Recently, Vietnamese government targets to raise the total output and export value of fisheries industry to 2 mill tones and USD 2.5 bill, respectively, in year 2010 .
A DEVELOPMENT STRATEGY FOR THE FISHERIES INDUSTRY IN VIETNAM by Lai Huy Hung A research submitted in partial fulfillment of the requirement for the degree of Master of Business Administration Examination Committee Dr Fredric William Swierczek (Chairman) Dr Hans Stoessel Dr Do Ba Khang Nationality Vietnamese Previous Degree Bachelor of Business Administration University of Economics Ho Chi Minh City, Vietnam Scholarship Donor Government of Switzerland/SDC (SAV) Asian Institute of Technology School of Management Bangkok, Thailand April 2000 i Acknowledgement I would like to express my sincere thankfulness and indebtedness to my research advisor Dr Fredric William Swierczek for his guidance, advice and encouragement through out the research work My sincere thanks are also due to Dr Do Ba Khang and Dr Hans Stoessel for examining the research work and giving valuable comments as the members of examination committee I would like to express thanks and appreciation to Prof Hoang Xuan Thong – Director of Institute of Fisheries Economics and Planning, Dr Tran Huu Chinh – General director of FIDICO, Miss Nguyen Thi Nga – Planning vice director of Science, Technology and Environment Department, Dr Nguyen Thanh Hung – vice dean of fisheries faculty of HCMC University of Agriculture and Forest, for providing information and interview Without their helping, this research would not have been possible I would like to express my sincere gratitude to all of my teachers and others at AIT and Swiss Vietnam AIT Management Development Program for their teaching and supporting during my course I would like to express my deeply appreciation to The Government of Switzerland who gave me a great chance to participate in MBA study by providing financial support Special word of appreciation goes to my parents and family for their support, endurance and encouragement throughout my study Last but not least, special thanks to my close friend and classmates for their friendship that made my study more memorable with enjoyable and excitement ii Abstract Due to the resources lacking and to survive in the competitive world of Vietnamese fisheries industry, it is necessitated to analyze the fisheries industry distinctly and explore factors The main objective of this research is to formulate a development strategy for Vietnamese fisheries industry A number of strategic formulation techniques are employed to analyze the internal strengths and weaknesses, external opportunities and threats as well as the internal linkages of the industry In general, Vietnamese fisheries industry has potential competitive advantages for development To exploit these potential advantages, it necessary to rationally manage and control the balance development between sub-sectors as well exploiting the strengths of these sectors It is suggested arrays of policies and regulations for strengthen competition of fisheries industry, which are mainly focused on industry internal linkages and the rational exploitation of natural resources iii TITLE PAGE I ACKNOWLEDGEMENT II ABSTRACT III LIST OF FIGURES VII LIST OF TABLES VIII INTRODUCTION 1.1 Background 0.1 Problem statement 0.2 Objectives 0.3 Approach to the study 0.4 Expected contribution 0.5 Scope of the study 0.6 Organization of the research 1 2 2 LITERATURE REVIEW 0.7 Strategic management process 0.7.1 Definition of strategy 1.1.1 Process of strategic management 0.8 Concept of industry environment 0.9 Industry analysis 1.1.2 Structural determinants of industry development a) Threat of new entry b) Rivalry among established companies c) The bargaining power of buyer d) The bargaining power of suppliers e) The threat of substitute products 1.1.3 National determinants of industry development a) Factor conditions b) Demand conditions c) Related and supporting industries d) Firm strategy, structure and rivalry 1.1.4 SWOT analysis 4 10 10 11 12 13 13 13 14 15 15 16 16 16 INDUSTRY CHARACTERISTICS AND SOCIO – ECONOMIC STATUS OF FISHERIES INDUSTRY 0.10 Organization and management 0.10.1 Ministry of fisheries (MoF) 0.10.2 State organization 0.10.3 Universities 0.10.4 Research Institutes 0.10.5 Other institutions and agencies 0.10.6 Extension services 0.11 Regional distribution of fisheries 0.11.1 Red river delta 18 18 18 18 18 19 19 19 20 20 iv 0.11.2 Northern Mountain 0.11.3 South central coast 0.11.4 Southeast area 0.11.5 Mekong River Delta 0.11.6 Mountainous and Middle high lands 0.11.7 Central highlands 0.12 Demography 0.12.1 Population and population growth 0.12.2 Age structure 0.12.3 Sex structure 0.12.4 Household structure 0.12.5 Agriculture and living land distribution 0.13 Workforces 0.13.1 Characteristics 0.13.2 Labor in fishery industry 0.13.3 Female labor 0.14 Income structure 0.15 Capital structure 0.16 Economic structure 0.16.1 State Owned sector 0.16.2 Collective sector 0.16.3 Private sector 0.16.4 Household sector 0.16.5 Foreign sector 0.17 Training and education 0.18 Incentive programs 0.19 Health care system 20 20 20 21 21 21 21 21 22 22 22 22 22 22 23 23 23 23 25 25 25 25 25 25 25 26 26 FISHERY INDUSTRY ANALYSIS 0.20 Fisheries exploitation 0.20.1 Aquatic resource 0.20.2 Fishing capacity 0.20.2.1 Fishing fleet capacity 0.20.2.2 Categories of fishing gear 0.20.2.3 Labor in fishing sector 0.20.3 Yield and productivity 0.20.4 Freshwater fish exploitation 0.20.4.1 Pond fish exploitation 0.20.4.2 Fish exploitation in low land areas 0.20.4.3 River fish exploitation 0.20.5 Conclusion 0.21 Fisheries aquaculture 0.21.1 Water Surface 0.21.2 Labor in Aquaculture Sector 0.21.3 Total Yield and Exported Value 0.21.4 Culture Method 0.21.4.1 Freshwater culture 27 27 27 28 28 30 31 31 33 33 33 33 33 34 34 35 35 35 