Assessment of vietnamese fisheries sector prospect and fisheries enterprises in the context of EVFTA free trade agreements

In recent years, when the EVFTA free trade agreements have beensigned, the potential for Vietnam's seafood industry has grown, so I decided to choose the topic: "Assessment of Vietnamese

Vietnam has long been a leading seafood producer and exporter in theregion, along with Indonesia and Thailand Seafood exports havebecome one of the important sectors of the economy Fishery is one ofthe production and business industries, an economic activity in theoverall socio-economic of mankind Fishery plays an important role inproviding food for mankind, not only it is also an economic industrythat creates employment opportunities for many workers, especially inrural and coastal areas The demand for fisheries for mankind isincreasing while the resources of these resources are limited and havebeen exploited to the ceiling, so the aquaculture industry hasdeveloped to compensate for these shortages

In recent years, when the EVFTA free trade agreements have beensigned, the potential for Vietnam's seafood industry has grown, so I

decided to choose the topic: "Assessment of Vietnamese Fisheries sector Prospect and Fisheries enterprises in the context of EVFTA free trade agreements.”

The content of this report is mainly focus on analyzing VietnameseFisheries sector and performance of enterprises over the years,combine with the fluctuation of macroeconomic and industry

Objectives of the study and research question

 Research Question: What are the potentials of Vietnam'sseafood industry in the context of EVFTA and how to develop with thatpotentials?

 General Objective: Using Literature Review and Data analysis

to find out the prospects of the seafood sector and enterprises

Relying on the valuation outcome and then recommending forinvestors whether they should invest in this stock or not and forenterprises what to do in this context to improve business activitiesand increase seafood exports.

5 Research Structure

My graduation thesis will be separated into 4 chapters:Chapter 1: Theoretical basis

Chapter 2: Vietnamese Fisheries Analysis

Chapter 3: Corporations in Vietnam Fisheries industryChapter 4: Recommendations for investors and enterprises

CHAPTER 1 Theoretical basis 1.1 Definition

1.1.1 Sector

A sector is an area of the economy in which businesses share the same

or a related product or service It can also be thought of as an industry

or market that shares common operating characteristics Dividing aneconomy into different sectors allows for more in-depth analysis ofthe economy as a whole

Almost all economies are comprised of four, high-level sectors,which, in turn, are each made up of smaller sectors Of the largesectors within an economy, the first group is called the primary sectorand involves companies that participate in the extraction andharvesting of natural products from the earth, such as agriculture,mining and forestry The secondary sector consists of processing,manufacturing and construction companies The tertiary sector iscomprised of companies that provide services, such as retailers,entertainment firms and financial organizations The quaternary sectorincludes companies in the intellectual pursuits, such as educationalbusinesses

Investors use sectors to place stocks and other investments intocategories such as technology, healthcare, energy, utilities andtelecommunications Each sector has unique characteristics and adifferent risk profile that attracts a specific type of investor As aresult, it is common for analysts and other investment professionals tospecialize in certain sectors For example, at large research firms,analysts may cover just one sector, such as pharmaceutical companies

or technology stocks Additionally, investment funds often specialize

in a particular economic sector, a practice known as sector investing.For example, the oil and gas sector is a large industry that attractsspecialized investment funds Momentum in these sectors is measuredusing The Stochastic Oscillator and the Stochastic Momentum Index.How Investors View Sectors:

+ Almost all serious investors look at sector performance at leastweekly For example, many investors conducted sector analysis on Friday, June

1, 2018, for the investment week of May 29, 2018, to June 1 As of that Friday,shares of companies in the coal industry group were the top performers with areturn of 10.25%, while automobiles came in second with growth of 6.12% Theautomobile industry received a boost from shares of General Motors (GM) thatrose on news that Softbank Vision Fund planned to invest $2 billion in theautomaker's self-driving cars The next two highest performing industry groupswere the Internet and real estate holdings and developers, with gains of 4.51%and 3.56%, respectively

+ Stocks tend to follow the performance of their respective sector, inaddition to the overall stock market Keeping abreast of the market can make iteasier to determine when a stock that belongs to a particular sector has bottomedout (investopedia 2019)

through fish farming Aquaculture has directly or indirectly impactedthe lives of over 500 million people in developing countries dependent

on fisheries and aquaculture

According to FAO, aquaculture is the cultivation of aquatic organisms

in fresh and brackish/saltwater environments, including theapplication of techniques in farming processes to improve productivity

of individuals or collectives In particular, aquatic resources arebiological resources in natural waters with economic and scientificvalue to develop fisheries, preserve and develop aquatic resources.Nearly 90% of the world's seafood industry is extracted from the seaand oceans, compared to the output obtained from inland waters

Fishery activities mean the exploitation, farming and transportation ofexploited aquatic products; preserving, processing, buying, selling,exporting and importing aquatic products; services in fisheriesactivities, investigation, protection and development of aquaticresources Fishing is the exploitation of aquatic resources on the sea,rivers, lakes, lagoons, and other natural waters Overfishing, includingoverfishing, reducing fish stocks and employment in many parts of theworld

