Investment opportunities in Food Processing

Investment opportunities in Food Processing

Food processing industry is one of the industries selected and given priority on development by the Government from now until 2025, with a vision to 2035. Large market in Vietnam and export, plus incentive policies of the government has brought many investment opportunities for businesses in this area.

Potential market

At the investment promotion conference in the field of food processing industry recently took place in Ho Chi Minh City, Deputy Minister of Industry and Trade Do Thang Hai said that this sector was growing steadily in the period 2012- 2016 with an average increase of 6.94% per year for processed food and 9.48% for beverages. According to statistics, Vietnam's annual food consumption is estimated at about 15% of GDP, and in the first nine months of 2017, it has increased by 11.9% compared the same period in 2016. However, only 9% of productivity increase has not met the domestic market demand.
According to Bui Truong Thang, Deputy Director of the Department of Industry (Ministry of Industry and Trade), the market for food production and processing still has plenty of room to grow, especially in such sectors as milk, beverages, confectionery , cooking oil. For the dairy sector, demand is forecasted to increase to 27-28 liters / person / year by 2020; Confectionery consumption is projected to increase by 10% a year compared to the regional average of 3% per year and the world average of 1-1.5% per year. The vegetable oil industry currently consumes an average of 12 kg / person / year. As forecast by 2020, Cooking oil consumption will reach 17 kg / person / year. Besides the domestic market, the potential for exploiting and processing foodstuffs for export overseas is also very large.
Vietnam is one of the largest exporters of rice, coffee and cashew nuts. Exports of agricultural products in 2016 reached more than $ 15 billion, of which many groups have high and stable growth such as vegetables, pepper, cashew nuts and coffee. However, Vietnam's agricultural and aquaculture products are mainly exported in raw materials so the value index is not high. Therefore, there are many measures applied by localities in order to increase the added value of exports, of which the attraction of investment in production development and adoption of advanced technologies is one of priorities to promote the development of the industry.

"Wide door" for investment in food processing

Ms.Tran Kim Oanh, Director of the Center for Investment Promotion and Development of Trade and Industry (Department of Trade Promotion), said that foreign direct investment (FDI) in the food processing sector was limited. As of the end of October 2017, 128 countries and territories registered to invest in Vietnam, total registered capital of nearly $ 313 billion with 24,199 projects. However, the food processing sector only attracted over $ 4 billion with 295 projects. FDI projects in this field are Singapore with 62 projects with total registered capital of US$ 1.58 billion. South Korea is ranked second with 61 projects, registered capital of approximately 1 billion USD ... Binh Duong is the province with many FDI projects in food processing, followed by Ho Chi Minh City and Long An.
According to Kim Oanh, the modest investment figures show that investment opportunities into this sector in Vietnam are huge. However, domestic raw materials have not met the requirements of production, standards of FDI enterprises, so the import of raw materials is quite large; The proportion of crude exports was still high, refining is still low compared to FDI enterprises in their own country or other countries. Therefore, in order to attract FDI in food processing, Tran Kim Oanh said that it was necessary to plan material areas, support for FDI enterprises to build and develop raw material areas for stable production.
Thierry Rocaboy, Chairman of Food Agri & Aqua Business Sector Committee of Eurocham (FAASC), said that investment trends in food processing had increased in recent years. However, the proportion of European enterprises investing in processing is small, low compared to the potential. Nam Sang Kun, an investment promotion expert from Korea, said that Korea's investment in Vietnam in the food processing sector had increased in recent years. Many Korean companies were moving overseas to capitalize on emerging markets in Asia; Trade agreements between Vietnam and Korea was also creating favorable conditions for Korean businesses to increase investment in Vietnam.
Source: New Hanoi

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