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Vietnam aims to become global seafood processing center PDF Print
Monday, 12 December 2016 12:45

VIETRADE - Vietnam’s fishing and aquatic processing sector has posted an annual average growth of about 15% in recent years, significantly contributing to the national gross domestic product (GDP) and export, said Vice Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vo Tan Thanh.  After a long time failed to match its potential due to low-capacity vessels and out-of-date equipment, Vietnam’s seafood processing sector is likely to become a global seafood processing center in the future thanks to its competitive labor cost and increasing number of high-quality processing facilities, reported a local daily quoting General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) Truong Dinh Hoe. According to a VASEP source, Vietnam is currently one of the biggest seafood processing countries – for Pangasius, the country is No. 1, while for shrimp exports Vietnam is ranked No 5; for tuna exports Vietnam is also in the Top Ten. Vietnam is about to hit 4.5% increase in fisheries exports in 2016 after sales to overseas markets fell by US$1.2 billion in 2015. There have been administrative reforms and restructuring of the seafood sector in favor of advanced technology transfer and application, as well as encouraging foreign investment in Vietnam.

 

Ownership

Regarding ownership big seafood processing companies are strengthening their position by acquiring other, smaller, companies, while the small companies themselves are seeking both domestic and foreign partners. According to the VASEP, the process of merger and acquisition of seafood processing companies has been strong this year. “The weak businesses will find it difficult to survive in tough competition so this is an opportunity for ones with financial strength,” says a spokesman.

 

All seafood processing companies were originally owned by the state. However, the Vietnamese government has allowed private investors, usually the people who run them, to buy into these companies which are then known as joint stock enterprises. The situation has progressed further and some joint stock enterprises have become fully privatized companies (with the government retaining a small stake) listed on the stock exchange in Ho Chi Minh City or Hanoi. Foreign firms can buy shares or even take them over as long as there is Vietnamese participation. The state is fully behind these moves. In fact, the Vietnamese government is aiming to sell off the seafood processing companies where it still owns a majority stake by the end of 2020. It also seems to be encouraging foreign investment into the industry.

 

Foreign investment
The country plays a vital role in the global seafood supply chain as world leading seafood processors are shifting their factories from Europe and China to Vietnam, and domestic businesses have increased imports of raw materials for processing for export. Foreign firms, particularly feed producers, have invested on their own in Vietnam. Overseas owners usually install their own management and management systems, which is generally considered to be beneficial, but will retain or appoint a Vietnamese director and obviously employ Vietnamese workers.

 

Thai companies are becoming involved in the Vietnamese seafood industry. CP, Thailand’s biggest animal feed and chicken producer, has invested heavily in the country where it produces feed for fish and shrimp, pigs and poultry, which it sells in other countries as well as Vietnam. It also runs shrimp farms near Hue in central Vietnam and pangasius farms and processing plants on the island of Ben Tre near Ho Chi Minh City in the south.

 

Seafood processor Go Dang Seafood (Godaco) is partly owned by a Thai-British conglomerate and plans to build a third factory to concentrate on value-added products in 2016. Established in 1998 in the Mekong Delta region, Godaco’s mission is to become one of the top five pangasius and clams exporters in Vietnam. Jerzy Malek, the founder and former CEO of Polish seafood processor, Morpol, has also invested in Vietnam by buying the former Marine Farms’ cobia producer close to Nha Trang. It is reported that he plans to build a major hatchery for cobia juveniles to supply to other farmers around the coast (VASEP).

 

Technologies

Vietnamese government also emphasized the importance of increasing quality and trade value of fish products through applying advance technologies in the sector in general and in processing in particular. The government aims at sustainable development by improving the quality and application of production techniques production, processing, system with advanced quality standards. Aquaculture development planning seafood along with environmental protection and comprehensive management of the quality of the seed stitch, food, veterinary medicine is made sure to closely follow the needs, tastes, and consumption habits of the EU market for with seafood items, so that, production, export of aquatic species models, quality and safety. Soon there are policies to encourage companies/importers, upgraded modern technology, proprietary technology, invite professional trainer and increase investment in research and application of new technologies.

 

Enterprise is also actively involved in technology products manufacturing. At present, many seafood businesses in Vietnam are applying high technologies and modern methods to turn the sector into a hi-tech industry. They have been active in studying and deploying applications capture, mastering new technology, basic technology. They have focused on information technology, biotechnology in fishing, aquaculture and seafood processing to create a breakthrough in technology and economics. 

 

Concerns remain

Apart from progresses made, there are still some concerns regarding food safety of seafood product, unstable local supplies for processing due to saline intrusion and skilled labors to take over the maneuvering of advanced technology in the sector in and seafood processing particularly.

 

Antibiotic residue

There was an increase in the number of shipments being rejected by importing countries due to antibiotic residues and other contaminants being detected during routine testing. Exporters have received an increase in food safety warnings from overseas markets over the past 18 months about contamination of seafood products, which also is creating problems for exporters looking to increase their sales. According to Vietnam’s Department of Animal Health, during January to September 2015 some 181 warnings on seafood safety were received from important export markets including Japan, South Korea, the US, the EU and the Eurasian Economic Union. VASEP is urging members to increase their competitiveness and to avoid illegal use of antibiotics to rear shrimp and other seafood products.

 

Saline intrusion
One of the issue affecting the production capacity is saline intrusion. Shrimp farmers rearing brackish water shrimp in some regions have another problem to contend with as saline intrusion is reported to have entered up to 70km inland on rivers in many areas in the Mekong Delta region. Many farmers have reduced their shrimp farming activities temporarily as Vietnam’s shrimp species grow slowly in highly saline water. According to MARD, many affected shrimp farmers have reduced the area used to raise shrimp by about 50% due to high salinity (VASEP). As part of efforts to assist affected farmers, MARD has instructed provincial governments to increase environmental surveillance activities and promptly warn farmers about major changes in salinity and other environmental factors affecting their aquaculture activities.

 

Labor

The labor force in mining, seafood processing is currently at shortage, especially in coastal provinces, which have developed fisheries. With the inevitable trend, processing plants are equipped with modern equipment, requiring engineers to operate and control and skilled workers to familiar themselves with the production lines. At the same time, it is necessary to accelerate the mechanization and modernization of processing equipment and machineries to improve the efficiency of manufacturing operations. Manpower for the onshore fishery is taking elements decided for the sustainable development of fisheries.



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