Decision No. 3690/QD-BCT dated September 12, 2016, approval for the planning for development of Vietnam’s beer – alcohol – beverage industry by 2025 and the orientation towards 2035

DECISION

APPROVAL FOR THE PLANNING FOR DEVELOPMENT OF VIETNAM’S BEER – ALCOHOL – BEVERAGE INDUSTRY BY 2025 AND THE ORIENTATION TOWARDS 2035

MINISTER OF INDUSTRY AND TRADE

Pursuant to the Government’s Decree No. 95/2012/ND-CP dated November 12, 2012 defining functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Government’s Decree No. 92/2006/ND-CP dated September 07, 2006 regarding the establishment, approval and management of the master plan on socio-economic development;

Pursuant to the Government’s Decree No. 04/2008/ND-CP dated January 11, 2008 on amendments to the Decree No. 92/2006/ND-CP regarding the establishment, approval and management of the master plan on socio-economic development;

In consideration of the request of Director of Light Industry Department,

DECIDES:

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1. Viewpoint

a) Develop beer – alcohol – beverage industry by balancing the production and consumption between regions nationwide in order to ensure the mutual benefit of the government, society and enterprises, and prevent overusing alcoholic beverages.

b) Develop the beer – alcohol – beverage industry by adopting advanced technologies and equipment, improving technologies to increase the quality of products, and producing new products with high quality and diverse types to meet domestic consumption and export demand, and improve the competitiveness in the global integration.

c) Make a sustainable development and attach a special importance to the food safety and protection of ecological environment.

2. Targets

a) General targets

- Make the beer – alcohol – beverage industry of Vietnam a modern industry in consistent with its position and role in the economy with famous brand names on the market and high quality products with diverse types and models in order to ensure the food safety and the community health, enhance the competitiveness in global integration and meet the domestic consumption and export demand.

- Make internal change in structure of the beer – alcohol – beverage industry by gradually reducing the proportion of beer and alcoholic industries and increasing the proportion of the beverage industry.

b) Specific targets

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- Total production of beer is expected to reach 4.6 billion liters, that of alcohol is expected to reach 350 million liters (in which, total production of industrial alcohol holds about 40%), and that of beverage is expected to reach 9.1 billion liters by 2025. The export turnover is also expected to reach USD 600 million.

- Total production of beer is expected to reach 5.5 billion liters, that of alcohol is expected to reach 350 million liters (in which, total production of industrial alcohol holds about 50%), and that of beverage is expected to reach 15.2 billion liters by 2035. The export turnover is also expected to reach USD 900 million.

- The industry’s total output is expected to reach VND 90,500 billion, VND 113,540 billion and VND 167,920 billion by 2020, 2025 and 2035 respectively.

- The average growth rate of the value added of the whole industry is expected to reach 5.8%/year during 2016 – 2020, 4.6 %/year during 2021 – 2025 and 4.0%/year during 2026 – 2035.

3. Development orientation

a) Beer sector

- Concentrate on adopting modern technologies and equipment to improve the product quality and minimize the consumption of raw materials and fuels; associate or merge into large-scale enterprises.

- Encourage producing alcohol-free beer and luxury lines of beer with competitive price in order to boost export. Establish and develop certain nationally-known brands of beer.

- The construction of beer factories with a scale of under 50 million liters/year is not encouraged, except for factories that produce beer for domestic sale.

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- Concentrate on producing high quality industrial alcohol by adopting modern technologies.

- Industrial alcohol producers are encouraged to reprocess alcohol produced by small-scale alcohol production establishments or alcohol production villages to produce qualified products in conformity with food safety regulations.

- Step by step build national alcohol brands. Improve the cooperation with foreign large-scale alcohol companies in producing high quality alcoholic products in order to replace imported alcoholic products and for export.

- Produce wines and fruit brandies in association with the development of local raw material areas.

c) Beverage sector

- Encourage economic sectors to invest in the production of beverage products with large scale and modern technologies and equipment in order to ensure the food safety and environmental protection.

- Encourage the production of beverage products from fresh fruits and nutritious beverage products by using domestic materials, and the production of natural mineral water products.

4. Region-based sector planning

a) Beer sector

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- By 2025, the proportion of beer output in each region nationwide is expected to reach: 7% in the Northern Midlands and Mountains (in which, 2% in the Northeast and 5% in the Northwest), 23.3% in the Red River Delta, 24.8% in the North Central Coast and the Central Coast (in which, 15% in the North Central Coast and 9.8% in the South Central Coast), 4% in the Central Highlands, 31.4% in the Southeast and 9.5% in Mekong River Delta.

b) Alcohol sector

- Concentrate on improving the output of alcoholic products in the Red River Delta, the Southeast and Mekong River Delta.

