Vietnam's food industry attracts domestic and foreign investment

This is information presented at the Seminar on Investment Promotion of food processing organized by the Vietnam Trade Promotion Agency on 15^th November 2018 in the framework of the Vietnam International Food Industry Exhibition 2018 (Vietnam Foodexpo 2018).

Statistics from the Ministry of Industry and Trade show that Vietnam's annual food consumption is estimated at 15 percent of GDP. Over the past five years, the average annual consumption of processed food and beverages has grown at 9.68% and 6.66%, respectively. According to forecasts of BMI Research, Vietnam's food industry is expected to achieve an average two digit annual growth in 2015-2020 of 10.9%.

Due to the fertility of the food processing industry as a "gold mine" in Vietnam, domestic and foreign businesses are "excited" to pour in capital investment.

CJ Cheil Jedang Corporation (CJ) of Korea has been present in Vietnam since 1999. The corporation has recognized the potential of the Vietnamese food market, which has recently implemented a number of M&A deals to expand its market share. In 2016, CJ bought Ong Kim kim chi brand and spent VND 300 billion to buy more than 4% stake in Vissan IPO. By 2017, CJ continued to acquire Cau Tre Food Joint Stock Company and changed its name to CJ Cau Tre, and added a number of business lines such as fruit and vegetable processing, flour and ready meal production, etc.

Another case is PAN Food. PAN Food has purchased 4 food companies, including Bibica, Lafooco, 584 Nha Trang Aquaculture and Aquatex Ben Tre to jointly develop food products. Both domestic and export sales of PAN Food are about USD 90 million, of which about USD 45 million is export revenue.

CP Vietnam Animal Husbandry JSC, in addition to food processing plants already established in some provinces and cities, has recently put into operation a new factory with an area of ​​6 hectares in Tan Phu Trung Industrial Zone (Cu Chi, Ho Chi Minh City). The factory is designed with a capacity of up to 13,200 tons of sausage and processed food each year.

Vietnam has a large and abundant supply of agricultural products, seafood and food for domestic market and export. However, according to Tran Kim Oanh, Director of the Center for Investment Promotion for Industry and Trade (Vietnam Trade Promotion Agency), domestic raw materials do not meet the requirements of production and standards of FDI companies. Therefore, the import volume of raw materials is quite big; the proportion of crude exports is still high, processed exports still low compared to those of FDI companies in their own country or other countries. Therefore, in order to attract FDI in food processing, Tran Kim Oanh mentioned that it was necessary to plan material areas, support FDI companies to set up and develop raw material areas for stable production.

At the seminar, according to many experts, in order to facilitate the development of the food industry, businesses and farmers must link more strongly, find out products that the market needs, not merely sell things they have, combining with investment in production technology, packaging, marketing, "shaking hands" with foreign companies and importers to produce according to the tastes of each market.

In addition to efforts of businesses, it is necessary for the State to support and promulgate development policies in line with key sector objectives, especially linking with the value chain.