"The industry needs to make major changes to be able to compete globally," Dinh Van Huong, chairman of the Viet Nam Fruit Association (VFA), said during a seminar in HCM City on Monday on expanding the export market for southern fruits.

An association report said the industry lacked a master plan and suffered from chaotic organisation and a poor distribution network.

"The investment in labour and raw materials is very high. The poor processing technology for post-harvesting and the infrequent use of machinery for cultivation have restricted the development of the sector," Huong added.

The industry was plagued with outdated planting techniques, unproductive fruit seeds, high transport charges, a lack of a professional preservation system and poor knowledge of inspection methods and standards that are required by importers like the US, the EU and Japan.

The Trade Ministry said it would set up some regions for fruit exports only, encourage the production of fertilisers and pesticides, call for infrastructure investment and hire foreign advisory companies.

The ministry will also give financial assistance for international co-operation and trade centres. Quality guarantee and trade promotion will also get more attention from the government.

More policies on preferential taxes, bank loans for infrastructure, technology transfer, human resource training, and export promotion will be created.

"All work will be done to meet five requirements of the market: a reasonable price, regular and on-time supply and delivery, large quantities, good quality and good hygiene," Huong said.

By the end of 2005, Viet Nam had cultivated more than 767,000 hectares of fruit with a total capacity of 6.5 million tonnes, and another 635,000 hectares of vegetables with 9.6 million tonnes each year.

There are around 60 processing factories operating with a capacity of 290,000 tonnes of product a year.

Factories are faced with a shortage of raw materials to process because of the lack of a master plan.

Export turnover has gone up and down for seven years. In 2000, turnover was US$213 million; in 2001, $344 million, and in 2002, it fell to $201 million. It was $151 million in 2003.

Turnover recovered in 2004 to $171 million. In 2005, it was $230 million, and last year rose to $283 million.

Viet Nam fruit and vegetable exports mainly go to the southern provinces of China, the US, Europe, Russia, Japan, Taiwan and Republic of Korea