Tax cuts aid foreign livestock investment

In this year’s first eight months, the rate of foreign firms asking for permission to import animal feed materials was up 20% year-on-year, according to the Ministry of Agriculture and Rural Development (MARD). The on-year rate hit 30% last year.

“Foreign animal feed firms are boldly expanding their businesses in Vietnam. Many new investors are working with the ministry for their upcoming projects in the country,” said Dang Dinh Quyet, deputy director of the General Affairs Division under the MARD’s Livestock Production Department.

“Import tariff cuts under the ASEAN Economic Community (AEC) are also luring foreign meat imports into Vietnam,” he said.

China’s New Hope Liuhe Company is said to invest US$407 million into building additional seven pig complexes in Vietnam by 2018, with a combined annual capacity of 2.3 million pigs. Construction will start from September. Currently the firm has six animal feed mills in Vietnam.

In another case, the Republic of Korea (RoK)’s CJ will invest millions of dollars into building its sixth animal feed plant in the south-central province of Binh Dinh. This 120-hectare project will also comprise a pig-breeding farm. Local farmers’ households will cooperate with CJ in raising the pigs, which will later be bought by CJ for food processing.

Rusagro, one of leading Russian agricultural groups, is also completing final procedures to export its pork to Vietnam, starting from 2017, with an expected volume in the tens of thousands of tonnes per year.

In late July 2016, Vietnam’s BRG Group, SeABank, and Japan’s Michinoku Bank announced the establishment of a consortium to promote quality agriculture, meat, and processed food trade between Vietnam and Japan.

The consortium aims primarily to provide Japanese and Vietnamese firms with financing, export consulting, training, transport, logistics, compliance, and regulatory issues.

Australian meat imports have not dropped off either. Vietnam has been one of Australia’s fastest growing export markets for live cattle, rocketing from just 1,441 cattle four years ago to almost 310,000 cattle last year. The number was about 200,000 in this year’s first eight months.

Director of the MARD’s Livestock Production Department Hoang Thanh Van said Vietnam’s livestock production industry is expected to witness robust growth by 2018, thanks to new investments in breeding operations this year.

According to the Vietnam Institute for Economic and Policy Research’s recent survey on impacts of the AEC, new investments in the local husbandry sector are attributed to slashed import tariffs under the AEC, plus Vietnam’s great husbandry growth potential.

Import tax rates for a series of items such as cattle, animal products, sheep, goat, and horse meats, raw milk, and dairy products will be reduced to 0% over the next two years.

With these advantages, investors may concentrate production lines in a chosen ASEAN member, and then export the finished product tariff-free to other ASEAN members as well as to ASEAN’s free trade partners in the region (China, India, the Republic of Korea, Japan, Australia, and New Zealand).