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Mekong Delta an untapped trade giant

 VietNamNet Bridge – The Cuu Long (Mekong) Delta plays a very important role in the country's economy, as it produces a high volume of agricultural products consumed domestically and abroad.

VietNamNet Bridge – The Cuu Long (Mekong) Delta plays a very important role in the country's economy, as it produces a high volume of agricultural products consumed domestically and abroad.


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Ba Nga Floating Market in the Mekong Delta's Hau Giang Province. The Delta plays an important role in the country's economy as a producer of agricultural products consumed domestically and abroad. 

 

 

 

When the Trans-Pacific Partnership (TPP) agreement becomes effective, the Delta will not only see trade opportunities but also face challenges to meet world standards.

Professor Vo Tong Xuan, rector at South Can Tho University, said the Delta's high surplus of paddy and wide variety of tropical fruits and seafood made it an important agricultural area.

Apart from garments and textiles, many of the country's most highly valued food exports come from the Delta.

Between 2001 and 2012, bilateral trade between Viet Nam and the US increased to US$26 billion from $1 million, much of it from farm products cultivated in the Delta, Xuan said.

More than 50 per cent of the country's paddy and 90 per cent of nation's rice exports come from the Delta, as well as 70 per cent of fruit and 58 per cent of aquatic products.

Eighty per cent of the country's shrimp exports originate from the area.

Six years since the country joined the World Trade Organisation, the export turnover of agricultural and aquatic products has surged sharply.

During the past decade, the region enjoyed GDP growth of over 12 per cent, and in 2012, the delta's export turnover hit $10 billion.

In the past decade, export turnover of the delta increased 20 per cent a year.

From 2020 to 2030, the Delta targets an annual rice output of 24 million tonnes to remain as the country's top rice producer.

According to Nguyen Thi Nhung of Ton Duc Thang University, who studies the Cuu Long (Mekong) Delta's economy, the annual GDP of the area was about 17.8 per cent between 2002 and 2011.

The rate will likely remain at 12 per cent through 2020, she said.

With the TPP, a wider door for Vietnamese goods will open. The US and Japan, two members of the TPP and important partners of Viet Nam, are important markets, especially in the agricultural sector.

With TPP membership, Viet Nam will be able to access the markets of Canada and Mexico, two countries with which Viet Nam has no bilateral trade agreement.

With TPP, Viet Nam's rice, coffee, pepper and aquatic products, all of which rank globally among top exports, will have easier access to many markets.

And importantly, the TPP, which will offer tax exemptions, will allow more raw materials and equipment for agricultural production to be imported to Viet Nam.

US Ambassador David Shear said the country's exports of farm products, particularly seafood, could surge 37 per cent once TPP negotiations were concluded.

The ambassador said the Cuu Long (Mekong) Delta would benefit the most from the country's TPP membership.

In 2012, Viet Nam's exports of seafood and agricultural products to the US were valued at $4 billion, including $1 billion from seafood.

When TPP takes effect, the number of trade disputes, including anti-dumping cases, are also expected to fall.

Truong Dinh Hoe, general secretary of the Viet Nam Association of Seafood Exporters and Producers, said: "After joining the World Trade Organisation, Viet Nam's seafood exports increased annually. With more investment in equipment for processing and breeding, the country's seafood export revenue has grown steadily since 2000."

Export revenue has reached $6 billion annually and is expected to grow 15 per cent every year.

In recent years, due to the economic crisis, export growth has slowed down. In 2013, seafood export value was more than $6.5 billion.

"TPP will open wider doors for Vietnamese exports. Vietnamese seafood has already been exported to some TPP member markets," Hoe said.

Up to 70 per cent of Viet Nam's seafood exports and revenue comes from HCM City and the Cuu Long (Mekong) Delta, he said.

By 2015, the government targets seafood export revenue of $7 billion and by 2020, $10 billion, Hoe said.

Challenges

Although opportunities will arise with the TPP, strict standards may present a barrier to Cuu Long (Mekong) Delta's products to enter TPP member markets.

Nhung said that sustainable agriculture should be expanded as most production in the Delta was based on household and small-scale enterprises.

Farmers do not have adequate technology or modern equipment, she said.

"Human resources in the delta is another matter. Climate change and higher sea levels have influenced the delta and its agriculture," she added.

Professor Vo Tong Xuan said he was worried that the government had not established a programme to enhance the competitiveness of domestic enterprises.

"Maybe we are so satisfied with ourselves because Viet Nam is a top global exporter of rice, coffee, pepper, tropical fruits, fish, shrimp and other seafood. So we forget that our product quality has not reached the top standard of the world," Xuan said.

He added that only a few of Vietnamese products have trademarks that are known in the world.

Most products in the delta were produced by households and small enterprises, and even rice had no well-known brandname.

In addition, most processing factories do not have equipment with advanced technologies.

Xuan suggested that the Government set up a national programme to help local enterprises improve competitiveness so that agricultural products can meet strict international standards.

He said the TPP would have more of a positive than negative effect on Viet Nam, and would create an environment in which modern manner and effective business production could thrive.

 Source: VNS

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