PM sets bar high for shrimp exports

by Thiên Lý

The Ministry of Agriculture and Rural Development (MARD) has set a shrimp export target of US$10 billion by 2030.

However, Prime Minister Nguyễn Xuân Phúc disagreed with this, saying the target is too low and can be reached by 2025.

He went on to say that Việt Nam should become the world’s shrimp production base.

But analysts are divided on this.

Some said reaching $10 billion even in 2025 would be difficult since the agriculture sector faces many challenges like the small, household scale of production, climate change and international integration.

Besides, global seafood exports now are worth around US$130 billion, with shrimp accounting for only around 10 per cent or $13 billion, they said.

According to the Food Agriculture Organisation of the United Nations, the exports are growing at an average rate of around 15 per cent a year.

But in reality, it will not be easy to achieve the 15 per cent growth rate.

Even if it is achieved the global trade in shrimp will only reach $30 billion by 2025.

For Việt Nam to achieve the $10 billion export value by 2025, it would have to both increase shrimp output and value addition of shrimp products.

Experts calculate that if the added value of shrimp is doubled by 2025, the country would earn $6 billion from exports.

For the $4 billion remainder, it would have to produce an additional 1 million tonnes of shrimp.  

Last year shrimp exports were worth $3.1 billion. To achieve this, the country had to produce 650,000 tonnes.

Việt Nam might be able to produce an additional 1 million tonnes of shrimp, but almost certainly cannot double value addition because its companies already process shrimp using advanced technology.

Lê Văn Quang, chairman of the Cà Mau-based Minh Phú Seafood JSC, said his company has set a target of exporting $2 billion worth shrimps by 2021.

It is a feasible plan since the company plans to make major changes to production, marketing and technology application, according to the chairman.

PM Phúc said if Minh Phú alone could export $2 billion, Cà Mau Province’s total exports could be $4 billion and the remaining $6 billion could be managed by other provinces and cities, and the $10 billion target could be achieved by 2025.

Some analysts concurred with Phúc, saying Việt Nam’s shrimp industry has all the conditions necessary to develop and become the world’s shrimp production hub.

But they hastened to point out that the country needs to step up investment in infrastructure for shrimp farming and processing to boost productivity as well as value addition.

Now a full 70 per cent of costs in shrimp production goes towards feed and medicines, most of which are imported.

Moreover, processors import 17 per cent of the shrimp they require.

Banks plagued by bad debts, continue to pay low dividends

Trần Thiện Nguyên, who owns shares in a joint stock bank based in HCM City, hopes this year it will pay higher dividends than in previous years.

In recent years banks had been paying very low dividends or even nothing, he said.

As a result, dividend payments have always been a hot topic at lenders’annual shareholders meeting in recent years.

Analysts blame the low dividends on banks’ high bad debt levels and their slow recovery.

The chairman of a HCM City-based bank with a chartered capital of VNĐ5 trillion (US$220 million) said last year pre-tax profits were VNĐ484 billion, or 10 per cent higher than the target.

But it only intends to pay a dividend of around 5 per cent, the same as the 2015 rate.

He explained that the bank had to set aside a considerable amount of money for risk provisioning since the market was still beset by many difficulties.

The banking sector still has non-performing loans worth about VNĐ200 trillion (US$8.8 billion) bought by the Việt Nam Asset Management Company (VAMC) but remaining unresolved.

To settle bad debts, banks are having to use considerable sums of money for their risk provision accounts, which has a big impact on their bottom line.

Eximbank for instance had to set aside VNĐ1.2 trillion last year for provisioning, or 82 per cent of its net interest income. In the event, its pre-tax profit was only VNĐ300 billion.

Therefore, Eximbank’s after-tax profit was only VNĐ202 billion, 70 per cent down from 2015.

VIB Bank’s provisioning was VNĐ532 billion, or 56 per cent of its net interest income.

At the same time banks are also struggling to adopt international bank management standards prescribed under the Basel II accord as required by the central bank.

Basel II requires minimal capital requirements, regulatory supervision and market discipline.

To achieve this goal, banks must increase their capital to meet capital adequacy ratio (CAR) norms. Under Basel II standards, they need to have CAR of around 9 per cent.

State giant BIDV is one of the lenders that would have to mobilise more capital to meet the 9 per cent norm.

Opportunities to invest in agriculture

The Việt Nam Rubber Group (VRG) plans to equitise along with 20 of its subsidiaries in the third quarter of this year.

The valuations of the targeted companies have more or less been completed.

VRG is working with auditing firms to check the legal provisions on valuations, and has outlined concrete plans for converting its member companies into shareholding businesses. The company is also looking for strategic investors after equitisation.

The Việt Nam Southern Food Corporation (Vinafood 2), whose plan to equitise was approved by the Government, is set to equitise in the fourth quarter.

VRG and Vinafood 2 are among several large companies under the agriculture ministry due to go public this year.

Others include Agriculture Materials Company, Vinafood 1, Việt Nam National Coffee Corporation, and Hạ Long Fisheries Company.

In the first quarter the ministry will disinvest from several companies: Việt Nam Fisheries Corporation, Sugar and Sugarcane Company, and Việt Nam Maize Development and Investment Company.

It is planned that around VNĐ2.19 trillion worth of disinvestments will be carried out in the agriculture sector in 2017-20.

Market observers said the fact that several major agricultural companies would be equitised this year and the Government would disinvest from many large companies would provide several opportunities for those who want to invest in the agricultural sector.