A plant processing frozen shrimp for export in the Mekong Delta. Agricultural enterprises are facing stiff competition as the country takes part in more free trade agreements. — VNS Photo Danh Lam

HCM CITY (Biz Hub) — Agricultural enterprises in the Cửu Long (Mekong) Delta are facing severe challenges as Viet Nam integrates more deeply into the global economy, the director of the Viet Nam Chamber of Commerce and Industry's (VCCI) Can Tho branch said at a meeting this week in Can Tho City.

Many enterprises still lack knowledge about the Trans-Pacific Partnership (TPP), the ASEAN Economic Community (AEC) and free trade agreements (FTAs) that Viet Nam has signed, according to VCCI director Vo Hung Dung.

The biggest challenge is the pressure of competition, especially in the livestock industry. Agriculture is expected to be the most affected sector when the TPP and other FTA commitments take effect.

Rice, aquaculture and vegetable production face stiff competition because of a lack of highly skilled human resources, cutting-edge infrastructure and special incentives for start-up investments.

Many enterprises are not fully aware of the opportunities and challenges brought by international integration, and have failed to develop strategies to develop markets in and outside the country, according to Dung.

Other challenges include slow economic growth and the impact of climate change such as rising sea levels, saline intrusion and a lack of water resources.  

Viet Nam joined ASEAN in 1996 and signed bilateral trade agreements with the US in 2001 and with Japan in 2003. It joined the WTO in 2007, and this year, became a member of the TPP. To date, the country has signed 11 FTAs.

Long-term solutions

Dũng said that Viet Nam should reform its economic growth model and restructure the economy, especially agriculture. Production should be reorganised and technology promoted, he added.

The business model of large farms would also help to reduce costs and improve quality and food hygiene and safety, according to Dung. Bio-technology should also be used in farming and animal husbandry.

Under its commitments in the TPP and FTAs, Viet Nam will need to improve its competitiveness, modify its legal system and administrative procedures, and offer more training to improve human resources.

Dr. Pham Binh An, director of the WTO Centre in the country's southern region, said to take full advantage of international integration, businesses needed to keep up to date about FTA procedures and research markets and trade barriers, as well as learn about changes in policies under the TPP and FTAs.

Vo Tri Thanh, deputy director of the Ha Noi-based Central Institute of Economic Management, said agricultural enterprises should establish relationships with large firms in the region and the world to receive lessons in developing business.

Under new trade agreements, reduction of tariffs will create opportunities for Vietnamese industries to reduce production costs and have capital to promote investment and exports.

Local enterprises should take advantage of the lower production and business costs and improve competitiveness of their goods and services, Thanh said.

Viet Nam should approach large markets that have high purchasing power, he said.

He said that domestic small- and medium-sized enterprises, however, still faced many challenges in grabbing opportunities because of shortcomings in production and business. — VNS