Vietnam is investors’ winning cup of tea

The local tea sector is seeking the right blend

The Vietnam Tea Association (VTA) said Vietnam was becoming a lucrative destination for many foreign tea investors. For instance, Sri Lanka’s J.V. Gokal Ceylon (PVT) Ltd, India’s Gillanders Arbuthnot & Co. Ltd, Kanan Devan Hills Plantations Company Private Limited (KDHP) and Aarkay Industries, Malaysia’s Bharat Tea Plantations SDN BHD Company,  plus Malaysian and Pakistani tea associations recently came to Vietnam in search of investment opportunities.

“Vietnam is open to foreign investors. We came here to find long-term tea partners with strong commitments. We are willing to be leveraged for Vietnam’s marketing channels and provide Vietnam with previously inaccessible markets,” said KDHP’s general manager Chako Thomas.

In April this year, a joint venture was established by KDHP and Lam Dong Tea Joint Stock Company - one of Vietnam’s biggest tea producers, in which KDHP would invest $8 million to establish a plant to annually produce 2,040 tonnes of assorted export-oriented tea.

Pakistani Tea Association chairman Muhammad Hanif Janoo said the association stood ready to invest in Vietnam’s tea industry as joint venture partners to make tea for export to Pakistan.

London-based Tea Estate Agencies Ltd/Tonkin Trading Company said that there were many opportunities for Vietnam to develop its tea industry. “We are so proud to say that we commit to ship the best made-in-Vietnam products into big markets,” said the company’s Hanoi-based representative office manager Nguyen Thu Hang.

“Does Vietnam’s tea have a good future? Yes, you have a bright one if you have right management and development mechanisms,” she said.

Hang said Vietnam’s tea quality had reduced since 2006, due to farmers’ backward harvesting and growing technology, coupled with residues of pesticides in tea leaves.

Janoo said the value of Vietnam’s exported tea remained low, while the quality in general was not consistent. 

At present, though Vietnam is the world’s fifth largest tea producer and exporter, made-in-Vietnam tea prices are just a half of normal global prices.

“Vietnam’s tea can fetch a higher export price if its quality is improved and contractual ties between farmers and foreign producers are riveted, while investors’ benefits are ensured further,” Janoo said.

VTA’s vice chairwoman Nguyen Anh Hong noted that localities’ management over their tea industry and investment attraction were “disheartening long-term investors”.

“Lax licencing of tea projects without material areas has resulted in companies scrambling materials from one another. Materials in some localities like Yen Bai only meet one-third of their plants’ capacity,” Hong said.

Vietnam has 18 foreign enterprises engaged in tea processing and trading, occupying 8 per cent of its total tea enterprises. The country exported 130,000 tonnes of tea last year, with an export turnover of $179 million.

Recently, the northwestern region’s provinces Lai Chau, Son La, Phu Tho, Yen Bai, Dien Bien and Lao Cai jointly trumpeted a list of nine export-oriented tea projects in need of investment capital from local and foreign investors.

The projects include a 200 hectare $769,200 project to cultivate and process high quality tea in Lai Chau, a 15,000ha $2.56 million project to cultivate and process tea in Son La, and a 5,000ha $15 million project to cultivate and process tea for export in Phu Tho with four plants processing 14,000 tonnes in total per year.

Yen Bai seeks investment for a $2.56 million project to build a high-quality tea processing plant and grow 3-5ha of tea and another two projects to build two high-quality tea processing plants. Dien Bien and Son La seek investment for a project to grow 1,000ha of tea and build a tea processing plant, with an annual capacity of 12 tonnes, and a $718,000 project to cultivate high-quality tea on 100ha, respectively.