VIETNAM’S dairy firms are investing big in new markets as they brace for stepped-up competition at home from global giants on the prowl to take advantage of a Pacific trade pact.

    Domestic milk demand is soaring as household spending power increases in the country of 90 million people, boosting profits for dairy firms that are expanding quickly, but can meet only a third of the milk needs.

    That’s leaving a void that giants like New Zealand’s Fonterra and Canada’s Saputo could fill with new products and lower prices once the U.S.-led Trans Pacific Partnership (TPP) comes into play, eliminating tariffs among 12 markets worth 40 percent of the global economy and 75 percent of Vietnam’s dairy imports.

    It is the flip-side of the communist country’s aggressive drive to outpace Southeast Asia in getting preferential access to the world’s biggest markets for its swelling electronics, textiles, seafood and commodities output.

    Trade liberalization would strengthen a vibrant economy set to grow to US$200 billion this year, but foreign competition from the TPP could deal a heavy blow to local firms that lack capital and expertise and are unfit to join supply chains. According to private estimates, TPP would add 15 percent to Vietnam’s economy up to 2025, compared with less than 2.2 percent for Malaysia and Singapore.

    That would further burnish an economy that has grown at a rapid 5 percent-plus clip over the past 15 years.

    Vietnamese diary firms, bracing for stiffer competition, are seeking to expand overseas and utilize non-TPP trade deals, or find niche markets at home to navigate the pitfalls of the biggest trade pact in a generation.

    “TPP is definitely a challenge, from big investors entering the market, tariffs cuts ... but we’ve been preparing for five years,” said Hoang Cong Trang, vice president of TH Group. (SD-Agencies)