Vietnamese livestock enterprises have warned that foreign invested enterprises are controlling the food market, which is one of the reasons that makes it difficult to stabilize the market.
The enterprises have every reason to give the warning. CP Vietnam, a foreign invested enterprise alone has the productivity equal to the livestock production of farmers in five provinces in total. The enterprise’s pork and chicken output accounts for 8 percent of the total livestock output of the whole country.
“The food market is being controlled by foreign invested enterprises,” said Le Van Me, Chair of Phu Son Livestock Company in Dong Nai province. He went on to say that in the near future, when they double the number of sows, they would completely dominate the Vietnamese market.
According to Me, foreign invested enterprises are now evading tax in a legal way. The enterprises do not have to pay VAT, because they outsource the breeding to farmers and they bring livestock feed to the farms. Farmers can only get money for taking care for the livestock, while foreign companies can make money from many things, from selling animal feed, breeders to selling pigs.
Meanwhile, Vietnamese animal feed producers and breeders (farmers) are different. Therefore, Vietnamese farmers have to pay VAT when purchasing animal feed.
“Foreign invested enterprises are growing, while domestic enterprises are facing big difficulties. Especially, foreign enterprises also can get money from the government to help stabilize the food market. Therefore, they can get benefits in every way.
Besides, the enterprises declare high import prices in order to create a low profit which allows them to avoid corporate income tax. This is also the thing that makes it impossible to reduce the animal feed prices.
Nevertheless, the representative from CP Vietnam argues that the company is paying VAT. He said that the company does not collect pigs and fowl from farmers, but farmers breed pigs and fowl for the company.
An agriculture expert said on Tien phong that with the bank loan interest rates of 25-27 percent, farmers now dare not to create new herds of animals. Under the current regulations, farms must be located far from residential quarters to prevent environmental impacts. While it remains unclear about the land policy, the farmers, who want to carry out husbandry in big scale, cannot access land.
With the strong capability and the current tax policy favorable foreign invested enterprises, they would dominate the market and domestic enterprises are unable to compete with them,” representative from another breeding company said. “With the current policies, foreign invested enterprises can make fat profits even if they do not commit tax frauds”.
In the latest news, a Chinese leading animal feed producer, C.P Pokphand has decided to spend 609 million dollars (12 trillion dong) to purchase 70.82 percent of CP Vietnam’s stakes. This is considered one of the biggest merger and acquisition deals in Vietnam.
In the letter sent to shareholders on June 21, 2011, the board of directors of CPP said it intended to buy CP Vietnam in early 2011. CPP would issue more shares to increase capital and purchase Modern State, a subsidiary of Thailand-based Charoen Pokphand, which is holding 70.82 percent of CP Vietnam’s stakes.
Phat luat has quoted Dhanin Chearavanont as saying, “that the strategic move would help CPP become the leader in the Vietnamese animal feed market.”
The Ministry of Agriculture and Rural Development has noticed that after decreasing to 55,000 dong per kilo 3-4 weeks ago, the live pork in southern provinces increased again to 60,000 dong.
Especially, fowl and duck eggs have also increased in prices, partially because enterprises are collecting eggs to prepare for the mid-autumn festival production season. – Vietnamnet
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