Vietnam: not much investment in agriculture

Attracting a large number of businesses to invest in the agricultural sector will contribute to speeding up the restructuring of the agricultural sector in Vietnam, bringing the development of agriculture in line with its potentiality.

0102 Vietnamese fruit export

Not getting more than 1%

The number of businesses investing in agriculture in Vietnam is very modest. According to the Minister of Agriculture and Rural Development Nguyen Xuan Cuong, in previous years, the agriculture, forestry and fishery sector had only over 3,000 enterprises, accounting for less than 1% of the total number of enterprises in Vietnam. But in 2017, more than 2,000 businesses invested in agriculture. The number of enterprises investing in agriculture has increased significantly, but compared to the number of enterprises operating in Vietnam, the proportion of enterprises investing in agriculture in Vietnam has yet to get more than 1%.

According to experts, the reason why businesses do not invest much in agriculture comes from many barriers and difficulties when investing, especially inadequacies with the issues of limitations. From 2013, the Government issued Decree No. 210/2013 / ND-CP on policies to encourage businesses to invest in agriculture and rural areas. However, the implementation of the Decree is still inadequate due to limited resources, frequent changes in land use in localities, ineffective agricultural insurance policy, making enterprises difficult to access banks, and administrative procedures.

According to agricultural expert Hoang Trong Thuy, at present, 3 difficulties for businesses to invest in agriculture are as follows:

  • difficulty in land usage
  • environmental difficulty
  • the value of investment in agriculture is very high

People generally do not want to rent land because the lease is only short term and can be reclaimed at any time. In the first 3 years, enterprises have to invest in land improvement and in the 7th year, they will begin to break even and 3 years later, they start to make profits. Therefore, if the land is rented for less than 10 years, the company will not invest. Costs are high for businesses, and with a large number of lawsuits, they get really "fed up".

Enterprises should be considered as "the center" in agricultural reform

Regarding agricultural development, the development of hi-tech agriculture is a matter of concern of the Government as well as the business community. Being aware of this trend, the Government has many policies to attract investment from enterprises in hi-tech agriculture. However, nowadays, the number of enterprises recognized as high tech application enterprises is still very modest with 25 enterprises.

The business community is considered a key factor to restructure the agricultural sector, so attracting a large number of enterprises to invest in this field will contribute to speeding up its restructuring, sustainable development, commensurate with its potentiality. Attracting businesses and, more importantly, keeping a firm attached to the agricultural sector is a question that needs to be addressed comprehensively and synchronously, not only by the policy system but also by the whole implementation.  In this regard, the Minister of Agriculture and Rural Development said that in order to build businesses trust, the first priority is to focus on administrative reforms so that enterprises can invest in the sector. Along with that, the authorities must closely coordinate with businesses and identify the difficulties to solve, especially for the market. However, not only large enterprises, but more importantly small and medium size enterprises should start to mobilize more because this is the core force, the main force to contribute to the transfer of spontaneous household economy to a commodity-centric economy as well as the value chain.

Source: Vietnam Custom News