Tuesday, June 18,2024 - 7:33 GMT+7  Việt Nam EngLish 

Potential for exporting industrial goods to Algeria and notes 

 Monday, April 15,2024

AsemconnectVietnam - Algerian market has a need to import many industrial products, however, Vietnamese enterprises need to be careful in payment and partner appraisal.

Textiles, footwear, iron and steel predominate
Mr. Hoang Duc Nhuan - Commercial Counselor, Vietnam Trade Office in Algeria said that Algeria is a country that depends almost entirely on oil and gas exports (accounting for 90% of total turnover), other fields are not yet developed. Although Algeria advocates diversifying its economy, the country has to import most products, including 50% of food.
Besides agricultural and forestry products such as coffee, green tea, rice, spices, wooden furniture, seafood... which are in great demand, Algerian market also needs to import many industrial products.
Specifically, for footwear, Algeria consumes about 90 million pairs of shoes each year, while only producing 1 million pairs. Footwear imports account for 95% of the market with a total value of 1.13 billion USD/year. European, American and Chinese shoe brands account for a large proportion in this market. Algerian enterprises are interested in importing shoe soles and shoe accessories.
Textiles and garments, in 2020, Vietnam's textile and garment export turnover to Algeria reached 2.2 million USD. The main brands exported from Vietnam are Adidas, Nike, Pouma, Lacoste... In addition, Chinese textiles and garments overwhelm other countries' goods in the Algerian market because they meet needs of local consumers for cheap products and diverse designs.
Similar to footwear, import taxes on garments into Algeria remain high. However goods are exempt from import taxes when the clothes originate from the EU and Saudi Arabia thanks to the free trade agreement. Algerian enterprises have high demand for fabrics and yarns to serve domestic textile production industry. In addition, Algerian side also calls on Vietnamese enterprises to invest in joint ventures and associate production of these product groups.
Iron and steel products: Every year, Algeria imports about 2.5 billion USD of aluminum and iron and steel products. For many years, Vietnam has always maintained a high export turnover of this product group. In 2020, export value of iron, steel and aluminum to Algeria reached 12.37 million USD and in 2021 it was 8.6 million USD.
In addition to the above products, Algerian market also needs to import many other industrial products, such as: chemical products; packaging industry materials; auto components and spare parts.
Many notes
Although there is much potential to increase export turnover of industrial products, Mr. Hoang Duc Nhuan also emphasized that there are many obstacles for Vietnamese enterprises to bring goods to this market.
Algeria is not yet a member of the WTO, tariff barriers are still very high and clearly protective. Average import tax is 53%, not to mention many products subject to domestic consumption tax of 10-30% and additional defense tax with rates from 30% to 200%.
In order to reduce trade deficit and protect domestic production, Algerian government's policy in recent years has been to limit or even ban import of manufactured goods, increase investment attraction and link joint venture to promote production and export of non-oil products.
Business environment in Algeria is not favorable. Trade policies are changeable and protectionist, bank payment times are slow, Algeria does not allow deposits to be transferred for imports.
"Currently, freight rates to Algeria are high due to impact of crisis in the Red Sea, an average of 5,000 USD/20 feet", the representative of Vietnam Trade Office in Algeria informed.
For enterprises to benefit, especially to ensure "safety" when exporting to Algeria, Mr. Hoang Duc Nhuan also noted: It is necessary to learn and verify partners. Before transaction, ask partner to provide business registration license, tax code, copy of the representative's passport and identification card so that when necessary, authorities such as Trade Department can assist consulting and verification.
Information on labels and packaging for imported goods in Algeria must be written in Arabic and another foreign language (French or English). Particularly for labeling on food products, it is necessary to clearly state: Product name; net weight for pre-packaged food items; name or trademark deposited and address of manufacturer or packer or distributor or importing company if the food is imported; the country of origin and/or the country from which the goods come.
Regarding payment method, Mr. Hoang Duc Nhuan recommends using irrevocable L/C confirmed by a reputable European or American bank or collecting documents through the bank, which requires customers to make a deposit at least 20% of the value of the goods, no deferred payment method is accepted. Require customers to make a deposit outside Algeria through the company branch or customer's relatives, for example in Dubai or Europe. Another measure is to apply delivery on top of the customer's advance payment.
In particular, when a dispute arises in import and export, enterprises should first make arrangements with their customers or immediately contact Vietnam Trade Office in Algeria for advice and support, to avoid prolonging situation. Especially when goods are stuck at the port, leading to increase storage costs and damage to goods.
“If the goods stay at the port for more than 81 days without notification from authorities such as a court or lawyer's office, they may be auctioned by Algerian customs. If dispute is due to the partner's fault, intervention and influence of Vietnam Trade Office and Ministry of Industry and Trade can bring positive results in some cases", Counselor Hoang Duc Nhuan emphasized.

Source: Vitic/ congthuong.vn
 

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