Enjoying zero taxes, shrimp enterprises boost exports

The export tax of shrimp to the US has been reduced to 0%. Along with many advantages from the market, Vietnamese shrimp enterprises are speeding up to reach the target of US$4.2 billion in exports by the end of 2019.  

Processed shrimp of Vietnam are being exported to the US. Photo: T.H.

Positive signals from the US market

Over the weekend, the US Department of Commerce (DOC) released the final results of the 13th period of review (POR 13) on Vietnam's anti-dumping duty on shrimp to the US with 31 enterprises enjoying zero taxes. Of which, two mandatory respondents in the review – Sao Ta Foods JSC and Nha Trang Sea Product Company – are entitled to zero tax. The other 29 enterprises shipping shrimp to the US will be subject to the same rate at zero percent.

In the context of the US-China trade war, this is good news for the Vietnamese shrimp industry and good motivation for businesses to continue promoting shrimp exports to the US.

According to Mr. Ho Quoc Luc, Chairman of Sao Ta Foods JSC, the DOC tax rate proves that Vietnamese shrimp enterprises are honest in their operations and declare business data in full to the DOC. It also proves that DOC is fair and thoroughly examines the documents provided. The law firms of the defendants also worked conscientiously. Mr. Ho Quoc Luc said that, despite the advantages, shrimp businesses should maintain a moderate growth rate in the US market to avoid adverse situations in the future.

According to the Vietnam Association of Seafood Exporters and Producers, shrimp exports to the US – the third largest shrimp import market of Vietnam – increased by 37.2% in July this year to US$77 million. In the first 7 months of this year, shrimp exports to this market reached US$327.4 million, up 5%. Demand for US shrimp imports from Vietnam is rising due to reduced inventories, while the US is also reducing imports from India and Thailand and sharply reducing imports from China. Vietnam's shrimp exports to the US have just reached the lowest tax rate in the final result of the 13th administrative review announced at the end of the week, which will be a motivation for businesses to accelerate exports to this potential market.

Speed up in the last months of the year

Under the Vietnam - EU Free Trade Agreement (EVFTA), signed on June 30, 2019, Vietnamese seafood export tax to the EU will be completely eliminated (except for frozen tuna and canned tuna products with a 0% tax rate of 11,500 tons) with a 7-year roadmap. Particularly, shrimp exports will grow because the import tax in this market will sharply decrease from the first year, then gradually decrease to zero in the following years.

Processing plants have the most orders with abundant raw shrimp. So they are speeding up to promptly supply goods to key consumption in the end of the year and New Year in the main markets such as the EU, Japan, the US, Canada and Australia.

Vietnamese shrimp has been exported for over 40 years. So far, it is consumed in nearly 100 markets. In particular, many major markets have seen a significant increase. In July 2019, Vietnam's shrimp exports to the top 8 markets (including the EU, Japan, the US, China, South Korea, Canada, Australia and Taiwan) all showed positive growth. Notably, shrimp exports to the EU and South Korea also recorded the first month of positive growth after continuous decline since the beginning of this year. In particular, exports to China and the US grew well, reaching double digits. Specifically, Vietnam's shrimp exports to China in July 2019 increased by 47.7%, reaching US$51.6 million. In the first 7 months of this year, shrimp exports to this market reached over US$285 million, increasing by 1.7% compared to the same period last year.

In July 2019, China increased its shrimp import from Vietnam due to a decrease in imports from other sources. India – the second largest shrimp exporter to China – is expected to reduce production due to bad weather and disease. Argentina, which ranks fourth in shrimp supply to China, also announced a decline in shrimp production due to decline in its fishing grounds. With the above advantages and positive growth in July, shrimp exporters expect that this key export will continue to grow positively in the last months of the year.