- Develop kinds of wine and fruit brandy in the Central Highlands and the Central Coast. Develop the production of distilled alcoholic beverages and mixed alcoholic products, and refine alcoholic products made by alcoholic production villages in other regions.

- By 2025, the proportion of alcoholic product output in each region nationwide is expected to reach: 9.5% in the Northern Midlands and Mountains (in which, 4% in the Northeast and 5.5% in the Northwest), 29.5% in the Red River Delta, 17% in the North Central Coast and the Central Coast (in which, 5% in the North Central Coast and 12% in the South Central Coast), 7.5% in the Central Highlands, 22.5% in the Southeast and 14% in Mekong River Delta.

c) Beverage sector

- Concentrate on developing the production of beverage products inthe Southeast, Red River Delta, the North Central Coast and the Central Coast.

- Develop fruit or vegetable juice beverages in the Southeast, Mekong River Delta and the Central Coast. Develop the production of purified water and mineral water products in all regions nationwide.

- By 2025, the proportion of beverage output in each region nationwide is expected to reach: 8% in the Northern Midlands and Mountains (in which, 4.5% in the Northeast and 3.5% in the Northwest), 22% in the Red River Delta, 19.5% in the North Central Coast and the Central Coast (in which, 5% in the North Central Coast and 14.5% in the South Central Coast), 2.5% in the Central Highlands, 31% in the Southeast and 17% in Mekong River Delta.

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5. Investment capital

Total investment for the whole industry during 2016 - 2020 shall be VND 27,325 billion, where the beer sector: VND 17,704 billion, alcohol sector: VND 791 billion and beverage sector: VND 8,831 billion. Total investment for the whole industry during 2021 - 2025 is VND 28,752 billion, where the beer sector: VND 15,660 billion, alcohol sector: VND 341 billion and beverage sector: VND 12,750 billion.

Investment capital shall be mainly mobilized from enterprises, bank loans, derived from the issuance of shares, private investment and foreign direct investment.

6. Solutions for planning implementation

a) Market solutions

- Regulatory bodies:

+ Annually organize domestic trade fairs and exhibitions whereby enterprises may introduce and promote their products. Enterprises shall be assisted to participate in trade fairs and do product promotion in foreign countries according to the national trade promotion program for expanding export market.

+ Provide information about the market to small and medium-sized enterprises.

+ Provide assistance in identification of foreign partners that cooperate with enterprises in business and investment.

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- Enterprises:

+ Adopt business strategies and market development strategies. Do research on market and consumer needs, produce new types of products, diversify products and improve product quality in order to meet the market demand and improve the competitiveness of products and enterprises.

+ Actively participate in domestic and foreign trade fairs and exhibitions to introduce enterprises’ products, improve the trade promotion in traditional markets and find new export markets.

+ Adopt measures to prevent trade frauds and unfair competition acts in the market, and adapt to requirements in the Agreement on Technical Barriers to Trade (TBT) and other international treaties.

c) Investment solutions

- Encourage economic sectors to invest in or enter into joint venture with foreign partners to invest in the production of quality beer, alcohol and beverage products with separate brands by using domestic materials in conformity with domestic consumption trends in order to replace imported products.

- The construction of beer factories with a scale of under 50 million liters of beer/year is not encouraged, except for factories that produce beer for domestic sale.

- Rent land area out to enterprises for developing centralized material areas in service of the beer-alcohol-beverage industry’s development. The lowest land rental rate within the price bracket of each region shall be applied.

d) Management solutions

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- Promulgate national technical regulations and standards for beer, alcoholic and beverage products according to the international practices to use as the basis for inspection, especially alcoholic products produced by small-scale production establishments.

- Strictly abide by regulations of laws on prevention of effects of overuse of alcoholic, beer and beverage products.

- Enhance the role and operational efficiency of Vietnam Beer Alcohol Beverage Association (VBA).

dd) Scientific and technological solutions

- Apply incentive policies adopted by the Government under the Investment Law to enterprises that invest in advanced technologies and/or purchase alcohol produced by alcohol production villages to manufacture industrial alcohol products which meet quality and food safety requirements.

- Assist small-scale alcohol production establishments/enterprises in receiving transfer of alcohol production technologies in accordance with technical regulations, standards and processes.

- Assist enterprises and farmers in cultivating new plant varieties and applying advanced technologies to develop raw material area serving the production.

e) Material and packaging solutions

- Encourage the investment in production of equipment, materials and packaging to meet domestic production demand and reduce the quantity of imports.

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g) Human resource solutions

- Make plans and organize training or retraining courses to train quality human resources by combining enterprises' demand with vocational training schools and centers.

- Improve the training and retraining for managers and skilled workers of enterprises so that they are capable of adopting and operating new technologies and equipment, and adapting to competitive conditions in international economic integration.

h) Financial solutions

- Encourage and enable economic sectors to invest in production by means of contribution of capital, issuance of shares/bonds, loans provided by domestic and foreign credit institutions.

