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Vietnam Today

Domestic food enterprises underestimate foreign competition

Released at: 15:27, 13/04/2016

Domestic food enterprises underestimate foreign competition

Report on food processing sector reveals a lack of appreciation of the threat posed by foreign competitors.

by Minh Tuyet

Only one-fifth of Vietnam’s enterprises have a thorough understanding of the tariff reductions in free trade agreements (FTAs) while more than 40 per cent know nothing at all, according to the “Policy Brief: Impact of Current & Proposed FTAs and BITs on Vietnam’s Food Processing Sector” report released in Hanoi on April 13 by ActionAid Vietnam and the Central Institute for Economic Management (CIEM).

Given their inadequate knowledge of FTAs and bilateral investment treaties (BITs), domestic enterprise should be very concerned about foreign enterprises but the report revealed quite the opposite is true.

“Twenty-six per cent of enterprises believe that competitive pressure from foreign direct investment (FDI) will be tough while more than a half see no difference between competition from local enterprises and FDI,” the report noted.

The food processing sector appeared to be more positive about foreign competition, with 65 per cent of respondents not seeing any significant increase in competition.

“However, this varied view may be a result of a lack of clear understanding of what lays ahead for the sector due to limited knowledge about threats and opportunities in FTA commitments,” according to the report.

In terms of access to information on FTAs and BITs, 55 per cent of domestic enterprises said it was poor.

“Poor access to information on FTAs and BITs limits the ability of local enterprises to make the practical commercial decisions necessary to sustain them in open competitive markets,” the report noted.

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