EVFTA to bring in Hungarian meats

Hungarian firms are seeking to intensify their agri-food presence in Vietnam, in response to growing demand and upcoming slashed tariffs under the EU-Vietnam Free Trade Agreement.

Vietnam is becoming more attractive to Hungarian agri-food firms, thanks to EVFTA, Photo: Le Toan

Executives of 60 Hungarian firms, including nearly 20 agri-food ones, came to Vietnam last week to hunt for investment and business opportunities in the country, which is expected to sign the EU-Vietnam Free Trade Agreement (EVFTA) with the EU next year.

These agri-food firms want to take advantage of EVFTA’s tariff cuts (see box for details) and Vietnam’s growing demand for safe agri-food products, which is rising by 15-20 per cent per year. They met with hundreds of Vietnamese partners at a Vietnam-Hungary business forum last week in Hanoi.

Sándor Horváth, president and CEO of Integrál Zrt, said Vietnam is a very important market to his firm, which produces and exports goose and duck liver, leg, and breast meat. “We see that Vietnam’s people like these products very much, and that’s our opportunity to export products to Vietnam. First we want to establish a firm network of distributors here, and then we may think about establishing a joint venture or even building a factory in Vietnam,” Horváth said.

In its business plan, Integrál Zrt will expand its market share in Vietnam by taking advantage of tariff cuts under the EVFTA, which Hungary’s government is pushing other EU nations to ratify as soon as possible.

In another case, Kometa Co., Ltd. – Hungary’s preeminent pork processor – is seeking Vietnamese partners to distribute its pork products in Vietnam, where the firm sees a huge demand for pork consumption.

“Under our new business plan, Vietnam is a key market in Southeast Asia. We want to establish long-term partnerships with Vietnamese firms. EVFTA will be a very good tool for us to do this,” said the firm’s export director, Larissza Barakka.

Kometa has a slaughtering capacity of 800,000 pigs annually and a processing capacity of more than 20,000 tonnes of pork over a wide range of cooked and matured meat products.

Master Good Kft, a producer of feed, breeds, hatched chicken, broilers, and meat products, is also exploring opportunities in Vietnam.

“Master Good Group is the largest broiler company in Hungary, accounting for more than one-third of Hungary’s production. In Vietnam we see many supermarkets selling broilers, and we want our products to be consumed in the country,” said the firm’s managing director, Lászlo Bárány.

According to the Hungarian National Trading House, Vietnam’s rising demand for agri-food products and EVFTA’s tariff reductions are drawing not only Hungarian firms into the country, but also those from other EU markets.

A representative from the EU Delegation to Vietnam said that many EU firms stand ready to invest in Vietnam’s agri-food sector once EVFTA takes effect in 2018.

“EVFTA is expected to help Vietnam attract more EU agri-food investment and products thanks to tariff elimination by Vietnam for EU agri-food products,” the representative said.

The average tariff on agricultural items will drop from the current 67.7 per cent to 31.3 per cent in the third year of EVFTA’s entry into force, then to 17.9 per cent in the fifth year, 4.7 per cent in the seventh year, and down to 2.6-4.6 per cent by the 10th year.

Meanwhile, the average tariff on fishery items will drop from the current 86.7 per cent to 0.4 per cent in the third year, and 0 per cent in the 10th year.

Forty-two EU agri-food firms came to Vietnam recently in search of investment and business opportunities. These firms have a total revenue of €170 billion ($188.8 billion) per year, and sought to ink multi-million-euro deals to either establish joint ventures or distribution channels with Vietnamese enterprises. Last year, firms in Vietnam spent nearly $11.4 billion importing goods from the EU, more than $1 billion of which was for buying agri-food items, while the rest was for importing machinery, equipment, services, and other industrial products.

By Khoi Nguyen