Multiple rice exporters at risk of closing down
A lot of struggling rice exporters could go out of business if a Government decree on rice export conditions is upgraded into law.
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The rice export conditions provided by Decree 109/2010/ND-CP dated November 4, 2010 are so strict that many businesses cannot meet.
They include at least one storehouse having a minimum capacity of 5,000 tons of paddy and meeting Ministry of Agriculture and Rural Development standards, and a rice mill with a minimum capacity of 10 tons an hour.
The decree has effectively driven many local firms out of the rice export sector. Certain enterprises such as Co May Trading & Services Co Ltd in Dong Thap Province and Vien Phu Production and Trading Joint Stock Company in Ca Mau Province have come to Singapore to do rice export business.
This is in stark contrast with the situation in Cambodia and Laos where enterprises can easily export rice to Vietnam and other countries thanks to great support from their governments.
Life would become harder for local rice exporters as the decree has been added to the draft amendments to Appendix 4 of the Investment Law governing conditional business sectors.
Article 7 of the Investment Law states: “Conditional business and investment fields are where business and investment activities must meet certain conditions for reasons related to national defense, national security, social safety, social ethics and community health.”
One might wonder whether or not rice export activity has anything to do with national security, which warrants the addition of rice to the list of conditional business sectors.
In wartime, this might be true but now Vietnam is one of the world’s leading rice exporters, so food security is not a concern under the current circumstances.
According to the Vietnam Chamber of Commerce and Industry (VCCI), rice exportation and other business activities should be taken out of the list of conditional sectors.