Land for aquaculture is land with inland water bodies, includingponds, lakes, lagoons, lagoons, rivers, canals, canals and ditches; landwith coastal water surface; alluvial and coastal alluvial land; sandybeaches and coastal dunes; land used for farm economy; non-agricultural land with water surface allocated or leased foraquaculture Most of the fisheries are wildlife, but aquaculture is onthe rise Cultivation can be done in coastal areas, such as with oysterfarms, but now it is often practiced in inland waters, in lakes, ponds,tanks and other forms

Fisheries Classification:

The distribution of aquatic species is based on the feeding

characteristics and habitat and climate

+ Group of fish (fish): As farm animals with distinct fishcharacteristics, they can be freshwater fish or brackish water fish For example:Pangasius, Goby, Eel

+ Crustaceans: The most common is the ten-legged crustaceangroup, of which shrimp and crabs are important cultured species For example:Giant freshwater shrimp, black tiger shrimp, white shrimp, earth shrimp, seacrabs

+ Molluscs: Consists of species of lime shells, most of which arebivalve and most live in the sea (clams, cockles, oysters, snails) and a few live

in fresh water (mussels) , pearl oyster)

+ Seaweeds: are low-cost, unicellular, multicellular plant species,small-sized species, but also large species such as Chlorella, Spirulina,Chaetoceros, Sargassium (Alginate), Gracillaria

+ Reptilies and Amphibians: Reptiles are amniotic four-leggedanimals (for example, crocodiles) Amphibians are species that can live both onland and in water (for example, frogs) , snakes) raised for meat, skin used forfood or in fine arts such as tortoise (fins), frogs (skin and meat), crocodile (skin).(wikipedia 2019)

In short, Fisheries is a "general term for resources", products brought

to people from the water environment and exploited, cultivated andused as food and raw materials by humans or for sale on the market.Among aquatic products, the most common activities are fishing,farming and fishing

1.1.4 Definition of prospect

A prospect is a potential or untapped strengths, unknown

The term prospect can be used on both an individual and

organizational level A company can be on your list of prospects, butthat doesn’t mean you want to sell to every employee at thatorganization Only certain contacts at that company who fit your specific target qualifications are considered true sales prospects Regarding sector level, an industry is considered as potential when thecountry has enough factors to develop that industry, and at the same time, that industry in the future has many favorable conditions to become stronger and bring more benefits, more profitable for the country

1.1.5 EVFTA free trade agreements

1.1.5.1 Definition of free trade agreement

A free trade agreement (FTA, short for Free Trade Agreement) is atrade agreement between two or more countries Accordingly,countries will follow the roadmap of reducing and eliminating tariffbarriers as well as non-tariff barriers towards the establishment of afree trade area

According to statistics of the World Trade Organization, there aremore than 200 free trade agreements in force Free trade agreementscan be made between two individual countries or can be reachedbetween a trade bloc and a country

1.1.5.2 EVFTA free trade agreements

EVFTA is a free trade agreement between Vietnam andthe European Union (EU) signed on June 30, 2019,marking a historic milestone for the trade relations

is a comprehensive new generation agreement and is the first EU FTAwith a middle-income country like Vietnam Vietnamese seafoodexporters are having high expectations on the EU's free tradeagreement that will help boost seafood export orders to the region andhelp Vietnam's seafood products have the strength more competitive.The paper focuses on the opportunities and challenges for Vietnameseseafood enterprises, based on which proposed a number ofrecommended solutions to contribute to promoting the operation ofthese businesses.

- Some key contents of the EVFTA Agreement

For Vietnamese exports, as soon as the Agreement comes into effect,the EU will eliminate import duties on about 85.6% of tariff lines,equivalent to 70.3% of Vietnam's exports to the EU After 07 yearsfrom the date of entry into force of the Agreement, the EU willeliminate import duties on 99.2% of tariff lines, equivalent to 99.7%

of Vietnam's exports For the remaining 0.3% of exports, the EUcommits to giving Vietnam a tariff quota with an import duty of 0%.For EU exports, Vietnam committed to eliminate tariffs as soon as theAgreement comes into effect with 48.5% of tariff lines (accountingfor 64.5% of import turnover) Then, after 7 years, 91.8% of tarifflines equivalent to 97.1% of EU exports were removed from Vietnam

by import taxes After 10 years, the tariff elimination rate is about98.3% of the tariff lines (accounting for 99.8% of import turnover).For the remaining 1.7% of EU tariff lines, we apply the roadmap toeliminate import duties longer than 10 years or apply tariff quotas inaccordance with WTO commitments

Vietnam's and EU's commitment to trade in investment services aims

to create an open and favorable investment environment for businesses

of the two sides Vietnam's commitments go beyond the commitments

in the WTO The EU commitment is higher than the WTOcommitment and is equivalent to the highest EU commitment underthe recent EU FTAs

