VietNamNet Bridge – Goods and farm produce exchanges still cannot attract businessmen over the last years, even though they are believed to be the inevitable goods transaction mode in the modern times.

The gloomy markets

Though the Buon Ma Thuot Coffee Exchange (BCEC) has been equipped well with the support of the local authorities, domestic and foreign institutions including the French Development Agency AFD, it still has been quiet since the day of establishment in 2008 with very few transactions.

Vo Thanh Chau, Director of the Exchange, admitted the modest trading volumes with both spot and forward transactions. Since 2009, only 1,000 tons of coffee has been brought here for spot transaction. Meanwhile, forward transactions have been made mostly by brokers and members.

Chau said BCEC remains unattractive to businessmen, because it still lacks the “market makers,” i.e. the institutions and individuals who have good financial capability to buy and sell goods, thus leading the market. This happens with not only coffee, but other farm produce as well.

According to Tran Luong Thanh Tung, Director of CFE Company, the low liquidity is the biggest barrier that prevents businessmen, especially financial investors, from joining the market.

“This is the “story of chicken and egg,” said Tung. “If investors do not join the market, the liquidity would not be improved. Meanwhile, if the liquidity is weak, financial investors would be outside the market.”

The businessman said that in order to have the necessary liquidity, goods exchanges “need a push,” which is strong enough. “The push will not come from the coffee growers, import-export companies, financial investors, but from the state management agencies,” he commented.

Vo Thanh Chau also said that the settlement of many existing problems is without the reach of BCEC. For example, the payment method needs the involvement of commercial banks. Meanwhile, the regulations on the management and operation of the exchanges should be set up by the Ministry of Industry and Trade and relevant ministries.

Vietnam’s goods exchanges unconnected with the world’s

According to Tran Thanh Hai, General Director of the Vietnam Gold Trade and Investment JSC, only 3 goods exchanges have been set up, including the gold, securities and coffee, which has been put under the management of the Dak Lak province, the “coffee metropolis” of Vietnam.

Hai said the existence of the goods exchanges have been in no way helping the transactions of the goods. Especially, the exchanges remain unconnected with the world market.

Hai believes that the exchanges need new mechanisms for them to operate, either the PPP mode (private public partnership), or equitization to improve their strength. Vietnam also thinks of attracting foreign businessmen, who are the members of the foreign exchanges.

Singaporean SICOM, for example, sends staff to Vietnam regularly, inviting Vietnamese commercial banks and big enterprises to join SICOM to help improve the liquidity.

Le Viet Nga, a senior official of the Domestic Market Management Department of the Ministry of Industry and Trade, has informed that three legal documents relating to the operation and management of the goods exchanges would be released this year.

These include the one guiding the procedure for businessmen to join the goods exchanges overseas, the one guiding the payment method and the third one relating to the technical procedure for online transactions

TBKTSG