Tax advantages
According to Vietnam Association of Seafood Exporters and Producers (VASEP), ASEAN is currently one of the important export markets of Vietnam seafood. Vietnamese tuna export turnover to this market is increasing. In particular, when the ASEAN Trade in Goods Agreement (ATIGA) officially came into effect since 2010, most of the import tariff lines were downed to 0% that brought favorable conditions to boost Vietnam's tuna export growth.
Before 2010 when ATIGA was not effective, Vietnam's tuna export to ASEAN was only US$ 1.6 - 6 million per year. But from 2010 onwards, the export value to this market has had a remarkable growth. In 2010, the tuna export value of Vietnam to ASEAN increased by 190%, from US$ 6 million in 2009 to nearly US$ 17.5 million in 2010. And so far, Vietnam's tuna export value to ASEAN has increased to more than US$ 50 million.
In addition, in the long term, ATIGA has an indirect effect to increase the export turnover of Vietnam to non-ASEAN markets because of importing raw materials for export production with cheaper prices from ASEAN countries. On the other hand, as a member of ATIGA, Vietnam has conditions to exploit new advantages in trade relations with big countries. For example, Vietnam will be entitled to the US Generalized System of Preferences (GSP). However, the elimination of tariffs also creates many challenges for Vietnamese tuna processing and exporting enterprises. Because ASEAN is a close market with similarities in terms of natural conditions, exploitation resources, etc. the structure of Vietnam's export tuna products with other ASEAN’s member countries is quite similar. While the scale and level of development of the tuna industry is inferior, Vietnam is unlikely to compete with regional countries such as Thailand, the Philippines or Indonesia, which also enjoy similar benefits like Vietnam. Therefore, joining ATIGA, Vietnam continues to accept fierce competition with other members of the association not only in the regional market, but also in the world market.
Looking forward to US$ 1 billion export value
Along with tra fish, Vietnam's shrimp export value to ASEAN market is quite stable recently thanks to the preferential treatment from the ASEAN Free Trade Area (AFTA) and related agreements.
Shrimp is a product group that contributes the third largest proportion in total seafood export to ASEAN market. Exporting Vietnamese shrimp to ASEAN in the period of 2008-2018 increased from US$ 24 million in 2008 to US$ 58 million in 2018. Entering 2019, Vietnam shrimp export to ASEAN market tends to decrease along with the general downtrend of Vietnamese shrimp export to world markets because of the decline in world shrimp prices amid increasing supply. However, the pace of decline was lower than that of other major import markets. In the first quarter of 2019, Vietnam shrimp exports to ASEAN reached US$ 12.7 million, down 10.5% compared to the same period in 2018. Currently ASEAN is the 8th largest shrimp importer of Vietnam, accounting for 2.1% total export value of Vietnam shrimp to the markets.
With many advantages on tax rates when implementing trade agreements, ASEAN is expected to be a potential seafood export market, which will reach value of US$ 1 billion in the near future, helping businesses reduce dependence on the main markets. However, this is a market that has not been paid attention by Vietnamese enterprises. According to VASEP, enterprises can consider expanding exports to this market block, avoiding depending on some key markets.
Currently, the US, Japan and China are the three main export markets for Vietnamese seafood. In particular, the Chinese market has the highest growth rate, and is also the largest importer of tra fish and also for shrimp in the near future. In recent times, ASEAN has emerged as a potential market to help Vietnamese enterprises reduce their dependence on key markets. Vietnam has exported products to 9 ASEAN countries with 3 major importers that are Thailand, the Philippines and Singapore. Since the establishment of the ASEAN Economic Community (AEC) to create a common market for the region with the same preferential tax rates, it has created opportunities for Vietnamese seafood exporters to take advantage to increase exports to ASEAN. The block’s population is expected to reach 790 million by 2050, pushing the supply of food substantially to meet increasing demand. Seafood consumption is estimated to increase to 37 million tons in 2030. Fishery consumption per capita is expected to increase from 38.4kg / person / year to 51.5 kg / person / year in 2030. However, in order to develop the market in a sustainable way, enterprises need to focus on quality to create added value for products.
Huong Tra