Despite a large increase in seafood exports to the European Union in 2021, Vietnam’s aquaculture sector is facing a key challenge from the bloc. Namely, a yellow card was issued in October of 2017 to the Southeast Asian nation.
Yellow cards are part of a two-step process, whereby countries issued with a yellow card must take steps to remedy IUU fishing. Failure to comply with the EU’s requirements may see a country issued with a red card, which effectively means their fish products will be banned for sale in the EU.
Though Vietnam’s yellow card is still in effect, as recently as October of 2022, EU inspectors in Vietnam determined that sufficient progress had been made to avoid issuing a red card. Monitoring is set to continue, however, and a failure to continue to remedy IUU challenges could see a red card on the table – which would be detrimental to Vietnam’s aquaculture exports.
FDI in aquaculture in Vietnam
In the fisheries industry, raw materials include seed, feed, and aquatic pharmaceuticals. In Vietnam, there has historically been a shortage of these materials, and this has given rise to huge investments by foreign firms.
Fish food
Instead of directly competing in the breeding and processing stages of fish farming, FDI enterprises are mostly focused on the aqua feed market. Though there are some domestic producers of fish food, the lion’s share of the market belongs to a handful of big foreign suppliers.
Specifically, in pangasius feed, 70 percent of fish farmers use food supplied by foreign enterprises like Cargill (US), Green Feed (Thailand), Proconco (France-Vietnam), or Anova (USA). Meanwhile, in shrimp feed, there are big names like Uni-President (Taiwan), CP (Thailand), and Tomboy (France).
Seed
Foreign companies not only have a dominant presence in the aqua feed market, thanks to their low prices and high production standards, but they also exert control over the supply of seed for species, such as black tiger shrimp and vannamei shrimp.
Seafood processing
FDI firms also participate in aquatic processing activities where they have an advantage with respect to access to capital and better production quality compared to domestic enterprises. Foreign corporations, such as C.P., Japfa, New Hope, and Emivest, have in recent years invested a large amount of capital in production and processing of marine products in Vietnam.