The sectors that Vietnam committed to facilitate EU investors include

a number of specialized services, financial services,telecommunications services, transport services, distribution services.The two sides also made commitments on national treatment in thefield of investment, and discussed the content of dispute resolutionbetween investors and the state

+ Government Procurement

Vietnam and the EU have agreed on the contents similar to theGovernment's Procurement Agreement (GPA) of the WTO Withsome obligations such as online bidding, setting up an electronicportal to post bidding information, etc., Vietnam has a roadmap toperform The EU also pledges to provide technical assistance toVietnam to fulfill these obligations

+ Intellectual Property

Commitments on intellectual property include commitments oncopyright, inventions, inventions, commitments related topharmaceuticals and geographical indications, etc Basically,Vietnam's commitments on intellectual property are in compliancewith current law provisions

+ State-owned enterprises (SOEs)

Provisions of SOEs in EVFTA Agreement to create an environment of

takes into account the important role of SOEs in implementing publicpolicy goals, macroeconomic stability and security - defense.Therefore, the EVFTA Agreement only governs commercial activities

of state-owned or controlled enterprises and monopoly enterpriseswhose commercial activities are large enough to make sense incompetition

+ Ecommerce

To develop e-commerce between Vietnam and the EU, the two sidespledged not to impose import taxes on electronic transactions Thetwo sides also pledged to cooperate through maintaining dialogue onthe management issues raised in e-commerce

+ Trade and sustainable development

The two sides affirmed their commitment to pursuing sustainabledevelopment, including economic development, social developmentand environmental protection Regarding labor, as members of theInternational Labor Organization (ILO), the two sides pledged torespect, promote and implement the ILO 1998 Declaration on thebasic principles and rights of TB, and action, including promoting theeffective ratification and implementation of ILO Basic Conventions

In addition, the two sides also agreed to enhance cooperation throughinformation and experience sharing mechanisms to promoteratification and implementation of labor and environmentalconventions in a number of areas such as climate change, biodiversity,sustainable management of forests and trade in forest products

1.2 Factors affecting the fisheries industry

1.2.1 Macro factors

- World Economic situation

The slowdown of the world economy in recent times has caused arecession in global consumption Meanwhile, 95% of Vietnam'sseafood production is exported, so external factors such as changes inthe economic situation and policies of major export markets such asthe US, China and India will have a clear impact on the fishery.

- Exchange rate

The exchange rate is always an important issue for exporters,especially for industries with a high proportion of exports such asseafood Any fluctuations of exchange rate will affect the revenue andprofit of seafood companies

- Trade barriers and food safety

Over the past few years, import markets have imposed increasinglycomplex safety standards, related to drug and chemical residues,certification, and DUR dumping tax barriers, especially aboutEthoxyquin antibiotic residues This factor has caused manydifficulties for Vietnam's shrimp exports to the Japanese market Iffishery enterprises cannot meet these requirements and regulations,their profits and reputation on the world mayor will be seriouslyaffected, and the worst consequence is that they can be forced muststop working

- The climate changes

As the climate changes, so do the temperatures of the oceans, seas,and rivers Many aquatic species will be affected by the newecological environment and these adverse changes Global warmingaffects aquaculture operations, especially shrimp farming, becauseshrimp are very sensitive to any changes in their habitat But thischange may affect shrimp farming around the world, but for

developing countries like Vietnam, these effects are considered moreserious by experts.

1.2.2 Micro factors

- The competitiveness of the business

Domestic seafood businesses need to increase their reputation,improve the modernity of their production lines, and reduceproduction costs At the same time, increase the cost of inputmaterials to increase product quality to be able to compete withforeign businesses

Technological progress is key to addressing the biological challenges

of aquaculture In addition, the expansion of technological advances inaquaculture has attracted many global investors in the fisheries sector

- Input materials

Input materials play an important role in the business activities ofseafood enterprises when the cost of raw materials accounts for 70-80% of production costs According to DOF's 2018 report, in theperiod from 2019 to 2020, domestic fishery resources only meet 80%

of production demand, so the demand for imported raw materials willincrease from 620 million tons a year to 1 billion tons a year.Therefore, the fact that seafood companies have to continue importingraw materials will increase production costs This situation has causedmany difficulties for businesses in the industry Some businesses havemade big losses, and even stopped production

- Interest rate

The majority of enterprises in the fisheries sector have high capitalneeds, especially working capital to purchase raw materials forprocessing This feature is most evident by the high demand for short-

term loans of businesses Therefore, the impact of exchange rates onthe business activities of fishery enterprises is enormous Betweenearly 2018 and mid-2019, rising interest rates have made interest cost

a burden for most companies in the industry

1.3 Evaluation methods

1.3.1 Top-down and Bottom-up approach methods

There are two types of approach methods:

