Foreign direct investment (FDI) firms in Vietnam will be banned from directly purchasing agricultural products from farmers and establishing buying networks, local Vietnam News reported on Thursday, quoting a new circular from the Vietnam Ministry of Industry and Trade (MIT) as saying.

Specifically, MIT's new circular, which will go into effect on June 7, defines regulations on goods trading and directly related activities of FDI firms in Vietnam.

MIT's move is made to the fact that in recent years the FDI companies have been able to dominate the local market because they have more capital and human resources.

According to the Vietnamese Ministry of Agriculture and Rural Development (MARD), the FDI firms have taken over 70 percent of the animal feed industry.

In the Central Highlands, 12 FDI companies have exported up to 60 percent of total coffee production.

The FDI firms also bought and exported 36.6 percent of the country's pepper output in 2012.

MARD said the FDI companies only bought the products and did not invest in agricultural resources. Meanwhile, domestic companies, which have supported the farmers' production, are inferior to the FDI companies because the latter could pay the farmers higher prices.

In the first five months of this year, while the country hit a trade deficit of 1.9 billion U.S. dollars and the domestic sector with 6 billion dollars, the FDI sector earned a trade surplus of 4 billion dollars, according to the Vietnam General Statistics Office. Enditem

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