35 v 0.21.4.2 Brackish shrimp culture 0.21.4.3 Marine culture 0.21.5 Extension service for aquaculture 0.21.5.1 Brood-stock hatchery system 0.21.5.2 Feed production 0.21.6 Conclusion 0.22 Fisheries Processing and Manufacturing 0.22.1 Raw material 0.22.2 Raw material processing 0.22.3 Processing and Manufacturing facilities in fisheries industry 0.22.4 Labor in fisheries manufacturing 0.22.5 Product categories 0.22.6 Food quality inspection and management 0.22.7 Conclusion 0.23 Fisheries trading 0.23.1 Foreign market 0.23.1.1 Exported value 0.23.1.2 Exporting market 0.23.1.3 Exported products 0.23.2 Domestic market 0.23.3 Conclusion 36 37 37 37 38 38 40 40 41 41 43 43 45 45 46 47 47 48 48 49 49 STRATEGIC INFORMATION AND RECOMMENDATIONS 0.24 Summary of analysis 0.25 Development strategy formulation 0.26 Recommendations 0.26.1 Fisheries exploiting 0.26.2 Aquaculture 0.26.3 Processing 0.26.4 Marketing and trade 0.26.5 Supportive industry 0.26.6 General 51 51 51 52 52 53 54 55 56 57 CONCLUSIONS 58 References Appendixes vi LIST OF FIGURES vii LIST OF TABLES viii Chapter Introduction 1.1 Background Vietnam fisheries, being a long-standing one, are an important economic sector Vietnam fisheries productions contribute yearly more than 9% of GDP and attract a manpower of more than million people The total output and export value of the fisheries industry continuously increase respectively from 1,4 mill tones and USD 550 mill and in 1995 to 1,8 mill tones and USD 980mill in 1999 Though having great potential, Vietnam's fisheries sector remains underdeveloped At present, Vietnam has only 142 fishing ports, 22 others are in construction Degrading major infrastructures such as water supply, electricity and transport systems can not serve development of the sector In recent years, foreign investors have cancelled 44 out of 48 FDI fishery projects Merely 4% of capital for aquaculture are from foreign investment Lacking money and knowledge, farmers have failed to develop effective aquaculture 96.3% of fish raising areas are of extensive cultivation which can generate low yields Tens of thousands of aquaculture farms have suffered from losses and bankruptcy when their fish die or are not good enough to be exported due to lacking breeding technologies Vietnam now has 196 aqua-product processing factories 70% of them have been working for over ten years without upgrades Due to insufficient investment, most enterprises and families don’t have renovated equipment to increase their output To date, the country has only 27 enterprises qualified to export products to the European market Around 81% of aqua-product exports are sold at low prices At a recent meeting of international donors for the fisheries sector, Fishery Minister Ta Quang Ngoc said that Vietnam would need around VND 3,112 bill in the coming time to develop the sector2 0.1 Problem statement Recently, Vietnamese government targets to raise the total output and export value of fisheries industry to mill tones and USD 2.5 bill, respectively, in year 2010 Due to the resources lacking and to survive in the competitive world it is necessitated to analyze the fisheries industry distinctly and explore factors, which directly or indirectly influence the improvement of this sector, to formulate the long-term development strategy for this industry in Vietnam Ministry of Trade Vietnam economic review: 1999 Economic Development Magazine: 2000, pp 41 0.2 Objectives To describe current performance of Vietnamese fisheries industry To identify the structure and characteristics of internal linkages in the fisheries industry To analyze and determine strengths and weaknesses of the fisheries industry To identify the barriers for development of Vietnamese fisheries industry To formulate a development strategy for future development and improvement of the fisheries industry in Vietnam 0.3 Approach to the study Mission: the mission of this research is to develop the fisheries industry in Vietnam Goal setting: to formulate a development strategy Gathering information: primary data were gathered by unstructured interview with fishing company, middle man, technical and academic institutes, related government agencies and departments Secondary data were gleaned by reviewing relevant texts, government reports and publications Data analysis: before going to formulate the strategic plan, it is important to understand the fishery business environment and this was done with the help of Porter’s concept and SWOT analysis Formulation of strategic plan: after data analysis and data interpretation, a suggested strategic plan is formulated 0.4 Expected contribution It is hoped that the research will be beneficial for the policy-makers as well as for fishery business entities It may also serve as a stimulus to boost the fisheries in the global market 0.5 Scope of the study This study is confined at national level for overall development of the fisheries industry in Vietnam The research geographically describes the fisheries industry and focus on industrial linkage analysis, which can support the industry strategic formulation 0.6 Organization of the research The research consist of six chapters, which is further described as follow: Chapter 1: Introduction chapter fisheries iced product Its share in total iced product is 56% in 1990-1995, 46% in 1997 and 52.5% in 1998 In 1995, iced squid takes about 10.33% (18,800tons) of total fisheries iced product, which is equal to 10 % of total fisheries exported There are different forms of iced squid exported: a frozen squid form, Sashimi, seafood mix… There is a rapid increase in iced fish In 1991, if there is only 11,000 tons raw material for iced process, then in 1998 this one is about 49,200 tons Iced fish occupied 24.59% of total fisheries exported product in 1995, and 26.19% in 1997 The major forms of iced