[Vnbiz] Lexis Nexis Vietnam Pesticide Market

[Craig Stevenson]

Pesticide & Toxic Chemical News
June 12, 2006
*SECTION:* Pg. 7 Vol. 34 No. 34

*ACC-NO:* 5195407

*LENGTH:* 940 words

*HEADLINE:* *Vietnam* issues blueprint for pesticide market.

*HIGHLIGHT:*

forecasts and trends of chemical properties

*BODY:*


*Vietnam's* pesticide industry is expected to experience strong growth over
the next five years and foreign companies will have increasing opportunities
there. Pesticide & Toxic Chemical News takes a look at recent trends and
developments.

*Vietnam's* annual consumption of pesticides will increase 20% to 30% and
reach 60,000 to 65,000 tons by 2010, according to the government's Eighth
Five-Year-Plan for the chemical industry, released in January.

To meet the rising domestic demand, the Vietnamese government will invest
$90 million to set up more state-owned pesticide factories over the next 5
years, according to sources from *Vietnam's* Ministry of Agriculture and
Rural Development (MARD).

In May, the government divided the nation into six investment areas and
pledged to push the chemical and pesticide industries in the north and
southeast areas.

But foreign businessmen believe the government's investment won't have much
impact on their business in *Vietnam.* "It's still a good time for Chinese
pesticide companies to enter the *Vietnam* market, because if Vietnamese
companies produce more pesticides, they will buy more active ingredients and
raw materials from us," Guo Chaoren, a Chinese pesticide dealer who has been
selling pesticides to *Vietnam* since 2000, told PTCN.

*Vietnam's* domestic pesticide companies, including joint ventures owned by
local and foreign investors, annually produce 46,000 tons of pesticides,
which account for more than 90% of its domestic market.

But 90% of the pesticide active ingredients and raw materials used in the
pesticides are imported from foreign countries. Vietnamese law bars new
investors from producing toxic chemicals in the country. As a result, only
one company in *Vietnam* can currently produce active ingredients for
pesticides.

Kosvida Agrochemical, a joint venture owned by Korean DC Chemical Company
and *Vietnam* National Chemicals Corporation, annually produces 2,000 tons
of carbofuran, BPMC, carbyryl, glyphosphate, and isoprothiolane, which can
only meet 10% of the demand of *Vietnam's* pesticide active ingredients and
raw materials market, according to sources from China's Ministry of
Commerce.

And *Vietnam* has no intention of producing significant amounts of active
ingredients and raw materials for pesticides in the future. According to the
country's Agriculture Ministry, *Vietnam's* annual production capacity for
pesticide active ingredients will increase by only 3,000-5,000 tons in the
next 5 years.

It's estimated that *Vietnam* will still need to import 80% of its pesticide
active ingredients and raw materials in 2010--a $160 to $170 million market.
As a result, China's Ministry of Commerce is encouraging Chinese companies
to "explore the highly potential *Vietnam* market."

"We will invest more than $6 million in the *Vietnam* market," Gian Hao,
general manager assistant of China's Zhongli Industry and Trade Company,
told PTCN.

In 1999, Zhongli Company invested $1 million to set up a joint venture with
*Vietnam* First Plant Protection Material Company, producing 1,000 tons of
pesticides last year for sale in *Vietnam,* Cambodia, and Laos.

Industry growth

Several factors are helping to maintain rising growth in
*Vietnam's*pesticide industry, according to Guo and Gian.

First, there are more than 3,000 kinds of insect pests and hundreds of
varieties of weeds in *Vietnam.* Economic difficulties in the past have made
it impossible for Vietnamese to buy enough pesticides to protect their farm
products. But with successful reforms and economic growth in recent years,
Vietnamese farmers are now able to consume more pesticides.

For example, *Vietnam's* annual average consumption of pesticides has risen
from $6 to $14 per hectare in the past decade.

Second, after normalizing relations with its former enemy China in 1992, *
Vietnam's* agriculture in its northern provinces has been booming. The total
acreage of orchards in 14 northern Vietnamese provinces, which were once a
battlefront and the site of mine fields, has increased from 50,000 hectares
to 200,000 hectares in the past decade.

Third, increasing temperatures have forced Vietnamese farmers to use more
pesticides as the warmer climate has increased the frequency of flooding in
the Mekong River and *Vietnam's* coastal provinces, making farmers replant
their crops.

Entering the market

Establishing a joint venture is the best way to explore
*Vietnam's*pesticide market, according to Gian. With its joint
venture, Zhongli Company
can not only profit from selling finished pesticide products in
*Vietnam,*it can also export more pesticide active ingredients and raw
materials
there.

Setting up a joint venture there can also help companies avoid the
deficiencies of *Vietnam's* laws, which sometimes make it difficult for
foreign companies to explore marketing channels in the country, a Chinese
executive with the Zhongli/*Vietnam* First Plant Protection Material joint
venture, told PTCN.

For example, he adds, the number of shops a foreign company can set up in *
Vietnam* doesn't depend on market demand, but on the company's relationship
with local government officials. But that's not a problem to a joint
venture. Usually, the Vietnamese counterpart of the joint venture can settle
these kinds of issues smoothly, the executive noted.

Currently, there are more than 200 pesticide shops in most Vietnamese
provinces with some provinces in the Mekong River area having up to 600
pesticide shops. But sometimes the market seems a little chaotic.

"There are some illegal or fake pesticides flowing into the *Vietnam* market
every year," says an officer in China's Hekou City's Harbor Bureau who
requested anonymity.

Jason Chen

jason.chen at informa.com

*LOAD-DATE:* July 11, 2006
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