Creating new momentum for the fisheries economy

(Baonghean) - Fisheries is a pioneering industry in creating a concentrated, large-scale commodity production, with enterprises as the core, developing according to the value chain approach, establishing vertical linkages from exploitation, aquaculture to preservation, processing and export. Nghe An Newspaper had an interview with Associate Professor, Dr. Nguyen Huu Dung, Chairman of the Vietnam Association of Fisheries (VASEP) on the issue of how to create a new driving force for the fisheries economy.

PV:Sir, what is your assessment of the current picture of Vietnam's fisheries economy?

Associate Professor, Dr. Nguyen Huu Dung:After a period of rapid and strong development from 2008 to now, the Vietnamese seafood industry has gradually lost momentum and is facing increasingly severe difficulties and challenges. Production and export have stagnated and fluctuated in a negative direction. Enterprises and fishermen have been going through an extremely difficult period, and some have been or are facing the risk of bankruptcy. Meanwhile, the general goal is that by 2020, the marine economy must contribute 53-55% of GDP, 55-60% of the country's export turnover, solve social problems, and significantly improve the lives of people in coastal areas.

However, 8 years have passed and the implementation of the Marine Strategy has not been implemented much. Why? Besides the adverse impacts from the outside and the objective difficulties in the country, the shortcomings, weaknesses and limitations in the mechanism as well as the capacity of State management are the causes of further congestion for this important economic sector. The confusing thing is that right after issuing the Marine Strategy, we made the only ministerial-level agency in charge of marine management (the Ministry of Fisheries) "disappear", and in the past 8 years, the implementation of the Marine Strategy has not had any Ministry as the focal point (?!). In the context of completely new international integration and competition in the upcoming period of 2016 - 2020, I think that there needs to be some practical solutions on State management, in order to reduce resistance, create new motivation, new energy sources for the subjects of fisheries production to have new momentum, carry out restructuring of the fisheries industry smoothly and in the right direction, and create new methods for sustainable development in the coming time.

Shrimp processing at Nghe An II Seafood Joint Stock Company. Photo: Van Hai

PV:Specifically, what are those solutions, sir?

Associate Professor, Dr. Nguyen Huu Dung:Firstly, regarding priority economic entities, we must quickly shift from individual households to enterprises. International competition requires each economic sector to promote development towards improving quality, competitiveness and economic efficiency. The value chain is the correct approach to achieve these goals. And economic policy needs to have appropriate priorities for leading production entities for value chains.

In a self-sufficient economy, we have given high priority to the goal of “hunger eradication and poverty reduction”, focusing on direct support for the weakest link, which is small-scale production households. In large-scale commodity production, supplying the world market, that method cannot be effective because it does not create development momentum. It is time to focus investment on the strongest link of the value chain, which is enterprises, to have enough capacity to build a tight vertical linkage throughout the entire chain, connecting fishermen with the market, leading the entire chain to sustainable development, and improving international competitiveness.

Second, we need to control output. We must move from planning to quotas. The current fisheries economy often experiences a surplus or shortage of raw materials. The lack of a mechanism to link raw material production with processing, export and trade is the main cause, and it is time to no longer be able to continue the policy of encouraging production in a free manner, increasing one-way "supply", without a control mechanism, not based on a clear understanding of the market and without a mechanism to proactively develop "demand".

Third, we must control quality, moving from the final product to the entire chain. Quality control of aquatic products must be carried out not at the final stage, but at critical control points throughout the value chain. For example, in the aquaculture value chain, it is necessary to control at least three stages: quality of breed, quality of feed and quality of exported products.

Fourth, in terms of credit, we must shift from short-term to medium- and long-term. Many seafood companies (especially pangasius, shrimp, and tuna) have transformed their production and business models, from purely purchasing raw materials from the people for processing and then exporting, with not much working capital required for each production cycle), to mastering both the farming stage (even the production of fish seed and feed) and fishing, proactively providing raw materials and closing the value chain, with the required capital increasing many times and the production cycle being longer. However, the current credit mechanism of banks only lends limited working capital for short cycles for processing and exporting, and requires strict conditions on collateral. It is very necessary to establish a new credit mechanism of commercial banks to remove the bottleneck that is causing capital congestion today because the credit is only based on collateral.

Intensive shrimp farming (in Quynh Bang commune) is one of the key economic sectors of Quynh Luu. Photo: Van Hai

PV:Investing in the fisheries economy still has many risks, especially natural disasters and epidemics. Is there any way to solve this situation? And do businesses have the ability to solve this, sir?

Associate Professor, Dr. Nguyen Huu Dung:That is certain, and it is even more certain that businesses alone cannot solve this situation. Therefore, the fifth solution I want to mention is to control the consequences of risks. We must shift from support to insurance. Investment in aquaculture production and business is associated with risks of animal disease safety, natural disasters, markets, etc. Many types of risks cannot be avoided, but the consequences of risks can be controlled by different financial mechanisms. Up to now, the Government and local State management agencies have considered providing financial support to production entities when risks occur on a large scale, causing serious damage. But that support has very limited effects.

In the new context of large-scale commodity production, it is necessary to transfer the method and responsibility of controlling the consequences of risks from the State to insurance organizations, to collect fees from the majority to compensate for economic entities that suffer losses. The State needs to issue policies to strongly develop insurance service systems for the seafood industry, according to diverse criteria and conditions. At the same time, there needs to be an institution regulating that large-scale seafood production and trading entities must purchase insurance, and proactively apply preventive solutions to control risks. Along with that, there must be a new solution for market development: to shift from subsidies to export funds.

Currently, the State budget for market development in our country is only about 100 billion VND, which means less than 5 million USD per year. To create a concentrated financial source for trade promotion, costs for trade lawsuits, fighting against barriers and promoting activities to develop technology in the fisheries industry, the Government needs to study and allow the application of a mechanism to collect additional fees for development and protection of export markets to build a Fund for development and protection of markets for a number of key industries.

Sixth, the solution for seafood: We must shift from exploitation to marine aquaculture. Due to the ever-decreasing resources, the world's seafood supply will always be in short supply, supply cannot meet demand, and the level will become increasingly serious. Therefore, the marine aquaculture industry is a high development priority for many countries with advantages in accessing the sea. Developing a large-scale marine aquaculture industry not only solves the problem of diverse seafood raw materials for export processing, but also creates a strong boost for the seafood industry, contributing to stability and maintaining security at sea.

Seventh, it is necessary to establish a Ministry of Marine Economy. Vietnam still does not have a unified state institution to manage the sea. To implement the Marine Strategy, it is necessary to have a strong enough national institution, consistent in policy and discipline in action, with a unified policy to manage the sea, continental shelf and islands.

Finally, the solution is that the State and enterprises need to shift from administration to co-management. Up to now, the relationship between Government agencies and enterprises has been the relationship between the management agency and the economic entity being managed. Recently, in our country, the public-private partnership (PPP) relationship has been raised, but only in theory and in some areas (such as investment) and does not have a complete legal basis. It is necessary to build an institution to establish the role of the business community in a comprehensive relationship, mutual control and supervision with the system of Government agencies. To implement the co-management mechanism, the State needs to institutionalize the role of business associations; create conditions to establish and strengthen the position of associations in the community and in society; support and empower associations to perform their functions well and assign associations to do some of the State's work.

PV:Thank you for this conversation!

Red River

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