fish are iced filet and original iced fish And there are other kinds of iced product such as iced arca, iced crab, iced sentinel-crab, stuffed sentinel-crab… These kinds of iced product rapidly increased from 500 tons in 1991 to 41,050 tons in 1997, equally 21.85% of total fisheries exported There is growing demand for fresh product, but mainly from exported markets The demanded products include either alive form of crab, fish, and shrimp, or fresh form of marine tuna meal There are only canned food production bases in Vietnam Ha Long canned food company has capacity of 100,000 cans/day In 1985, the company produced 2,800 tons for local consumption and export, in which canned fish is 2,000 tons, canned shrimp is 16 tons and the rest is others Dried product is popularly produced because of the little requirement on equipment and technology The main products are dried-shrimp, dried cuttle-fish, dried fish, dried seaweed, and others marinated dried product In 1990, dried cuttle-fish achieved the record of over 4,000 tons However, the total output is not stable because of the fluctuation in raw material supply Dried seaweed is mainly produced by simple traditional method Depending on the market demand, the finished product can be either sweet dried seaweed or salty dried seaweed For example, sweet dried seaweed is exported to Japan, meanwhile, salty dried seaweed is exported in 35kg package form to Russia In 1997, total dried fish is about 23,000 tons In the past, Central area can contribute 10,000 tons of dried flying fish into total dried fish Currently, market rejections on dried flying fish have caused reduction of total dried fish There are not statistical numbers of dried peeled shrimp, dried shrimp, and dried marinated fish There are only factories, one belongs to Ha Long Canned Food Corp., and the other two are located in Vung Tau The total yield in 1988 is 6,000 tons This increased to 27,470 tons in 1992 Because of strong competition, however, it reduced to 19,000 tons in 1998 Fermented product includes the main products as fish sauce, fermented prawn, fermented shrimp, and sour fermented shrimp Excluding private sector, there are 73 stated fish sauce production bases in whole country in which 10 bases are in Northern area, 26 bases are in Central area, 30 bases are in Southern area, and bases are central state owned base There are only the traditional technologies applied in fish sauce production with average of months production lead-time However, fish sauce production develops so much, which achieved 150 mill litters in 1995, 161 mill litters in 1997, and 170 mill litters in 1998 The annual growth rate is 4.6%/year in 1985-1995 period, and 8.15%/year in 1990-1995 period Other fermented products are not counted because of the relatively small volume There are other kinds of product, which can be either exported such as fin, dried fish bladder, and fish foot, or locally consumed such as pearl, agar, alginat, and fish silver oil 44 0.22.6 Food quality inspection and management Though so many legal criteria were locally applied for fisheries selling, little attention is paid to checking and managing the implementation of these criteria In the past, some fishery products have been internationally awarded These products currently face difficulties such as the appearance of metal nail, cement, and agar in iced shrimp product These strongly affected the creditability of Vietnamese fishery product The state or ministry level criteria only affect the large exported volume product The quality of goods in small volume production, however, only depends on trader’s inspection if they are exported Otherwise, there are no inspections if they are consumed in local market Vietnamese fisheries exported companies are only ranked in the second class European list on fisheries exporting country classification 0.22.7 Conclusion • The biggest opportunity for the processing industry exists in serving domestic market Assuming that the current population of about 76.4 million people will continue to grow by the current growth rate, the population would reach 90.5 million by 2005 and full 100 mill by 2010 With this scenario, an additional 24 million people will be added to the population over the next 10 years That will require an additional 250 thousand tons of fish and fishery products annually, just to maintain the current level of domestic consumption of 10.2 kg per capita per year • Sophisticated domestic market will develop rapidly An ever increasing in number of Vietnamese people will have higher level of discretionary incomes available for the purchasing of high value product and for eating out The number of tourists and businessman that visit and stay in country for an extended period of time will also increase That will support a large domestic, to some extend a foreign exchange earning Catering for this consumer and restaurant market represents very significant business opportunities and prospects for the fisheries product distribution and processing industry • Furthermore, the gradually improvement of infrastructure will enable fish producers to reach the domestic markets very efficiently and at low cost • Domestic market will strengthen the processing industry Knowing domestic customer taste, being in close contact with domestic customer and speaking his language automatically provide a comparative advantage for Vietnamese processors That advantage is further enhanced by tariff impose on imported fishery products Utilization of these inherent advantages will allow domestic processing industry to serve a potentially lucrative market, accumulate earnings and experiences that provide platform for entering as well as being more competitive in global market • The shrimp market is expected to continue gradually growing by an annual average between and percents The