According to the Ministry of Industry and Trade, the outbreak of the epidemic has seriously affected Vietnam's import-export activities with China. The main cause of this is declining demands in China (for example, Starbucks chain has closed thousands of stores, affecting coffee consumption; so has McDonald, affecting consumption of fillet fish; restaurants and food chains are empty, leading to reduced demand for seafood).
The border market will open later than usual, and is expected to close until February 8, 2020, causing disruption of the trading activities between residents of Vietnam and China, while this is still an important form of sales for some Vietnamese agricultural products, especially fruits. Chinese traders no longer come to Vietnam as often as usual, so there have not been any new orders even though some types of fruit are in-season.
According to the Ministry of Industry and Trade, the impact of the epidemic and anti-epidemic measures on import-export activities is relatively widespread, but border trade will be most affected. Currently, import-export turnover (mainly agriculture and fisheries) via land border gates is about USD 7 billion, of which export by official quotas is about USD 3.7 billion while export by individuals is about USD 1 billion.
Facing this situation, on January 28, 2020, the Ministry of Industry and Trade issued a document to update the situation and give a warning to the Ministry of Agriculture and Rural Development, provinces and enterprises exporting agricultural and aquatic products.
The document of the Ministry of Industry and Trade required the whole trade office system of Vietnam in foreign countries to find and connect new customers to divert consumption of agricultural and aquatic products, especially fruits, and asked logistics enterprises to help preserve agricultural and aquatic products waiting to be exported.
However, the results obtained have not been significant as expected for many reasons. Firstly, export in the form of trading between residents of the two countries, especially fruit exports, due to the preferential treatment of VAT when imported into China, still accounts for a large proportion although the Ministry of Industry and Trade has recommended enterprises to shift to official export during the past 2 years.
Secondly, traders are reluctant to switch to official export quotas because this means suffering from additional costs, not to mention other requirements for packaging, labels, traceability, etc. Fruit products are under seasonal and preserved pressure (rubber, coffee, tapioca and seafood), so it is difficult to turn control the situation in a short time.
Finally, it is not easy to change the export market for fruits in particular and agricultural products in general because they have not been officially imported by other countries or do not meet the usual standards of traceability, labels, packaging, etc.
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The Ministry of Industry and Trade recommended that farmers immediately adjust their production schedule because the epidemic situation is still complicated, unpredictable and likely to last long. The Ministry also suggested increasing domestic consumption through encouraging and organizing the connection of domestic distribution chains with big fruit granaries in Binh Thuan and Long An, and called on people to join hands to support farmers.
It is known that, due to the profound impact of the epidemic and anti-epidemic measures, the Central Bank of China has stepped in to support Chinese enterprises through cutting lending interest rates. The Thai cabinet is expected to adopt a comprehensive program to provide emergency assistance to their travel companies (concessional loans, deferral of capital and interest payments for 6 months, deferral of income taxes, etc.) and reduce special income taxes on flight fuels and airport fees to support the aviation industry.
In this context, the Ministry of Agriculture and Rural Development is also suggested to synthesize the needs of the agriculture sector, and submit to the Government similar measures to help farmers overcome this difficult time, especially farmers who cultivate fruits which have very short shelf life.
The Ministry of Industry and Trade also asked the Ministry of Transport and the Ministry of Finance to join in the review of taxes and fees, especially road transport charges and taxes on flight fuel to consider reducing taxes and fees for goods in the current period, contributing to support farmers.
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Compiled by VietnamCredit