VietNamNet Bridge – Overseas food companies are eager to grab a slice of the thriving Vietnamese food ingredients industry.

At the Food Ingredients Vietnam exhibition held in Ho Chi Minh City last week, a plethora of foreign food firms expressed an interest in expanding their business into Vietnam, bringing highly developed technology for research and development (R&D).

“To outsiders, Vietnam is a very interesting and dynamic market that has so much potential for growth. For example, the beverage industry is forecast to grow 10% within the next few years, which is a highly attractive prospect,” said Frank Behnam, executive board member of Aquanova AG from Germany, which provides food ingredients and supplement processed from natural sources.

Behnam commented that domestic distributors and manufacturing firms were open to innovative food ingredients. Moreover, Vietnamese consumers tended to hold activities and ingredients from Europe in high regard, especially those with natural extracts. Thus he believed Aquanova AG could match these requirements and thrive in the Vietnamese food industry.

In the same sentiment, Kitimethee Monsereensorn director of Oleofine Organics from Thailand, told VIR that his firm was looking for opportunities in the ASEAN region, including Vietnam.

“I believe the Vietnamese food industry is poised for great growth in the near future. In particular, bread and other bakery products are fast becoming Vietnamese consumers’ favourite light meals this presents huge opportunities for us as a provider of processed additives and flavours for bakeries,” he said.

Monsereenusorn elaborated that with his firm was looking for domestic distributors, who could provide insider knowledge of the Vietnamese food market for Oleofine Organics. To make additional inroads to Vietnam, the firm would also push R&D activities of its laboratories in Thailand, Malaysia and India.

Unlike these two firms, Kerry Group, an Irish supplier of diary foodstuffs, is not a newcomer to the Vietnamese food ingredients market. With 12 years of operation in Vietnam, the firm has already scored a number of high-profile domestic partners, including International Dairy JSC (IDP).

However, as Mervyn Gribben, general manager at Kerry Nutrition Asia Pacific revealed Kerry has recently decided to amplify its Vietnamese presence after witnessing high growth in the Vietnamese food ingredients sector.

More Japanese enterprise are eager to pour money into agricultural, foodstuffs, construction, sea transport, tourism, and restaurant projects in Vietnam.

Last week, Minister of Planning and Investment Bui Quang Vinh met with the chairmen and CEOs of 10 Japanese firms who are currently conducting market research here, prior to deciding on heavy investment projects in the country.

The firms include Miki (rice and farm produce), Midoria (sake), Midoriya (design and construction), Seiwa (foods), Nozaki (electronic products and machinery), Sanyo (sea transport), Puratia (training of Vietnamese nurse and caregivers in Japan), IDOM (Tantan-men restaurant chain), Fuji (travel company), and Sengoko Yoshito (law consultancy).

These firms want to base their investments in the Dong Van Industrial Park in the northern province of Ha Nam. This month also saw Japan’s Showa Denko Group work with the Ha Nam authorities to development a hi-tech project to produce safe vegetables at the park, with the first harvest due at the end of the year.

Also, this month an investor delegation from Japan’s Yamaguchi prefecture visited the southern province of Binh Duong. The group is keen to invest in the machinery, agriculture, construction and restaurant sectors there. Binh Duong currently has 232 Japanese enterprises, with the total investment capital of over US$ 4.8 billion.

Atsusuke Kawada, chief representative of the JETRO’s Hanoi Office and vice chairman of the Japan Business Association in Vietnam, said JETRO was implementing a programme to help over 1,600 Japanese small-and medium sized enterprises invest in various developing nations, including Vietnam.

“These enterprises are looking at Vietnam as a prioritised investment destination. The number of Japanese enterprises will increase in Vietnam, both in the manufacturing and non-manufacturing industries,” he said.

Of the existing Japanese investors in Vietnam, 66.1% said they would “expand investment” here and continue considering Vietnam an important investment location. Meanwhile, some 84.4% expected their revenue to increase in Vietnam.

Vinh said Vietnam’s government and localities would create the best conditions possible to support these projects.

“Under Vietnam’s new Law on Investment, which will take effect in July, foreign investors in Vietnam will see major breakthroughs in Vietnam’s investment climate,” he stressed.

However, head of the visiting delegation to Vietnam last week, Sengoku Yoshito – former Minister of Japan’s National Policy and former President of the Democratic Party of Japan – told Vinh that in order to lure more Japanese investment, Vietnam needed to make its investment climate more business friendly.