Beware of "traps" when exporting to Algeria

Although Internet fraud in Algeria is not common, Vietnamese businesses are still advised to be cautious, check and verify partners.

Many potential products for export to Algeria

At the Import-Export Consultation Session with Algeria, Senegal and Tunisia organized by the Vietnam Trade Office in Algeria on the afternoon of March 26, Mr. Hoang Duc Nhuan - Vietnam Trade Counselor in Algeria - informed that in the trade balance between the two countries, Vietnam has an absolute trade surplus. Specifically, in 2023, Vietnam exported 237 million USD to this country, and imported less than 4 million USD.

In 2024, export turnover will decrease to 192 million USD. The reason is that raw coffee - an item that accounts for 70 - 80% of Vietnam's total turnover to Algeria - is too expensive, causing the partner to reduce imports from Vietnam and switch to other African countries.

Coffee - a commodity that accounts for a significant proportion of Vietnam's total export turnover to Algeria

Mr. Hoang Duc Nhuan also informed that due to the high price of coffee, which is an essential commodity, to support consumption, in 2025 the Algerian Government has deeply reduced import taxes and fees on the commodity from 63% to 10%. Thanks to that, in the first 2 months of the year, Vietnam exported 14,718 tons of coffee to Algeria, an increase of 65% compared to the same period in 2024.

“ Raw coffee is a potential export item of Vietnam to Algeria, currently accounting for 50% of the export proportion. This country is importing 100% of coffee for domestic consumption with a quantity of about 130,000 tons/year, turnover of 300 million USD. However, Algeria prioritizes importing raw coffee and encourages businesses, including Vietnamese businesses, to invest in producing finished products in this country, ” said a representative of the Vietnam Trade Office in Algeria.

In addition to coffee, many other products that are Vietnam's strengths have the potential to be exported to Algeria, such as green tea. Every year, Algeria imports 50 million USD worth of green tea, mainly from China. The total import tax and fees for this product is 54%.

Imported spices are worth 30 million USD/year, mainly black pepper, with total taxes and fees of 54%. In 2024, Vietnam's pepper exports to Algeria will reach 633 tons, worth 2.95 million USD, competing strongly with pepper from India, Pakistan, Brazil, etc.

In addition, cinnamon, cashew nuts, coconut rice, powdered milk, seafood, etc. are also Vietnamese export products with high turnover and many opportunities to expand market share in Algeria.

As for powdered milk, because domestic production cannot meet consumer demand, Algeria has to import about 400,000 tons of powdered milk each year, with a turnover of about 600 million USD. Powdered milk is also classified by Algeria as a consumer product, so the total tax and fees are only 10%, while taxes and fees for finished milk are up to 105%.

Regarding industrial products, Mr. Hoang Duc Nhuan also pointed out that Algeria consumes 90 million pairs of shoes each year, while domestic production only reaches 1 million pairs, so imports to serve the consumption of this item are more than 1 billion USD/year. Vietnamese shoes are highly appreciated by Algerian consumers. Enterprises in this country also have a need to import shoe soles for domestic assembly.

Textiles, Algeria imports 400 million USD worth of clothing and raw materials each year, worth up to 800 million USD. Latest data from Algerian customs, in 2023 Vietnam exported 300 million USD to Algeria including finished clothing, fabrics, yarns... and was subject to a total tax and fee of 54%.

Aluminum and steel import demand is 2 billion USD/year. In 2023, Vietnam exported to the Algerian market 2.7 million USD of raw aluminum, about 2 million USD of iron and steel bars. Algeria has produced and started exporting iron and steel, so it limits imports and imposes very high import taxes on this item.

Besides, chemical products, packaging materials, auto parts, etc. are also Algerian products in high demand.

“ With the goal of developing domestic production, Algeria always prioritizes the import of raw materials, restricts and imposes very high taxes on finished products. This country also encourages foreign enterprises to cooperate and invest in local production. This is also a new direction that Vietnamese enterprises should consider when approaching the Algerian market ,” Mr. Hoang Duc Nhuan once again emphasized.

Be careful in verifying partners

Although there is great potential for Vietnamese enterprises to expand exports to Algeria, Mr. Hoang Duc Nhuan also acknowledged the difficulties that could affect this activity. In particular, because it is not yet a member of the WTO, import tax to Algeria is quite high, averaging about 54%, not to mention some items subject to domestic consumption tax, defense tax... which can be up to 200%.

To protect domestic production, Algeria limits imports of domestically produced goods and promotes investment in local production cooperation, avoiding an economy dependent on oil and gas.

In the Algerian market, Vietnamese goods have to compete strongly with similar products from China, India and countries with free trade agreements. On the other hand, the trade policy of the host country is often changing, and the foreign trade policy is protectionist. Every year, Algeria issues the Finance Law which stipulates import-export targets and timely foreign trade management measures.

Another obstacle is that the language of business in Algeria is French but the language used in legal work is Arabic. This increases the time and cost of translation when necessary. Freight rates to Algeria have increased due to the crisis in the Middle East.

“ In April, Mediterranean Shipping Company announced an increase in shipping fees from 350 USD to 800 USD depending on the type of container and location ,” said a representative of the Vietnam Trade Office in Algeria.

Faced with the above difficulties, the Vietnamese Trade Office in Algeria also made recommendations to help Vietnamese businesses reduce obstacles when exporting to this market.

In particular, in Algeria, online fraud is not common, but caution should be exercised when searching for online partners or dealing with partners who proactively seek out Vietnamese businesses via websites.

“ Therefore, before making a transaction, businesses need to ask their partners - especially those who are cooperating for the first time - to provide their business registration certificate, tax code, and a copy of the representative's passport or citizen identification card. When necessary, competent authorities such as the Vietnam Trade Office in Algeria can assist in verifying the information ,” Mr. Hoang Duc Nhuan emphasized.

Regarding payment method, it is recommended to use irrevocable L/C with confirmation from a reputable bank in Europe or America or collect documents through a bank, in which the partner is required to deposit at least 20% of the value of the goods, and deferred payment is not accepted.

Require customers to make a deposit outside Algeria through the company's branch or the customer's relatives in Dubai or Europe. Another measure is to deliver the goods in advance with the customer paying in advance.

In case of disputes, domestic enterprises should negotiate with customers or immediately contact the Vietnam Trade Office in Algeria for advice and support, to avoid prolonging the process, especially when goods are stuck at the port, leading to additional storage costs and damage to goods.

Algeria is the third largest market in Africa, this country is encouraging and attracting foreign investment to develop domestic production. Therefore, this is also a good channel for Vietnamese enterprises to have a firm foothold in this market.

Source: https://congthuong.vn/can-trong-voi-cam-bay-khi-xuat-khau-sang-algeria-380133.html