Commodity Exchange: Bringing goods to foreign markets

The cashew is one of the items listed on the Goods Exchange of Vietnam. Picture: Nguyen Hien.

According to Mr. Nguyen Loc An, Deputy Director of the Domestic Market Department of the Ministry of Industry and Trade, Decree No. 51/2018 / ND-CP with the focus on amendments and supplements to regulations causing difficulties and problems in the operation of the Commodity Exchange as under Decree 158/2006 / ND-CP the Commodity Exchange not only meets the requirements of administrative reform, but also restrains the restrictions on business rights of enterprises. Facilitating enterprises to participate in the Commodity Exchange.

The breakthrough of Decree 51/2018 / ND-CP is to allow the Vietnam Commodity Exchange in association with the world's commodity exchanges to help accelerate the integration process of the Vietnam Goods Exchange faster, keep up with the development of the world market. In addition, the regulations that allow the Commodity Exchange to list all commodities that are not banned by the State and those subject to conditional trading, including those of Vietnam with export strengths as well as Vietnamese goods with high import demand for production and business. With this change, the activities of the Commodity Exchange of Vietnam with tools to combat price fluctuation will help businesses promote production and business, enhance its position in the domestic market and the world.

Ms Nguyen Phuong Dung, deputy head of the Department of Trade Infrastructure, the Domestic Market Department of the Ministry of Industry and Trade, said that trading activities through the Commodity Exchange would help farmers obtain the tool of price insurance to minimize the risks of business activities such as a price decrease of coffee, rubber ... Export-import enterprises can also know the standard price of trading these items by each type, contract, month to take initiative in production and business, balancing in supply and demand. For individual investors, the emergence of commodity trading units through the commodities exchange will provide a new investment opportunity while traditional investment channels face many difficulties.

Ms Nguyen Mai Oanh, vice president cum general secretary of the Vietnam Pepper Association, said that Vietnam and the world's leading pepper exporters are eager to have a commodities trading exchange for pepper that can establish the price of pepper in the world market and agree on the sale because it would be beneficial to produce a lot. A few years ago, the Indian Pepper Association sought, even willing to support money for the Vietnam Pepper Association to invest in technology to set up a pepper trading platform because they knew if Vietnam participated, they could control the price of pepper in the world. Therefore, establishing a trading floor is very important for Vietnamese pepper.

In recent years, although there are many commodity trading exchanges operating, but due to some problems in exchanging, payment, buying and selling abroad the pepper companies could not participate, even though they are keen and have been prepared to do so. Pepper prices are currently uncontrollable, fluctuate and continue to plunge. In 2017, although the pepper export was over $ 1 billion, but many businesses in the industry suffered from the inability to formulate standards of goods, so there were many types of pepper products that were not good quality and prices went down. The price of the blame leads to market devaluation. Besides, because there are no reference prices, farmers sometimes do not sell their products, and sometimes there is mass selling, which makes it difficult for both farmers and enterprises.

According to Ms Oanh, the activities of the Commodity Exchange under Decree 51/2018 / ND-CP will be a good opportunity for the pepper industry as reference prices will help enterprises stabilize trading contracts. Besides, ensuring the quality of the goods will also contribute to enhance the competitiveness of the pepper industry on the world market. With these above benefits, the Vietnam Pepper Association will prepare and disseminate for enterprises to participate. At this time, there are 20 large enterprises in the pepper industry registered to participate.

Mr Vo Hoang An, vice chairman cum general secretary of the Vietnam Rubber Association, said that the establishment of the Commodity Exchange has timely met the requirements of the production and export of Vietnamese rubber, increase income for rubber growers.

According to Mr An, the current issue of the rubber industry is how production and export can reach world price. Participation in the Commodity Exchange will help businesses and farmers solve this problem. However, for trading activities to be effective, the Goods Exchange must link with many trading floors in the world. Information submitted to the Commodity Exchange must also be detailed and specific in terms of types, standards, quality, warehousing, delivery time, payment terms, insurance issues so farmers can get. In addition, it is necessary to strengthen the propaganda and dissemination of information to attract more businesses and farmers to participate in the Commodity Exchange .