HCM City Chairman worried about foreign investors’ dominance of retail market
Phong expressed the concern at the city authorities’ meeting on May 30.
Phong said that several retail chains in Vietnam like Nguyen Kim, Big C and the online shopping website Zalora have been acquired by the 3rd richest billionaire of Thailand. Meanwhile, the Japanese investor of Aeon supermarket chain is striving to turn Vietnam into their second largest retail market in the region, after Malaysia.
"With this strategic orientation, if we do not have suitable policies, foreign investors will dominate the domestic retail market in the near future," Phong said.
Earlier, many Vietnamese producers have also expressed concern over the rapid expansion of foreign retailers on the domestic market as their products may be replaced by foreign items at supermarkets with foreign involvement.
Local goods producers and suppliers said supplying products for supermarkets is tough for small and medium firms while new owners of supermarkets could seek new suppliers.
The dismal forecast comes after Metro Cash & Carry stores in Vietnam have been acquired by Thailand’s TCC and Big C supermarkets by another Thai giant, Central Group, and its Vietnamese partner Nguyen Kim.
Pham Ngoc Hung, vice chairman of the HCMC Business Association, said member companies have had difficulty supplying products for foreign-owned supermarket chains.
Locally made goods formerly made up 80-90% of the total at retail stores but the percentage of foreign items there is rising. Quality domestic products can easily enter supermarkets of domestic enterprises but not foreign-invested stores.
Hung said foreign-invested supermarkets often demand high discounts, so those suppliers failing to meet their requirement have to go.
Prices of goods imported from regional countries are more competitive than those coming from Western countries.
Vietnam pledged to lift import tariffs on almost all products imported from member states of the Trans-Pacific Partnership (TPP) trade pact and the World Trade Organization (WTO) from 2018. Therefore, more imported goods will enter Vietnam in the coming years.
With the establishment of the ASEAN Economic Community (AEC) late last year, tax barriers to imports from Thailand will no longer exist.
According to the association, Vietnamese products are unable to compete on the home market with those from Thailand in terms of quality, price and design.
The association said Vietnam has not found effective measures to protect domestic retailers. Under the country’s commitments to the WTO, the economic needs test (ENT) was introduced as a way to prevent foreign investors from dominating the Vietnamese retail market. However, the regulation on ENT is not specific and applied differently in different localities.
Nguyen Thanh Nhan, general director of Saigon Co.op, the owner of the Co.opmart supermarket chain, said the ENT aims to control the fast development of foreign distributors, but supermarkets and shopping centers of foreign enterprises have mushroomed nationwide.
Foreign retailers have opened many stores to compete with domestic rivals.
According to the association, as many enterprises complain, foreign retailers have even publicly distributed rice, sugar, tobacco and other products for which they are not licensed.
Therefore, domestic enterprises proposed the Government weigh the licensing of new stores, especially in Hanoi, HCMC, Dong Nai and Binh Duong.
They also expected relevant agencies to inspect foreign retailers’ law compliance, tighten rules on foreign retailers’ operations, stop licensing new stores of foreign investors and prioritize Vietnamese retailers.