Top down and Bottom up are two methods of governance that areused frequently in many areas such as investment, management,information technology, investigation, construction, etc Eachmanagement style has different advantages and disadvantages At thesame time, they are only suitable for each different stage of a business.The following analysis can help leaders choose the best managementmethod

- Top-down approach

Analysis, deduction, starting from the peak, initially need a goal toachieve Then from this target find the problem crux Big goals will bedivided into medium goals, average goals will be divided into manysmall goals Administrators set strategies, plans, goals and requireemployees to implement

+ Advantages: Unity, discipline are always consistent, ensuring the goals of the leader or manager are implemented

+ Disadvantages: Do not make the most of the organization's humanresources, sometimes do not reflect the rules of the market and are often passive

in adjusting plans and strategies of the organization

This style may be appropriate for small-sized, easy-to-controlcompanies.

- Bottom-up approach

Summarize, induce, analyze from small problems, synthesize, interactwith each other to produce results The administrator will hold ameeting to listen to subordinates' opinion on the issues they are incharge After that, the new administrator sets the strategy / plan orgoal to implement

+ Advantages: Leadership strategies or plans or goals are easy toimplement because of the participation of subordinates, accurately reflecting theneeds of the market and customers, so the probability of success is very high

In addition, this style also helps leaders to be proactive and flexible in adjustingwhen the market changes, optimizing the company's human resources This style

is commonly used in large organizations, multinational corporations

+ Disadvantages: Sometimes leaders find it hard to make decisions quickly and decisively

Today, many businesses around the world choose the bottom-up style

of governance However, in the context of EVFTA free tradeagreements, we should use the top-down approach, because thisagreement affects the overall fisheries industry and then affects eachbusiness in the industry

1.3.2 SWOT analysis method

SWOT analysis is a process that identifies an organization's strengths,weaknesses, opportunities and threats Specifically, SWOT is a basic,analytical framework that assesses what an entity (usually a business,though it can be used for a place, industry or product) can and cannot

do, for factors both internal (the strengths and weaknesses) as well as

external (the potential opportunities and threats) Using environmentaldata to evaluate the position of a company, a SWOT analysisdetermines what assists the firm in accomplishing its objectives, andwhat obstacles must be overcome or minimized to achieve desiredresults: where the organization is today, and where it may bepositioned in the future.

- Advantages:

What SWOT analysis does do, however, is force some discipline andsystematic, quantifying thinking into the investment evaluationprocess A careful and thoughtful analysis should bring into focus thebalance of a company's advantages and vulnerabilities, and also givethe investor a benchmark to evaluate the company in future years Onbalance, SWOT analysis is best used by investors as a way ofcrystallizing and the thought process that goes into an investmentdecision The entire process can, and should, make an investor thinkmore deeply about the weaknesses of and threats to a company, whilealso helping to tease out what is really important and distinctive aboutone company versus its rivals (investopedia 2019)

SWOT analysis also works best when it is done consistently By using

it on a regular basis and keeping track of the information, SWOTanalysis can allow for better comparisons across industry participants,and more frequent use can also help limit some of the dangers of biasand selective (or incomplete) analysis

Investors can look at SWOT analysis as a good screening tool forideas and investment prospects that merit further research, as well as auseful means of tracking current holdings and comparing thedevelopment and evolution of those companies to the originalpurchase plans

(investopedia 2019)

- Disadvantages:

There are key limitations that investment-oriented users of SWOTanalysis should understand To start, SWOT totally ignores valuationand other significant fundamental metrics like return on capital,margins, cost of capital and so on A SWOT analysis will not tell aninvestor what price is fair for a stock, or if a stock is presentlyundervalued (investopedia 2019)

SWOT analysis also does not tend to offer much scope or scale to thesize or significance of various opportunities and threats It stands toreason that the creator of a SWOT analysis would not bother withnon-material opportunities or threats, but it is nevertheless important

to try to quantify the impact of these items on a company's returns.The biggest disadvantages of SWOT analysis is that it is subjectiveand self-directed The entire process relies solely on the analyst'sknowledge and judgment, and there is an inherent potential for bias

In the case of a biotech, for instance, a bullish investor may well see

an experimental therapy as a major opportunity while a bearish onewill see a weakness or threat in the vast amounts of money that are tospent developing a doomed therapy Likewise, an optimist may wellsee an emerging brand as a major asset (a strength), while the bearsees little value in a brand and major threats from competition frommore established brands/companies

1.3.3 Comparative method

Comparison is the method commonly used in analysis to determinethe trend, the level of fluctuation of analysis criteria Therefore, inorder to make comparisons, it is necessary to solve the fundamentalproblems and to ensure the uniform conditions in order to compare thefinancial indicators As the unity of space, time, content, nature and

unit of calculation At the same time for the purpose of analysis that determines the original comparison (investopedia 2019)

