Vietnam exporters want government to create trade infrastructure in Africa

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Rice was Vietnam's top export item to Africa in 2012

Vietnam's exports to Africa have been declining mostly over payment problems, and businesses say the country needs to set up banks and other infrastructure on the continent for sustainable trade.

Data from customs shows that exports to Egypt fell 40 percent year-on-year in the first two months of 2013, while the figures were 60 percent for Ivory Coast and 74 percent for Senegal, Thoi Bao Kinh Te Saigon newspaper reported.

It quoted Vietnamese exporters as saying they were wary and "fed up" because their partners in Africa were financially weak.

The director of a rice export firm in the Mekong Delta province of Dong Thap, who did not want to be named, said his company had stopped selling to Africa since the beginning of this year after failing to get payments for previous shipments.

"The biggest problem in exporting to Africa is payment," he said.

Vietnamese exporters hedge the risk by selling to international trading companies, which makes their rice less competitive in Africa, he added.

Rice was Vietnam's top export item to Africa last year, being shipped to 30 out of the continent's 55 countries and accounting for 30 percent of revenues.

Truong Thanh Phong, chairman of the Vietnam Food Association, said the weakening euro also made Vietnam's rice more expensive in Western Africa where the euro is used.

Vietnam is too far away from the continent, unlike India or Pakistan, meaning higher transport costs, he said at a recent conference held in Ho Chi Minh City to review rice exports in the first quarter.

According to the Africa desk at the Ministry of Industry and Trade, some African importers have reduced imports from Vietnam this year since its prices are higher than that of India or Thailand.

Businesses said they need more support from Vietnamese authorities to penetrate the market.

The ministry has organized several policy research and trade promotion events in Ivory Coast, Senegal, Cameroon, Ghana, Nigeria, and Algeria for Vietnamese companies to meet directly with local partners.

It also signed a memorandum of understanding with Sierra Leone, and is in negotiations with Guinea, Ghana, and Cameroon.

It recently cooperated with the International Trade Center to organize a meeting between Vietnamese and African banks in Hanoi to facilitate trade and especially address the payment problem.

But Vietnamese exporters want the government to provide more specific help such as opening branches of Vietnamese banks in Africa to lend money to importers to improve the payments situation.

The distance problem can also be solved if the government can choose countries in Africa to build warehouses for Vietnamese goods. 

Officials warned that rice exports to Africa would slow down from now since many countries there are starting to grow rice to ensure food security.

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