Cooking oil products fry local competitors

Regional cooking oil products are overwhelming the domestic market due to competitive pricing and import duty exemptions.

Imported cooking oil brands are widely visible in supermarket shelves in Hanoi, Ho Chi Minh City and other cities across Vietnam at price levels almost similar to those of locally made products.

For instance, Malaysia’s Sailing Boat brand fetches VND43,000-VND45,000 ($2) per litre (including soy bean, palm and mustard green oil), the Omely brand oil from Indonesia charges VND38,000 ($1.8)) per one litre bottle and Thai’s Cook brand soya bean oil costs VND48,000 ($2.2) per one litre bottle.

The prices of refined soy bean and palm oil imported through border gates in 2012 only averaged VND13,000 and VND17,200 (62-80 US cents) per litre respectively, according to Ho Chi Minh City-based border gate customs bodies.

The level is only from 2 to 5 per cent higher than that of locally produced items.

A Ministry of Industry and Trade (MoIT) Department of Competition Management survey highlighted an abrupt growth in the volume of imported vegetable oil into Vietnam.

Accordingly, around 604,375 tonnes of vegetable oil made forays into Vietnam last year against 350,878 tonnes in 2010.

The market share of local edible oil producers plummeted from 52 per cent in 2009 to just 10 per cent in 2012 due to growing presence of foreign imported products.

Do Ngoc Khai, director at the largest edible oil producer in Vietnam Vocarimex said local businesses were in a fix after edible oil’s import duty fell to zero per cent from early 2012 and Vocarimex was not exempted.

In the context imported edible oil poses a real threat to domestic production and responsive to domestic edible oil producers’ proposals the MoIT has issued a decision on temporary imposition of 5 per cent import duty on soy bean and palm oil imported into Vietnam. The decision took effect from May 7, 2013 and slated to remain into force not more than 200 days.

Industry experts, however, admitted the 200 day period would not change the landscape since local firms would not be in a position to immediately ameliorate their competitiveness as 90 per cent of the production materials are imported and factories are still in the machinery depreciation phase.

This year is forecast to remain tough for local vegetable oil producers because imported product remains in upward trend despite the protective measure 5 per cent import duty.

By Hai Yen