market will, however, continue to be volatile and heavily exposed to exchange rate fluctuations The strong Yen and sluggish growth in Japanese economy is exerting relatively strong downward price pressures on shrimp market Being price taker, Vietnamese shrimp producers are very exposed to these pressures 45 • Vietnamese producers are well positioned in both of the major shrimp markets and they are also well positioned to take advantage of whatever niche markets may exit – provided that they are fundamentally competitive with Asian shrimp producers Shrimp market has become a commodity market, dominated by the traditional kg block pack and its derivatives • Vietnam has potential to effectively establish reliable supplies on the major market for shrimp, fish, and mollusc products, not from capture fisheries, but from the country’s huge potentials in aquaculture productions • There is no intensive investment to develop the competitive advantage products; a systematic solving on raw material supply, appropriated processing technologies…; and innovation on post-harvest storing technologies to prevent the quality deterioration • There is a surplus in production capacities which are not utilized • The artificial trading and processing environment in early to mid 1980s had favored the large and self-support manufactories that equipped transport vessels and cold storage capacity This requires large scale in capital investment and operating, which can quickly turn into a disadvantage in a high competitive environment 0.23 Fisheries trading Except for the sub-sectors engaging in export, fish marketing and trade remain at a very low level of development Until mid 1980’s, marketing and trade in fish and fishery products was almost entirely carried out by public sector enterprises A major part was distributed as a portion of remuneration for work and whatever was left for consumer sales was sold at fixed prices at public stores Small quantities were traded directly between producers and customers However, with the liberalization of trade and the introduction of market mechanism, a domestic fish market started to develop towards the second half of the 1980s In the last ten years, there is an increase in Vietnamese fishery trading in both domestic and international market The internal and external market structure has increasingly changed in international market proportion from 1.2% in 1980 up to 13.1% in 1990, 22.6% in 1995 and 24.3% in 1998 (Table 4.19 and Figure 4.4) 46 Table 4.12: Proportion of raw material consumption Items Total fisheries yield (tons) Growth rate (%) Material for export (tons) Proportion (%) Local consumption (tons) Proportion (%) 1980 1985 1990 1995 1998 558,660 808,060 978,880 1,414,590 1,646,700 - 44.8 21.1 44.5 16.4 6,800 62,000 128,054 321,000 400,000 1.2 7.7 13.1 22,6 24.3 551,860 746,010 850,826 1,093,590 1,246,000 98.7 92.2 86.9 77 74.7 Source: Ministry of Fisheries, 1999 Figure 4.3: Proportion of raw material consumption 0.23.1 Foreign market 0.23.1.1 Exported value Though the fisheries’ efficiency has decreased gradually, its export has been grown up rapidly 4.63 times from 1990 to 1999 In the period from 1991 to 1995, it increased 168.3% with 33.6% up annually In 1996, its export value was USD 670 mil increasing 21.6% in compared with 1995 and reached 776 USD mil in 1997 and USD 858 mil in 1998 47 Table 4.13: The growth rate of total fisheries exported value Items 1980 1985 1990 1995 1997 1998 2,720 24,800 49,332 127,700 187,850 200,000 9.1 18.1 46.9 69.1 73.5 Exported value (mill USD) 11.3 90.0 205.0 550.1 776.0 858.0 Growth rate (times) 1.0 7.9 18.1 48.7 68.6 75.9 Exported volume (tons) Growth rate (times) Source: Ministry of Fisheries, 1999 0.23.1.2 Exporting market Exporting market was expended into 56 countries and regions over the world Japanese market is the biggest one with 50% of total export value of Vietnamese fisheries industry Ranked at the second and the third, EU and North America markets tend to expend Typically fisheries trading activity include export and import, while Vietnamese fisheries market is only export with limited importing canned products There are about 250 foreign trading partners in fisheries trading; however, there is limited number of joint ventures Most of the foreign partners transact about USD 2mil annually, numbers of 5-10 or more than 11 mil of USD trading partners are rarely In trading relationship with Vietnam, foreign partners are active in information, market, prices, capital and technology, while Vietnamese are passive and dependent on them 0.23.1.3 Exported products Quantity: Total export volume in 1990 was 49,332 tons and increased to 127,700 tons in 1995, 150,500 tons in 1996, and 187,850 tons in 1997 Annual growth rate was 34% in the period from 1990 to 1995 and 25% from 1996 to 1997 Structure: There was a changing • In 1990-1995 period, though shrimp was a strategic product and its exported vale was double, its rate in fisheries was reduced from 74.6% to 61% Fish and other fisheries were grown up in both relative and absolute number • In the period from 1996 to 1997, however, the change was highline Iced shrimp was 38.75% while other fisheries were increasing such as iced squid and iced fish up to 66.4% and 67% in 1997 in compare with 1995 Though the shrimp rate reduced, its yield increased 82% from 40,000 tons in 1991 to 72,800 tons in 1997 The changing tentative showed the priority in export structure for example 80% to 90% of exploited shrimp and squid sources, and other especial fisheries were exploited However, fish exporting has been limited since 1998, it landed 1.4 mill tons but only exported 100,000 tons Table 4.14: Proportion in fishery exported product 48 1991 Output Proportio (tons) n (%) Total exported (tons) 64,700 100.0 Iced shrimp 40,000 61.8 Iced squid 4,500 7.0 Fish 11,110 