 When studying the rate of change, the growth rate of theoriginal norms for comparison is the value of the preceding period (that is, thisyear compared to the previous year) and can be selected in absolute number,relative or average

 Selected analysis is the reporting period, the planning period

 Comparative origin is chosen as the root of time or space Based

on that, the content of the comparative method includes:

 Comparing this period with the preceding period to assess theincrease or decrease in the business performance of the business and from there

to comment on the trend of financial changes of the business

 Comparing performance data with plan data, data of enterprises withaverage data of industry or other enterprises to see the level of striving ofenterprises or not

 Vertical comparison to see the weight of each indicator compared tothe whole, horizontal comparison of multiple periods to see changes in quantityand in proportion of items over time

- Advantages of comparative method:

+ Comparative method is widely used in many countries around the

world, and most are used in practice when there are differences incompany’s core value, size, product, etc This method does not have afixed model or formula, but relies on the market information to

analyze the business;

+ There is not any technically difficult method, because no formulas

or calculations are required, but based on the presence of companies is beinganalyzed and their competitors;

+ This method demonstrates an appreciation of market value, thushaving a solid basis for being recognized by clients, as well as recognized bylegal authorities;

+ It is the basis for many valuation methods Often the analyst uses adirect comparison method in combination with other methods to position thecompany in the market

- Disadvantages of comparative method:

+ It is necessary to have more accurate information If the market information is incorrect, this method cannot be used

+ The parameters of the company fluctuate daily so the analysisresults will be wrong if the information is not updated in time Therefore, in thecontext of market fluctuations the information quickly becomes obsolete in ashort time

+ There must be competitors or companies which have the same product line that can be used for comparison

+ Analyst must have extensive experience in market knowledge.That is, the analyst must identify and analyze the strengths and weaknesses ofthe documents collected and used in the comparative analysis

+ Updating information usually also creates some amount of cost

1.3.4 Financial statement analysis method

This method is widely used in financial analysis as it is based on thenormative significance of financial ratios in financial relations.(investopedia 2019)

Percentage method enables analysts to efficiently exploit the data andsystematically analyze the types of rates in a continuous time series or

in stages Through that, economic and financial information is

improved and more fully provided This enables data accumulation and accelerates the calculation of a series of ratios such as:

 Solvency ratio: Used to assess the ability of enterprises to meet short-term debts

 Proportion and ability to balance capital, capital structure andsource of capital: This indicator reflects the level of stability and financialautonomy

 Proportion of business operation capacity: This is a group of indicators specific to the use of resources of enterprises

 Proportion of profitability: reflecting the overall efficiency of production and business of the enterprise

- Advantages of financial reporting analysis:

+ Analyzing the financial statements not only serves the subjectswho are managing the business but also provide information to the subjectsconcerned about the "health" situation of the business

+ Meet two goals of the business:

 Decision-making purpose: Based on information from specificfigures, the analysis will focus on the strengths of enterprises such as capitalindex, liquidity ratio, etc

 The purpose of investing in a business or leaving a business:This analysis requires much more depth: because in addition to analyzingfinancial elements such as analyzing financial reporting systems, Many of thenon-financial indicators such as human resources, marketing, welfare,difficulties of the enterprise From then to set up groups of solutions toovercome or increase in business activities

- Disadvantages of Financial reporting analysis:

+ Inflation can affect and distort financial information recorded onfinancial statements, making calculations and analysis inaccurate For example,inflation will affect the value of cash flow in a year, making cash flows indifferent years different currency prices This makes the comparison, analysis ofdata between the years there is a difference.

+ Seasonal factors also affect the performance of the company andmake the financial ratios tend to change abnormally For example, in the season

of inventory increases higher than normal, so if using the inventory turnoverratio increase higher than normal if using the inventory turnover ratio will seethe company seems to operate poorly effective

+ Analysis based on financial ratios depends largely on the accuracy

of the financial statements This is largely influenced by accounting principles.However, accounting principles and practices may vary among companies,industries, countries, and in different periods of time Therefore, the principles

of accounting practice can distort and undermine the meaning of financial ratios.+ Managers can take advantage of accounting principles to activelycreate financial ratios as they want, making financial reporting analytically nolonger an objective assessment tool

+ Sometimes the company has some very good scores, but someother bad ones make the overall assessment of the company's finances turnsdifficult and meaningless

+ There are many large-scale companies operating in differentsectors, even in very different sectors, so it is difficult to develop and applymeaningful sector-wide ratios in these companies Hence, financial analysis isusually most meaningful in small companies and has no multi-sectoral activity

21

+ There is no unified and uniform formulation of some indicators inbooks and documents on analysis of financial statements This makescomparison of data analyzed between different sources potentially riskier.

