Seafood stocks impacted by negative information of MPC

The information that Vietnam’s ‘Shrimp King’, Minh Phu Seafood Company (MPC), has been accused of tax evasion in US market has impacted not only MPC’s business but also the whole seafood industry.

Shocking news
In a letter sent to the Department of Customs and Border Protection (CBP), Darin LaHood, the representative for Illinois state, said that he has received a lawsuit for anti-dumping evasion from MPC. 
To be precise, MPC is being suspected of purchasing Indian shrimps, then processing these shrimps in Vietnam before exporting to US to evade the anti-dumping tax which has been currently imposed on Indian shrimps.
An excerpt of the letter said “based on the lawsuit, I propose CBP to investigate whether the US importer and a Vietnamese company are evading the anti-dumping tariff which is currently being applied on Indian shrimps”. The two companies, which are mentioned in the letter sent by LaHood, were soon identified as MPC and Mseafood Corporation of US.
The above information has scared most investors as MPC is the leading shrimp export company in Vietnam. Some experts worry that this information may impact negatively the final results of the anti-dumping tax administration review (POR13) of the US Department of Commerce (DOC).
In the previous review (POR 12), the anti-dumping tax for Vietnamese shrimp export companies was set at 4.58%, much lower than the 25.76% from the preliminary review and the 4.78% of the prior review (POR 11).
Seafood stocks impacted by negative information of MPC ảnh 1 A shrimp processing line at Minh Phu Seafood Company.

MPC accusation impacts whole industry 
The accusation for anti-dumping tax evasion by MPC has not just impacted negatively the MPC stock value, but also other listed seafood companies. Right after this information was released, MPC stock price tumbled from VND 40,000 per share to VND 34,000 per share, equivalent to a drop of 15%. The other listed seafood stocks also fell significantly, including IDI, ACL, VHC, ANV. Especially, the share price of Hung Vuong Group (HVG) has dropped 50% over the last month given its bad operating results and negative information of MPC.
Notably, a month earlier, seafood stocks had posted a good movement in April when DOC announced the preliminary result of POR13 administration review with the conclusion that FMC and Nha Trang Sea Product Company did not dump the frozen shrimp exports in the US in the period February 1, 2017 to January 31, 2018. 
DOC set the preliminary anti-dumping duty of 0% on the products from these two companies. Furthermore, as they are the two mandatory defendants, hence the other 29 Vietnamese shrimp companies which have applied for determination of different tax rates or guarantee no shipments export to the US within the above period will also enjoy a tariff of 0%.
This is not the final result of POR13 administration review, however, according to industry experts, this 0% tax rate is likely to be applied for all Vietnamese shrimp export companies in coming time.
Situation not worrisome 
MPC said that so far the company has not received any official information from CBP or any other department of US government. The current shrimp exports to US still follow the normal customs clearance. 
According to the lawyer of MPC in US, based on the Trade Facilitation and Trade Enforcement Act of 2015, after CBP receives the lawsuit from related parties or from other government department, CBP has 95 days for checking related information before filing for an official investigation. After the regulated investigation, CBP will announce the results.
So the letter of LaHood was just a one-sided lawsuit without proof and evidence, and is not the conclusion of the US government.
Le Van Quang, Chairman of MPC admitted that the company had imported Indian shrimps in 2003-2004 because of shortage of material resources. At that time, Indian shrimps were not being imposed with anti-dumping tax by DOC. In August 2004, Vietnam and India were both sued by US government and were imposed with the anti-dumping tariff. Currently, MPC has to import Indian shrimps again due to shortage of domestic material.
According to the company data, the Indian imported shrimp constitutes a small proportion in total imported shrimp of MPC, about 10%.  Le Van Quang also said that, despite the negative information, MPC continues exporting to US market, the company even receiving more orders from US market.
Talking about this issue, Ho Quoc Luc, Chairman of FMC, said that this information will not impact the result of POR 13 review. In the near future, Indian shrimp companies will no longer receive the tax advantage and will be subjected to two different tariffs. This will create more chances for Vietnamese shrimp export companies.
Furthermore, John Sackton, the founder of Seafood News in US said that the US domestic shrimp producers are trying to weaken the trust of shrimp buyers on imported shrimps by repeating false accusations, which still lack investigation, or point at the emergence of antibiotics in imported shrimp products to US. 

Kim Giang

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