17.2 Dried cuttle fish 4,100 6.3 Others 5,000 7.7 Source: Ministry of Fisheries, 1999 1995 Output Proportio (tons) n (%) 127,700 100.0 66,500 52.1 11,300 8.9 31,400 24.6 4,000 3.1 14,500 11.4 Items 1997 Output Proportion (tons) (%) 187,500 100.0 72,800 38.8 18,800 10.0 49,200 26.2 6,000 3.2 41,050 21.9 0.23.2 Domestic market The domestic consumption increased from 551,860 tons in 1980 to 1.093 mil tons in 1995 and 1.2 mil tons in 1998 The structure between fresh and processed products was changing The fresh products reduced from 72% in 1990 to 60.85% and 50% in 1995 and 1998 The average consumption excluding exported volume was 10.2kg/people/year and this number increased to 14.4 and 15.5kg/people/year in 1995 and 1998 This average is lower than in other Asian countries such as Malaysia: 39.4kg, Thailand: 19.5kg, and Indonesia: 15.9kg Since the fisheries processing is different in the regions, the average consumption per capita differs: 4.2kg/person/year at Red River delta, 31.8kg/person/year at Central coastal area, 35.7 kg/person/year at Mekong River delta, and only 1.8kg/person/year at Northern mountainous and high lands areas The Vietnamese people have a habit of eating fish and fishery products, which are among the preferred food items in their diet Domestic market is expanding, either purchasing power increases rapidly The market is likely to witness a gradually growing sophistication towards differentiated and higher value products (Table 4.22) Table 4.15: Proportion in domestic consumption of fishery product Items 1991 1995 12.0 15.0 Dried product (%) 1.5 4.6 Fish powder (%) 11.4 8.1 Salted product (%) 0.5 0.4 Iced product (%) 3.0 11.4 72.0 60.9 Fish sauce (%) Fresh product (%) Source: Ministry of Fisheries, 1999 0.23.3 Conclusion • Exported sector is mainly based on natural resource exploitation The culture investment is too small to meet market demand Material supply for export processing factories is so 49 unstable There is not a strategic plan for inter-linkages between culture, process, and selling stage The processors and exporters are separated from farmers So, they not pay attention to support farmer on technological transfer, post-harvest storing, and product pricing • Even though there are progresses in product diversification, the low value added product is still high in total (82.5%) This limits the competitive capacity of Vietnamese companies in global market • The old processing technologies have strongly affected the exported product quality In 1996, 30 factories out of total 170 Vietnamese factories were allowed to export to European market In 1998 this number, however, was reduced to 19 factories This is observed that the quality of exported product (including package and brand name) is still far behind the requirements in export markets • Lack of an effective market information system • There is little variety for domestic consumption There are not many products that have high value for metropolitan consumption Fisheries cannot meet the low price requirement of mountainous area because of the high transportation cost • There are advantages on close distance and same taste, which is useful for penetrating Chinese market • There is perspective for entering US market, which are favoring the pacific catfish This kind of fish can be artificially hatchery in Vietnam 50 Chapter Strategic information and recommendations 0.24 Summary of analysis We can summarize the internal strengths, weaknesses as well as external opportunities and threats of fisheries industry as follows Strengths • Gradually become active in production and familiar with global competitive environment • Adequate resources (human, natural resources…) for further development Weaknesses • There are still an unbalance in development among the sub-sectors • Lacking capital investment as well as the effective mechanism for direct and evaluate investments • Low level of application technology • Weaknesses of supported registration and infrastructure Opportunities • Economic recovery of traditional market • Emergence of Vietnamese fisheries in new market Threat • Releasing of import barriers when it joints in the regional economic arrangement • Product quality decreasing resulted from mass production 0.25 Development strategy formulation Based on the industry and SWOT analysis, it is recommended to have a development strategy for Vietnamese fisheries industry as follows: For fishery capture and aquaculture: The main focus should be paid to boosting the supply and availability of fishery production This can be done though the sub objectives: • Increase fish exploitation from offshore sources 51 • Maintain current levels of fish production from coastal sources, while seeking to increase the quality and value of this source • Sustain and increase the production from brackish water capture fisheries However, sustainable increase in fish supply should be delegated to fisheries aquaculture and farming sectors, not for capture fisheries For supporting the aquaculture sector, it should be concentrated on the increasing and utilization of potential water areas, integrating aquaculture and agriculture farming systems, and ensuring free disease brood stock For processing sector: Development strategy should focus on utilizing production capacity and increasing value of fish products This mission can be achieved through sub-objectives: • Renovating the existing processing factories • Applying new and appropriated processing technologies • Integrating customers into production process • Increasing levels of value added and quality • Adequately guaranteeing material supply and market demand through integrating the efforts of producer, processors, and traders to solve the interdisciplinary issues For marketing and trading: The strategy focuses on increasing competitive and marketing channels’ capacity as well as market development This can be achieved through: • Transforming traditional fish trade system to competitive auction system • Freeing market information flow • Develop and extract new market • Building up the backward linkages In general, strategy should be focus on strengthening inter industry linkages 0.26 Recommendations 0.26.1 Fisheries exploiting Any expansion into offshore fisheries should be carried out in gradual phrased manner, starting by deploying several pre-investment surveys The purpose of this survey is to establish the financially and economically viable of offshore fisheries using the existing fleet of vessels The survey will also aim at establishing the technical viability and limitations of the existing fleet, and identifying what configurations are needed for the future Then, based on the experience gained, effort will be made to develop or adapt domestic types of vessels that are more suitable for fishing offshore than the existing ones However, any future investment in offshore fisheries will be carried out by the commercial sector Such 52 investments will subject to licensing by the fisheries authorities The issuance of licenses will obey to rigid financial, economic, and social evaluations and assessments Government should collect, analyze and disseminate data obtained from the fisheries, aquaculture and the habitat to monitor and evaluate the state of fish stocks and level of exploitation There should be deep natural resource surveys, which can be used as a guideline to manage and direct fisheries exploiting activities This also helps to adjust the fishing structure, which can result in improvement of productivity Based on surveys and assessments, ministry will issue recommendations and guidelines for resource use and management These might include the introduction of close seasons, the prohibition of destructive fishing gears, and a number of other management actions The implementation of a renovated fisheries management system should follow the economic renovation process to ensure consistency between the macroeconomic and the fisheries sector administrative and legal frameworks Close coordination with the different agencies of government and the different economic units should be maintained In coastal capture fisheries, strategic focus will be put on ensuring the current levels of production while seeking to increase the value of that production These strategies will be supported by a concerted effort to strengthen the management and regulation of coastal fisheries, which ensure that fish and shrimps are harvested at the optimal economic and biological levels Efforts, through the establishment of appropriate infrastructure, will also be put on reducing the amount of fish lost after harvest during transportation and handling Present post harvest losses are variously estimated in a range as high or higher than 20%, depending on area and remoteness These efforts are expected to contribute significantly to the supply of additional raw materials, in particular to processing industry that serves the domestic market Review and amend legislation, decrees and instructions are related to the sustainable management of the renewable aquatic resources so that it can lead to successful achievement of conservation and management objectives 0.26.2 Aquaculture The ministry of fisheries, in consultation and cooperation with other relevant government agencies, should ensure implementation of the special conditions and requirements that are adequately reflected in the administrative and legal systems These will include the granting of long term leases, measures to secure adequate water supplies, the allocation of marginal agricultural lands to fishery aquaculture The different research institutes and extension services of ministry should be mobilized to carry out relevant applied research and development, and dissemination of results of this work to aquaculture These will include research to adapt new and improved technologies, improvement of aquaculture operations that emphasized on financial and economic factors Technologies for the development of specialized types of aquaculture should also be developed and perfected Special emphasis and efforts will be put on developing appropriate technologies to support an expansion of aquaculture from fresh and brackish water into marine habitats It is recognized that the country’s largest potential for expanding aquaculture lies in utilizing the high 53 productivity of marine habitats These will include the delivery of technologies and support to the establishment of integrated coastal area development projects All development efforts will be market driven Expansion of aquaculture activities will first focus on supplying the ever-increasing domestic market for fishery products Efforts will then be put on directing the industry development to specialty markets with potentially higher returns However, all commercially oriented activities will be carried out by the commercial sectors The aquaculture divisions of the Ministry need to be dedicated to supporting the development of the commercial aquaculture sector Special efforts should be made towards promoting private sector investments in order to develop the aquaculture sector This will include the promotion of commercial investments in specialized hatchery to cover the ever-increasing demands for fish seed and shrimp larvae The Ministry should consider the privatization of present public hatcheries While divesting public hatcheries and seed supplies to private sector, quality standards should be established to ensure the generic quality and health of brood stocks used in hatcheries Standards will also be set for shrimp larvae and fish fingerlings to ensure that they are disease free Efforts should be taken to encourage the commercial