In conclusion, each evaluation method has different advantages anddisadvantages Therefore, to assess the potential of the fisheriesindustry, using one method is not enough but a combination ofmethods is needed

CHAPTER 2 VIETNAMESE FISHERIES INDUSTRY ANALYSIS 2.1 Overview of the world’s fisheries industry

Fishery is one of the production and business industries, an economicactivity in the socio-economic overall of humanity Aquaculture plays

an important role in providing food for mankind, not only It is also aneconomic sector that creates employment opportunities for manycommunities, especially in rural and coastal areas The demand forfisheries for mankind is increasing while the resources of theseresources are limited and have been exploited to the ceiling, so theaquaculture industry has developed to compensate for these shortages.Today aquaculture provides about 27% of the world's totalaquaculture production, but accounts for nearly 30% of foodproduction Aquaculture objects are very diverse, including all kinds:fish, bivalve molluscs, algae and some other species

Seafood industry is always one of the hot industries in the world.According to VASEP, from 2000 to 2019:

- Global seafood consumption increases by 3.2% / year: -> Increasing faster

than the population (1.6% / year);-> Increasing faster than other types of meat (2.8% / year)

- Seafood consumption per capita increased from 9.0 kg in 1961 to

20.3 kg in 2016, an increase of 1.5% / year One reason for the increase

is the reduction of by-products during processing

Asia plays an important role in aquaculture activities around theworld, accounting for about 90% of total supply Global seafoodsupply increases by an average of 2.3% / year However, the averagegrowth rate of seafood demand is about 2.7% / year Therefore, it islikely that supply will not be enough to meet future demand

Many countries take seafood export as a key to economicdevelopment, including Vietnam.

In general, seafood export in the world has experienced 5 main stages:

Breeder

Aquaculture activities

Processing and Packaging

Exporting Consuming

Figure 1 Seafood export process

The ability to close the production process is important for seafoodbusinesses The more closed a company is, the higher its ability toautonomy in raw material resources and business efficiency On thecontrary, the less self-contained an enterprise, the more dependent itmust be on the outside, which will easily lead to passive productionand business efficiency

Currently, Europe is considered a fertile ground for seafood producingcountries, because it is a place with high demand for seafood, goodprices, especially, the EU Association has just passed EVFTA freetrade agreements Developing countries such as Vietnam, Thailand,Indonesia, Malaysia are countries in a fierce race in the fight to exportseafood to the European market

From 2018 to now, Vietnam's key seafood export market hasgradually shifted from China, Japan to Europe.

2.2 Overview of Fisheries industry in Vietnam

Vietnam is located on the West coast of the East Sea, is a large sea ofthe Pacific Ocean, covering an area of about 3,448,000 km2, with acoastline of 3260 km The internal waters and territorial waters are226,000 km2 wide, the exclusive economic zone is over 1 millionkm2 with more than 4,000 islands, creating 12 bays and lagoons with

a total area of 1,160 km2 which are well shielded and easy to parkboats Vietnam's sea has quite high biological diversity (biodiversity),which is also the place of arising and spreading of many groups ofmarine creatures in the tropical India - Pacific region with about11,000 species discovered

Our country with dense river system and long sea routes is veryconvenient to develop fishing and aquaculture activities Vietnam'sseafood production has maintained continuous growth over the past 17years with an average increase of 9.07% per year With the policy ofpromoting the development of the government, aquaculture activitieshave made strong development steps, the output has continuouslyincreased over the years, an average of 12.77% / year, making asignificant contribution on the growth of the country's total fisheryoutput

Meanwhile, due to the depletion of natural resources and the level offishing activities has not improved, the output of fishing activities hasincreased quite low over the years, with an increase in 6.42% onaverage per year

Vietnamese Fisheries data in recent years:

The whole year of 2019, shrimp farming area will reach 720 thousandhectares, brackish shrimp production is estimated at 750 thousandtons, equaling 98.3% compared to 2018, of which black tiger shrimp

is estimated at 270,000 tons, white leg shrimp is 480,000 tons

The total area of catfish farming in 2019 is estimated at6.6 thousand hectares, an increase of 22.2% compared to

1.42 million tons, equivalent to 2018 The export turnover is expected

to reach 1, $ 9 billion, down 12% over the same period in 2018

For fishing, thanks to favorable times, in 2019, fishing boats withtrawling nets, fin nets and capture nets have been operating a lot andhave good efficiency; Local fishing gill net operates in moderation,with low efficiency

- In the first quarter of 2020

According to statistics of the Vietnam Association of Fisheries(VASEP), in the first 2 months of 2020 - the period when COVID-19epidemic broke out in China and spread to many countries and regionsaround the world, the value Vietnam's seafood export reached 992million USD, down 11% over the same period in 2019 Regardingexport market structure, in February 2020, the export value to Chinamarket dropped the most seriously, decreased 44% over the sameperiod, reaching only 84 million USD, the EU market also witnessed a10% decline, while the US and Japan markets increased slightly,respectively up 1% and 2% over the same period Regarding theexport structure by species, shrimp and pangasius are still two mainexport items of Vietnam seafood, accounting for nearly 60% of thetotal export value In February 2020, while shrimp export remainedstable, with a slight growth of 3% over the same period, Vietnam'spangasius export activities faced more difficulties, export value godown 32% over the same period due to the largest export value market

of pangasius - China to 52%

With the complicated evolution of the COVID-19 disease, it canspread from person to person through close contact, (1) restrictingconsumers from going to restaurants, hotels, food retail chains,Supermarkets - the main distribution channel of Vietnamese seafood

products in export markets - have quickly reduced the demand forheat, in addition, (2) due to interrupted transportation activities,affecting the The rotation of goods from export, transportation,customs clearance, warehousing, loading and unloading toconsumption of goods is the main cause of great pressure on theexport activities of Vietnam's seafood industry.

