Vietnam to allow foreign firms begin exporting rice this year

The government plans to allow foreign-owned companies to export rice this year rather than in 2011, the date set in Vietnam's commitments to the World Trade Organization (WTO).

The government has asked the Ministry of Industry and Trade to work out a "clear and transparent" framework for the export of rice by foreign businesses in Vietnam, according to a statement released by the Government Office recently.

"We benefit from the policy," said professor Vo Tong Xuan, former principal of An Giang University. "The biggest benefit will be the strengthening of the Vietnamese rice brand."

Although Vietnam is the world's second largest rice exporter after Thailand, weak branding has placed the price of the local grain far lower than Thai rice, he said.

The new policy will encourage state-owned firms to improve their competitiveness, "raising the quality of our rice, and then its prestige in the world market."

Economist Pham Chi Lan said permitting foreign firms to export rice would be "very good."

"It will create a better link to the international markets. Local firms' access to foreign markets has been too limited."

Lan said Vietnam has not yet infiltrated high-level markets, but only to countries facing food difficulties.

"Vietnamese rice exports are weaker than Thailand, both in terms of penetrating big markets and fetching good prices," she said.

The move could also boost transparency in the Vietnamese rice trade and prevent control of the market by just a few big traders, Lan said. "It would be in farmers' interest."

Professor Xuan said some weak local firms may sink if forced to compete with foreign companies.

But he said this was only a minor problem as the overall rice export situation needed to be improved.

He noted that Thailand allows foreign firms to export the grain.

Lan said the policy's impact on national food security would be negligible as the government had the right to interfere with shipments in special cases.

However, relevant agencies should closely monitor rice shipments to prevent foreign firms from conniving with large local players to control the market and bury small farmers, she said.

Deputy Minister of Industry and Trade Nguyen Thanh Bien said his ministry was drafting a decree on the issue that will cover regulations to ensure national food security.

Vice Chairman of Bac Lieu Province Nguyen Thanh Be is one of several rice producers who has voiced support of the new policy.

"My province will create all possible favorable conditions for foreign firms to export rice directly."