FIEs’ distribution right makes Vietnamese businesses anxious Once foreign invested enterprises (FIEs) are given the right to distribute some important products in the domestic market, a lot of Vietnamese businesses would have to leave the market. However, this would benefit consumers.  The draft legal document compiled by the Ministry of Industry and Trade says that FIEs would have the right to distribute rice, petroleum and medicine from 2014. Vietnamese businesses feel anxious Economists believe that the presence of FIEs in the petroleum distribution market would not have big impacts on the big importers and distributors, who have great advantages, but would affect many other enterprises. Petroleum trade corporations need huge capital and experiences. Vietnamese distributors, who have the modest capital of tens of millions of dollars, can’t hold a candle to international energy groups with the capital of up to billions of dollars. The director of a petroleum import company in Also according to the director, Vietnamese consumers can get benefit for one year when buying products at competitive prices from the FIEs. However, later, when Vietnamese distributors leave the market after they get exhausted in the competition, FIEs would easily control the market. If so, consumers would suffer. In principle, FIEs would be punished if they dump products in the market. However, it would take management agencies at least 1-2 year to find the evidences of the dumping. Meanwhile, the 1-2 years is long enough for FIEs to dominate the domestic market already. When allowing FIEs to join the rice distribution market, The same thing is happening with the coffee industry. Vietnamese businesses have got worn out in the competition with FIEs to collect materials and export coffee. The medicine market now witnesses the cutthroat competition between small domestic enterprises and big international groups such as Sanofi, GSK and Novartis. Input materials now cost 50-80 percent of the cost price in the pharmacy industry. Meanwhile, this is the competitive edge of FIEs over domestic ones. As offering to buy materials in large quantities, thus enjoying discounts and many other preferences, FIEs always can buy materials at lower prices than smaller enterprises. Especially, FIEs can buy materials from different sources (Europe, the The opportunity for renovation The FIE’s right to distribute products in Vietnam turns out to not be a big worry in the eyes of economists, who believe that this would benefit consumers and create a fairer playing field. The economists don’t think that the day when FIEs officially get the distribution rights would be the doomsday for Vietnamese distributors, saying that the State can apply “soft support measures” to domestic enterprises, which do not violate the WTO commitments. The State can also control FIEs by imposing quotas and requiring certain percentages of domestically sourced petroleum supply in order to restrict the petroleum imports. Regarding the rice distribution, TBKTSG |
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