The European Union (EU) will offer Vietnamese rice exports duty-free tariff rate quotas when the EU-Vietnam Free Trade Agreement (EVFTA) comes into effect.
Therefore, the rice industry has been urged to change production practices to fully take advantage of these quotas. According to the Guide to EVFTA issued by Delegation of the European Union to Vietnam, the EU will allow the import of 80,000 tonnes of Vietnamese rice — 30,000 tonnes of milled rice, 20,000 tonnes of husked rice and 30,000 tonnes of fragrant rice — every year at zero per cent duty. The EU will also offer a 50 per cent duty cut at entry and then linear reduction over five years for broken rice.
Insiders said the preferential tax rate would help Vietnamese enterprises to save 17 million euros (US$20 million) in taxes each year.
Dang Hoang Hai, head of the industry and trade ministry’s European Market Department, said though Vietnam had been hailed as the world’s third largest rice exporter, its rice shipments to the EU market remained modest.
He said in recent years, Vietnamese rice exports even fell because the country still focused on planting high-yield rice. Meanwhile, other countries are accelerating high-quality rice production.
The Vietnam Food Association said rice exports to the EU market dropped from an annual average of 24,000 tonnes to 20,000 tonnes in 2014 and 18,000 tonnes in 2015. The association attributed the slump to the loss in market share of Vietnamese rice.
The EU was a demanding market with strict requirements in factors ranging from product quality to environmental standards, enterprise’s prestige and production process, Hai said.
In addition, though not being regular rice eaters, the EU customers prefer rice of higher quality than that of Vietnamese rice. That’s why Vietnam has become less competitive against other rice exporting nations.
It was undeniable that European consumers were familiar with Thailand’s fragrant rice, while Vietnamese rice was just starting to promote its image, Hai said.
Photo: CBR Investment AG