Positive report to PAC arising from Vietnam visit cites agri-trade potential

::: John Deasy: led aid oversight delegation to Vietnam - a trip that also explored the potential for trade

PAC Meeting: April 2, 2015

[Extract]
Deputy John Deasy:  The essential part of this for the past ten years has been the money we put into Irish Aid and the systems within the Vietnamese Government's structures of accounting for that. We felt comfortable about its practices but that will be part of the report we do and the findings.

It probably should be mentioned that a director from the Comptroller and Auditor General's office accompanied us to go through the controls within the Vietnamese Government's systems. That will be part of the report we compile. It is important because this involves a great deal of money. That should be included as well...

I will develop the trade element... particularly the export of dairy products. The current value of Irish dairy exports is €1.6 billion, but the market for liquid milk and milk ingredient products in Vietnam is worth $6 billion. 

That market has not been tapped into by Ireland in any great shape or form. It became an inescapable fact that much work needs to be done in this area. A lot has happened since we returned home. 

The draft report has been compiled and will issue to members in due course. We came to the conclusion that we need more personnel from Bord Bia and Enterprise Ireland on the ground in Vietnam. 

With the ending of milk quotas and the free trade agreement being hammered out between the European Commission and the Vietnamese, this is timely. We have had conversations with the Minister for Agriculture, Food and the Marine since our return. 

He has spoken to the Department of Public Expenditure and Reform and agreement has been reached to fund additional personnel in emerging markets. 

The Minister has agreed in principle to use some of that money to fund an individual from Bord Bia in Vietnam to promote the food and dairy industries specifically.  From that standpoint, the work we did with the embassy will bear some fruit. 

It became inescapable after being there just for a few days the kind of market that has begun to open in Vietnam, with a lower middle class income range emerging there. 

It is important we spread our risk effectively when it comes to the dairy industry outside China. The free trade agreement that will be hammered out between the European Commission and Vietnam does not just affect Vietnam but also acts as a gateway to the Association of South East Asian Nations, ASEAN, countries, with a population of approximately 630 million people. 

The Kerry Group has been working in Vietnam and will make an announcement when it comes to a very tiny slice of the milk industry there. It has a collaboration with an indigenous company and that is really the first kind of enterprise that has taken hold in Vietnam with an Irish-owned company.

Bord Bia's presence is in Shanghai in China and the comment or criticism from people we met in business circles dealing with food is that all our bets seem to be placed in China. 

As a result of what is happening in south-east Asia, the idea is that we need to create a presence outside China. In many respects, Vietnam is the engine in south-east Asia and those people believe strongly that the presence should be in Vietnam. 

There is also an issue with regard to where the embassy is located. The commercial hub of Vietnam is Saigon or Ho Chi Minh City and not Hanoi. That is also significant.

There is some precedent in the agricultural sector. The pork market was opened and exports began in 2014. Work has been done within the Department in that regard. 

When it comes to the initial step, the timing is right for that funding of an individual or individuals in Vietnam. As we learned, the most significant groundwork for contacts within official and government circles has been done over the past ten years. 

It has taken that long for our officials in the embassy to create a very substantial and solid contact network within government circles. The timing is right for these kinds of initiatives because of contacts made over the past ten years.

I will not be mealy-mouthed about the fact that we have helped programmes through Irish Aid over the past ten years and, as a result, this has allowed us access to government circles. 

That has proved very productive with respect to government officials and politicians understanding Ireland a little better. We should capitalise on that, and there is a need for us to use those contacts in an area like food and dairy. 

That is the conclusion everyone reached, including us, the embassy and the Department of Foreign Affairs and Trade. 

Since our return, that issue has been solidified, and I believe it will result in additional personnel from Bord Bia being funded to go to Vietnam. 

For that reason, it was a positive trip.

Chairman: I welcome the report. I will ask the clerk to change the foreword to reflect the fact that Deputy Deasy and others contributed in the way they did. I ask that we do some form of press presentation. We can send out a press release and flag the success of the delegation and what has transpired since it returned. 

In light of the fact we give €12.25 million in aid, it is important for us to have the right structures to monitor that spend. As has been proven in Vietnam, the structures are there and are being used by other countries which are delivering aid in Vietnam. 

From a trade perspective, I cannot agree more with Deputies Deasy and Costello in that having a presence in the country is very important. It can take many years for a business to build a relationship with a partner in parts of Asia and that requires a lot of investment. 

The Government should invest, first and foremost, and put its foot forward because having a presence in Vietnam is essential. This is especially relevant when we consider the Chinese economy, which has many advance factories built in Vietnam. 

The Chinese are looking at that market and their presence there. All that is based on the cost of labour. It is important, therefore, for us to be in the middle of that economic activity. 

Having people on the ground means they might look at the markets other European countries are exploiting such as Taiwan. We have raised this previously with various Departments that have appeared before us.

I am delighted the Deputy managed to visit some schools and industry and that he met some project leaders on the ground, which was very important. As was the case in other visits, time was taken to look at the disability and research sectors. 

I support Deputy Costello's view on trade missions. It is important we have a full trade mission to Vietnam. I thank Deputy Deasy and the other members of the delegation for their work there and their work since they returned. We should continue to highlight the aid programme and the strong possibilities for trade as we do our work.

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