sector to invest in feed manufacture These might also include divestment of public sector facilities and plants to commercial enterprises The emphasis will be put on high quality, efficiency and competitive pricing The raw materials for aquaculture feeds can be drawn from plentiful trash fish supplies and local agricultural crops Similar sentiments and strategies also apply to other sectors involved in businesses supporting the aquaculture industry, such as vaccines, diagnostic services and equipment manufacturer and suppliers In aquaculture, strategic focus should be put on supporting technological and operational advancement to improve the quality and value of farmed raw materials Emphasis will also be put on supporting the farming of high value species and on extending the areas under aquaculture Special emphasis will support the increasing in production and productivity of existing systems, especially the brackish water shrimp farming, and the introduction of large scale marine aquaculture for desirable species 0.26.3 Processing Establishing a legal and administrative framework that clears on the rights and obligations of the processing industry These will include a system for license the construction of new processing plant This is employed to ensure that a balance exists between national needs and prospects Such licensing systems will basically be limiting in scope to ensure that processing plants are sensibly located from geographical point of view, that there is consistency between plant capacities and the potential for raw materials The regulatory frameworks will also be administered toward ensuring the reasonable competition exists and that raw material producers have alternative outlets for their produce The licensing of processing plants will be carried out by central authorities to avoid favoritism and preferential treatments To encourage product differentiation and increasing value added, the government should support the development and dissemination of alternative product technologies and methods Both the export oriented and the domestic processing industry will be targeted A special 54 emphasis will be put on improving the traditional types of processing that serve the domestic markets Because of the large quantity absorbed on that market and the currently low levels of technology applied, it is believed that the gains can be quite substantial The government should ensure viability and dynamism of the processing sector by promoting new processing methods It will support the establishment of new businesses by identifying industry and processing needs, make these needs known and then steer the establishment of desired business through business licensing systems These might include the breaking up of large public sector ventures into smaller units that are within the investment capabilities of the commercial sector Carrying out a comprehensive study to thoroughly assess the economic and financial viability of the current state own processing enterprises This will include detailed technical, economic and financial assessments of individual plants for determining their viability Assessments will also include detailed assessments of the future potential of the plants, their prospects to obtain the necessary raw materials and their prospects for domestic and export sales Based on these assessments, processing plants will be ranked Priority plants will be identified for operational and managerial rehabilitation Plans for the closure of non-viable plants will be worked out, including compensation to employees who might be laid off Government supports a gradual commercialization of processing sector through evaluation and establishment of commercial accounting and operation procedures A comprehensive program for training senior and middle level managers of market oriented companies should be implemented for supporting purpose Maintenance the quality standards through: • Continued improvements to the policies, plans and standards on product quality and hygiene • Continuing the improvements and expansion of inspection quality control of processing plants and marketing facilities • Carrying out certification of fish processing and marketing facilities • Continue the issuance of quality and hygiene certificates for fish products in compliance with the required standard for export and for domestic consumption • Implementation a comprehensive program of training courses, technical instruction on quality control, quality improvements hygiene and so on for fish processors and traders The above activities will be incorporated into the administrative procedures for the licensing of processing plants, fish traders and so on Their compliance with NAFIQUACEN standards will be a precondition for maintaining licenses 0.26.4 Marketing and trade It is better if government can support market expanding and penetration by applying policies such as: 55 • Reduce and release export tax on some special exported goods, which can globally compete Reduce and simples the custom clearances for fishery exporting and develop supportive industries • Collect and establish a market information database This can be done by country’s commercial representatives A fishery association would be strengthened to due with this responsibility Even though a likewise association were established, it seems that it was ineffectively operated The operation of this association should be focused on communication and consultant on fishery operation and investment rather than only holding exhibitions as at present • Support the raw material supply for export processing sector through developing of aquaculture sector • Create a special stabilizing fund to compensate the price fluctuation This fund can be soured from export tax and other contributions of fishery export companies In the favoring case, these