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Developing vegetable oil industry: Material area development is key
Deputy Minister of Industry and Trade Bui Xuan Khu, who is presiding over the compilation of the strategy on the vegetable oil industry, believes that the biggest problem for the industry is not a lack of capital to build more factories, but a lack of areas to grow input materials.
Commenting about the competitive edge of the industry, Pham Van Liem, senior researcher from the Ministry of Industry and Trade, said that in general, Vietnam’s vegetable oil products are not highly competitive compared to products from ASEAN countries.
The biggest problem of the oil industry is heavy reliance on imported materials, with 90 percent of required materials needing to be imported.
Khu said that the biggest problem now is that Vietnam still does not have a key oil bearing crop to develop on a big scale which can bring high economic efficiency.
In fact, rice bran in the Mekong Delta could be a good material with very big volumes of 400,000-500,000 tonnes per annum. However, the problem is that it would cost a lot to carry the material to factories. That explains why the factory in Can Tho city still cannot run at full capacity (only 80,000 tonnes were collected in 2008).
Statistics show that the production value of the vegetable oil industry in 2008 was 6,620 billion dong, accounting for 4.62 percent of the production value of the food and drink industry, 1.02 percent of the industrial production value of all industries.
Workers in the vegetable oil industry have incomes which are higher than the average incomes in society (5.31 million dong per head per month in 2007).
In 2008, Vietnam had 35 vegetable oil producers in 13 provinces and cities with the total production capacity of 1,129 tonnes of refined oil per annum and 296.9 thousand tonnes of oil-bearing materials per annum.
Vocarimex, the biggest enterprise in the industry, and its subsidiaries and joint ventures, now account for 78.74 percent of total capacity of refined oil production.
In 2000-2008, Vietnam’s oil imports increased by 12.6 percent on average, while exports have been decreasing, which has led to a high trade deficit in vegetable oil. In 2008, the import turnover was $700 milion. Experts have warned that if Vietnam does not have an effective programme to develop its oil bearing crop, it will have to import $1 billion worth of materials by 2015.
Vietnam mainly imports palm oil, which accounts for 77.88 percent of total imports, from Malaysia and Indonesia. Due to the narrow gap between the tax rates on raw and refined oil as per the commitments under the ASEAN Free Trade Area (AFTA), most enterprises prefer importing refined oil to make finished products to sell domestically.
It was estimated that the vegetable oil consumption of Vietnamese people in 2008 was 7 kilogrammes per capita, which was equal to that in China in 1995.
If considering the above said consumption level as the foundation, the growth rate in oil consumption of Vietnamese people will be 8 percent in 2008-2018 and 3.5 percent in 2018-2025, which means that the consumption level will be 15.2 kilogrammes by 2018 and 19.4 kilogrammes by 2025. As such, the potential of the market is vast.
The draft industry development strategy stipulates that by 2020, Vietnam will produce and consume 1,420-1,730 tonnes of refined oil, 280-430,000 tonnes of unrefined oil and export 60,000 tonnes of oil of different kinds.
vietnamnet, vneconomy
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