2.3 Industry prospect

2.3.1 Short-term industry prospect

VASEP forecasts that Vietnam's seafood export activities in 2020 willface many challenges The association recommends that Vietnameseseafood enterprises should allocate appropriate financial and resources

to overcome the period when the demand from all markets isdeclining, and work closely with farmers to maintain stability source

of raw materials for production VASEP formulates two scenarios forforecasting Vietnam's seafood export value in 2020 as follows:

- Scenario 1: COVID-19 disease will be controlled in the first quarter of 2020

+ Seafood exports to China in the first quarter of 2020 will bereduced by at least 40% compared to the previous quarter, reaching about USD

265 million Seafood export in the next quarters will recover compared to thefirst quarter and the production value chain will operate normally in the secondhalf of the year It is forecast that the value of exports to China may reach US $1.5 billion, a slight increase of 5% compared to 2019 With this result, the totalseafood export value of Vietnam in 2020 can still be maintained 8% yoygrowth, reaching 9.25 billion USD

- Scenario 2: Production and export activities are affected and stalled until August 2020.

+ Meanwhile, compared to the same period, exports to China in thefirst half of the year will decrease by 30% to US $ 400 million, exports Thesecond half of the year increased by 10% will reach 930 million The total value

of seafood exports to China for the whole year will reach about US $ 1.33billion, down 6% And other export markets are also affected, the total seafoodexport value of Vietnam in 2020 will only increase by 3% -4% yoy to 8.9 billionUSD

+ According to VASEP assessment, these are the scenariosdeveloped by VASEP in the middle of February 2020 when the diseaseoutbreaked strongly in China, EU, US and Japan markets have not been affectedyet The cave is too big However, until now, when the COVID-19 epidemic inthe Chinese market has been controlled, production has gradually returned to thenormal pace, the disease situation has gradually become more complicated andsevere in EU and US markets when new cases are constantly increasing andthere are no signs of being controlled Therefore, exporting seafood to thesemarkets is forecast to continue to meet difficulties in demand and transportationactivities, however, the exact level of influence to date is very difficult topredict

2.3.2 Long-term industry Prospect

Global seafood consumption is expected to grow in the long term.According to FAO, by 2015, demand will reach 164 million tons /year, an average increase of 2.1% / year The average consumption percapita will reach 14.3kg, while the current average consumption is14kg

The United Nations projects that the world population will grow by 2billion over the next 20 years Therefore, consumption in developingcountries with a fast population growth rate like Vietnam will alsoincrease Obviously, the pressure on aquatic resources will alsoincrease, but this is also an opportunity for the world seafood industry

in general and Vietnam's seafood industry in particular

Domestic seafood demand is expected to increase rapidly due to thegrowth of the population from 90.7 million people to 97.7 millionpeople (the annual growth rate during the period of 2012-2022 is0.8%), VND GDP per capita is also expected to increase according tothe BMI 2013 forecast from 1,575 USD to 4819 USD in the sameperiod

In 2019, Vietnam - EU Free Trade Agreement (EVFTA) is signed.According to economic experts, this Agreement helps diversifymarkets and exports, especially for agricultural, fishery andVietnamese goods that have many competitive advantages.Competition in the market of goods and services will be more intense.EVFTA will be a big push for Vietnam's export of goods, especiallyseafood products that have many competitive advantages in thismarket: nearly 50% of tariff lines are having a base tax rate of 0 -22%,most of which is high at 6-22%, will be reduced to 0% (about 840tariff lines) About 50% of the remaining tax lines have a base tax rate

of 5.5-26% will be 0% after 3 to 7 years Particularly for canned tunaand fish balls, EU offers Vietnam tariff quotas of 11,500 tons and 500tons respectively In addition, most of frozen squid and octopusproducts with basic tax rate of 6-8% will be reduced immediately to0%, other products such as surimi will be reduced from 14.2% to 0%,fish checkers from 7.5% to 0%

It is expected that from 2020 Vietnam will have access to a hugeseafood consumption market With 28 member countries, the EU is alarge and potential market with a population of over 500 millionpeople, a total GDP of over US $ 15,000 billion, accounting for about22% of the world's GDP The per capita income of EU countries isquite high compared to the world, and they prefer to use seafoodproducts for their dietary needs and to protect their health due to thesuperiority of this product is delicious and nutritious Every year, EUseafood demand has reached 22.03 kg / person, 5.34 kg / personhigher than the world average.