companies had to contribute to stabilizing fund based on their export value When there are a strong distortion in export market, these companies can receive the benefit form that fund This fun can be built up by government as well as outsoured to insurance organizations • Stabilize the exchange rate, monetary and financial policies This is supported by the stabilizing fund in this industry • Joint in the multilateral and bilateral agreements in fisheries field to protect the export companies from losses related to lacking of internationally legal system and create the initial condition for market expanding and penetration • Develop infrastructure and legislation conditions to support e-commerce application This is useful for promoting Vietnamese fishery product in global market, and market information transferring Another strategic element is to seek further liberalization of the trade in machinery and equipment 0.26.5 Supportive industry To support the effective functioning and establishment of processing facilities the government will seek to ensure that the necessary infrastructures are available These will include the construction, operation and maintenance of fishing harbors and landing places with efficient fish handling facilities, fishery industrial estates and the supportive infrastructure facilities, which also aimed at human resources development and technology enhancement Fishing harbors will be established in places where there are concentrations of fishing vessels and where the potentials for fish landings The establishment of such infrastructures will be based on the carrying out of detail economic, financial and social economic assessments to prioritize specific sites and to ensure economic and financial return A key feature of the strategy for establishing fishing harbors is that industrial estates are established in close association with the harbors to accommodate fish trading, servicing 56 industries and processing plants Industrial estates will include the necessary power, water, roads and wastewater treatment plants The government should support the establishment of sheltered structures where fish trading and transactions can take place These will include the introduction and establishment of competitive auction systems for fish trading 0.26.6 General Government should ensure full coordination between the state, provincial, district and local levels in all matters and decisions concerning management and use of the aquatic resources It is also to delegate responsibility for carrying out fisheries management policies and programs, controlling the amount of fishing effort, and protecting nursery and other closed areas Under such a arrangement, the Ministry of Fisheries would have the responsibility to provide local technical advice and support from its experts, to monitor the performance of local fisheries management, and ensure that agreed decisions and actions concerning conservation of the aquatic resources are carried out promptly and fairly Government should develop an effective and efficient national aquatic resources data and statistics system This is useful to support management of the natural resources, support policy and planning analysis and decision making at both government and private sectors, support community planning and development, and support domestic marketing and export activities 57 Chapter Conclusions The main objective of this research is to formulate a development strategy for Vietnamese fisheries industry basing on the analysis of strengths and weaknesses as well as the internal linkages of the industry Fisheries industry can be classified into four sectors are fishery capture, aquaculture, processing, trading and supportive sectors For each sector pros and cons, these have been pointed out through applying the SWOT analysis, Porter’s models and the opinions of experts from different levels in Vietnamese fisheries industry Up to this point, it is confident to say that Vietnamese fisheries industry has potential competitive advantages for development However, it is also believed that the natural fish stocks in Vietnamese coastal and jurisdiction area are nearly exploited up to their biological threshold There should be an action to rationalize the development of fishing vessel fleets that can affect the substantial of natural resource as well as to maximize the fishing value Fishery aquaculture development emerged as a choice to warranting raw material supply for over capitalization processing sector Inter-industry linkages as well as the government role on development direction and supporting are lacking In conclusion, it is suggested arrays of policies and regulations for strengthen competition of fisheries industry These suggestions are mainly focused on industry internal linkages and the rational exploitation of natural resources However, technological transferring and applying issues can be further researched to support the decision making in implement this strategy Finally, the research has developed systematic solutions for improving the demonstration of fisheries industry It seems that the research can become a direction guideline and benefit to the industry management and monitoring activities 58 ... structure and characteristics of internal linkages in the fisheries industry To analyze and determine strengths and weaknesses of the fisheries industry To identify the barriers for development of Vietnamese... take advantage of opportunities List of 5-10 external opportunities here Source: Wheelen and Hunger (1992) 17 Chapter Industry characteristics and socio – economic status of fisheries industry This... review of literature particularly on the concept of strategic planning and the environment of fisheries industry Chapter 3: chapter describes the performance and distribution of Vietnamese fisheries