Removing hurdles to rice exporters
According to the Ministry of Industry and Trade (MOIT), following many years of implementation, the government’s decree on rice trading, known as Decree 109, has been effective in singling out competent rice traders and directing them to make long-term investments. Currently the number of rice traders is steady at 150, with improved storage, milling and drying capacity. They have also developed rice plantations and signed contracts with farmers.
But as the rice export sector is struggling, Decree 109’s compulsory requirements, such as the ownership of storage and milling facilities, are no longer considered relevant as they could barely be met by enterprises producing small quantities of speciality and organic rice. The decree has also exposed many weaknesses concerning contracts, floor prices and the management of the relevant agencies.
Therefore a new decree is currently being drafted by the MOIT to replace Decree 109, helping to fine-tune the legal framework for rice trading activities in a way that will make it easier for enterprises to export their rice products.
According to the MOIT’s Export-Import Department, the draft decree will no longer require traders to own the storage, milling or processing facilities, which can be hired from other companies. Exporters of organic rice, parboiled rice and rice with improved micronutrients also will not have to meet business conditions and secure licences but will only have to notify the MOIT of their contracts.
The draft decree also amends a number of regulations aimed at streamlining administrative procedures and specifies the responsibilities of the relevant ministries, agencies and local authorities in rice trading management. For example, rice exporters will not have to register their contracts at the Vietnam Food Association but only need to notify the MOIT through its online portal.
MOIT Minister Tran Tuan Anh said that the new decree succeeding Decree 109 has been formulated with reforms in mind and submitted to the Ministry of Justice for feedback, before being submitted to the government for approval. He emphasised that during the process, regulations will continue to be reviewed to ensure that the final version will facilitate rice exporters as much as possible.
Enterprises’ high expectations
Rice is one of Vietnam’s key exports so the draft decree to replace Decree 109 has received widespread attention from the business community. Director of the Dong Thap province-based Loan Hung Company Pham Hong Loan said in order for Decree 109 to bring substantive benefits to rice traders, what is important is the re-organisation of the rice production process from variety selecting and planting to harvesting, milling, advertising and exporting.
She added that when the rice value is enhanced, through a chain of production, enterprises will be the main player in purchasing rice at market prices, while the government will solely play the role of outlining strategies, regulating the market and assisting enterprises with market information.
Director of Trung An Hi-tech Agriculture Company Pham Thai Binh said abolishing the floor price policy will help rice traders to export more, while notifying rice contracts through the MOIT’s online portal will help enterprises cut costs and protect the information in their contracts.
According to Director of Thinh Phat Company Lam Tuan Anh, the new decree should include regulations on the quality for each specific type of rice, in accordance with a set of national standards, because quality is an important factor to the competitiveness of rice exporters. Furthermore, small enterprises should be allowed to export small quantities of Vietnam’s high-quality rice in order for them to penetrate demanding and niche markets. The government should solely play the role of providing market information, forecasting prices and accessing foreign distribution networks.