In addition, EVFTA also opens a new door for Vietnamese businesses

to access production technology machines and equipment in order toimprove product quality and participate in regional and global seafoodsupply chains thanks to investment transfer activities of multinationalcorporations

According to the Vietnam General Department of Fisheries, theseafood industry development plan to 2020 will focus on large-scaleproduction with appropriate and effective production models thatbring high yields and valuable products This is a positive signal forthe development of the whole fishery industry in the long term Totalproduction of the whole industry is expected to reach 9 million tons inthe period from 2020 to 2030 with 70% of which belongs toaquaculture Export turnover is also expected to increase from 10billion USD to 20 billion USD in the same period

2.4 SWOT analysis of the Fisheries industry

2.4.1 Strengths

- Favorable geographical position, easy to trade with other countries 31

+ Vietnam has a coastline of 3260 km with 112 estuaries and 4,000islands, large and small, creating many bays and lagoons, ensuring a rich fisheryresources Vietnam's waters have a high regenerative capacity of the tropicalecology and a relatively clean marine environment, so seafood is considered to

be safe for health - a leading advantage in the seafood world market today Inthe exclusive economic zone of about 1 million km2, the total marine productreserve is estimated at 4 million tons, of which the amount of aquatic products

in the floating layer accounts for 62.7% and the bottom layer accounts for37.3% for the ability to exploit 1.4 to 1.6 million tons of aquatic products of allkinds each year, including many valuable seafood of high economic value such

as lobster, tuna and blood cockle

With 1.4 million ha of inland water surface , Vietnam's aquaculture potential is very abundant, about 1.5 million tons per year

+ Aquaculture can be developed all over the country, with eachregion having its own unique potentials and unique products However, Vietnamhas a number of lowland ecoregions, especially the Mekong Delta and the RedRiver Delta, where saline water can be brought very deeply to create a brackishwater or aquaculture area Combined with rice cultivation and other largeagricultural contracts nearly 1 million hectares In this ecosystem, it is possible

to enter into aquaculture contracts that are both of high quality and low cost,which other farming systems cannot have those competitive advantages Thisadvantage especially promotes the strength in competition with the industrialfarming system when the price of aquatic products on the world market is at thelowest level of shrimp products

- The Party and the State are very interested in the development of the fisheries sector:

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+ Authorities always consider the fisheries sector as a key, considerthe rural industrialization and modernization as the most important initial step,considering the transfer of a part of the area Land under agricultural cultivationand ineffective salt to aquaculture is a key direction of the restructuring of theagricultural and rural economy and there are programs and policies that supportgreatly for the transition changing and developing fishery industry nationwide.

- Large population, large consumption market

+ Vietnam is among the top countries in the world with the highestpopulation in terms of territory, which has a positive impact on the productionand consumption of the fishery

- labor is cheap, leading to low product prices and stimulating exports+ Vietnam has many labors and human resources with little training,which will be suitable for the static starting advantages when using this type oflabor in the field of aquaculture development and processing

2.4.2 Weaknesses

- The level of scientific and technical application is not high

+ Vietnam's seafood production technology is generally very

backward compared to competitors

+ The infrastructure is weak, not synchronized with the outdatedtechnology level in exploitation, farming and processing leading to lowproductivity and economic efficiency

- Raw material production costs remain high

+ Due to the low level of technical science and equipment, the cost

of raw material production in Vietnam is very high

- Lack of raw materials for export processing

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+ Oversupply of labor in coastal areas, inadequate human resources,inadequate physical life is a huge pressure both socio-economic and ecologicalenvironment for the fishing industry.

- Enterprises in the industry have a high debt ratio, depending on the bank's credit policy

+ Most seafood enterprises in our country are small and sized enterprises The captial charter is not large enough However, learning thatthey want to invest in machines, production lines, building modern factories, sothey have to in vest

medium-2.4.3 Opportunities

- Global demand for seafood is getting larger and larger

- The elimination of tariffs on most of Vietnam's exports to the EU,including seafood products, will create an important advantage for Vietnamwhen competing with other competitors in the EU market

+ Accompanying with EVFTA is the Vietnam - EU InvestmentProtection Agreement (EVIPA), with a more open and open market, Europeanbusinesses will increase investment in Vietnam, creating favorable conditionsfor businesses Vietnam has access to many sources of imported goods andmaterials as well as high-quality and stable machines, equipment, technologiesand technologies from the EU with reasonable prices, thereby improvingproductivity and improve the quality of our exported products

- The reduction of import tax on EU's strategic goods into Vietnam willhelp improve the industry's technology and thereby boost production and exportefficiency This will help Vietnam to have high quality products at lower costsand have more options for suppliers, including the Fisheries industry

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