- Do research on applying advanced technologies to the management of production of beer, alcoholic and beverage products in order to fight against fake or counterfeit products, and prevent trade frauds and tax evasion.

- Do research on applying special excise duty to beer products based on their output and alcohol content at suitable times to prevent trade frauds, price change and loss of budget revenues.

Article 2. Implementation

1. Ministry of Industry and Trade shall take charge and coordinate with relevant Ministries/regulatory bodies and people’s committees of central-affiliated cities or provinces to announce, propagate and instruct the implementation of this planning; inspect the planning implementation; propose competent authorities to make amendments to applicable policies in conformity with the reality during the implementation of this planning.

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3. People’s committees of central-affiliated cities or provinces coordinate with Ministry of Industry and Trade, relevant ministries/ regulatory bodies to concretize the planning in province or city in conformity with the master planning for social and economic development of that province or city. At the same time, coordinate with Ministry of Industry and Trade in inspecting the planning implementation.

4. Vietnam Beer – Alcohol – Beverage Association shall coordinate with Ministry of Industry and Trade and local governments to propagate or disseminate the planning; instruct its members to implement the planning and other laws.

Article 3.This Decision takes effect as of the signing date.

Article 4.Ministers, heads of ministerial-level agencies, the Government's affiliates and Chairpersons of people’s committees of central-affiliated cities or provinces shall be responsible for implementing this Decision./.

MINISTER




Tran Tuan Anh

ANNEX I

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Items

Unit

By 2020

By 2025

REGION-BASED BEER OUTPUT

Northern Midlands and Mountains. Where:

Million liters

225.5

322.0

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Million liters

41.0

92.0

Northwest

Million liters

184.5

230.0

Red River Delta

Million liters

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1,071.8

North Central Coast and Central Coast. Where:

Million liters

1,029.1

1,140.8

North Central Coast

Million liters

635.5

690.0

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Million liters

393.6

450.8

Central Highlands

Million liters

123.0

184.0

Southeast

Million liters

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1,444.4

Mekong River Delta

Million liters

369.0

437.0

Whole country

Million liters

4,100.0

4,600.0

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Northern Midlands and Mountains. Where:

Thousand liters

31,500

33,250

Northeast

Thousand liters

12,250

14,000

Northwest

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19,250

19,250

Red River Delta

Thousand liters

112,000

103,250

North Central Coast and Central Coast. Where:

Thousand liters

54,250

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North Central Coast

Thousand liters

15,750

17,500

South Central Coast

Thousand liters

38,500

42,000

Central Highlands

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24,500

26,250

Southeast

Thousand liters

73,500

78,750

Mekong River Delta

Thousand liters

54,250

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Whole country

Thousand liters

350,000

350,000

REGION-BASED BEVERAGE OUTPUT

Northern Midlands and Mountains. Where:

Million liters

394.4

728.0

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Million liters

224.4

409.5

Northwest

Million liters

170.0

318.5

Red River Delta

Million liters

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2,002.0

North Central Coast and Central Coast. Where:

Million liters

1,190.0

1,774.5

North Central Coast

Million liters

272.0

455.0

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Million liters

918.0

1,319.5

Central Highlands

Million liters

163.2

227.5

Southeast

Million liters

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2,821.0

Mekong River Delta

Million liters

972.4

1,547.0

Whole country

Million liters

6,800.0

9,100.0

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ANNEX II

REGION-BASED AND PRODUCT-BASED INVESTMENT IN BEER – ALCOHOL – BEVERAGE INDUSTRY

Unit: VND billion

Items

Period 2016-2020

Period 2021-2025

Northern Midlands and Mountains

2,969.2

4,914.4

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1,913.3

3,022.5

Alcohol sector

105.7

42.7

Beverage sector

950.2

1.849.3

Red River Delta

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6,822.5

Beer sector

3,802.2

3,263.6

Alcohol sector

Beverage sector

2,423.1

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North Central Coast and Central Coast

6,768.1

6,866.7

Beer sector

4,725.5

3,498.5

Alcohol sector

168.7

128.0

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1,873.9

3,240.2

Central Highlands

1,828.9

2,309.7

Beer sector

1,470.8

1,910.6

Alcohol sector

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42.7

Beverage sector

233.8

356.4

Southeast

5,443.9

2,523.3

Beer sector

3,728.6

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Alcohol sector

373.0

128.0

Beverage sector

1,342.2

559.9

Mekong River Delta

4,089.6

5,315.1

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2,063.1

2,129.8

Alcohol sector

19.1

Beverage sector

2,007.4

3,185.3

Total investment in beer sector

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15,660.4

Total investment in alcohol sector

790.9

341.4

Total investment in beverage sector

8,830.6

12,750.0