16:07 | 19/02/2018 Investment
(VEN) - Agriculture in general and high-tech agriculture, in particular, have become attractive investment draws for domestic and foreign enterprises. The Ministry of Agriculture and Rural Development (MARD) is drafting a decree on attracting foreign direct investment (FDI) in agriculture for submission to the Prime Minister for approval. The decree is expected to considerably promote foreign investment in high-tech agriculture.
Agriculture has become a top priority of the government, authorities at different levels and various economic sectors. Many domestic and foreign corporations have chosen high-tech and organic agriculture as their main development strategy and have poured a major amount of capital into this field. Almost 2,000 new agro-forestry-fishery businesses were founded in 2017, up 3.8 percent from 2016, taking the total to more than 5,600 enterprises.
Investment in high-tech agriculture has been growing strongly in many provinces and cities nationwide. The Lam Dong Province Department of Agriculture and Rural Development said the province is leading localities throughout the country in terms of high-tech agriculture development, focusing on attracting FDI in high-tech agriculture as a way to promote the province’s socioeconomic development.
From 2012-2017, Lam Dong attracted 77 FDI agricultural projects totaling more than US$266 million in capital, including the Netherlands’ Bejo Group’s US$11.5-million vegetable seed production and export project – the biggest project of its kind in Southeast Asia, and Dalat Hasfarm’s US$25-million flower breeding project – the largest facility of its kind in Vietnam. During the same time, Lam Dong attracted 1,425 domestic agricultural investment projects, including 959 cultivation projects, 400 cultivation-husbandry projects, and 66 livestock breeding projects.
Over the past year, Lam Dong attracted about 30 official development assistance (ODA) programs and projects, which have already invested a total of US$1.8 million in the province, mostly in cultivation and livestock breeding. Draw of the Mekong
Many domestic and foreign investors have recently become interested in Mekong Delta agriculture. The Dong Thap Province People’s Committee and the Korea Rural Community Corporation (KRC) signed a public-private partnership (PPP) project, under which KRC will promote Korean ODA in Dong Thap infrastructure development, provide equipment, machinery and human resources training to serve the production of more than 28,000 hectares of rice. KRC will also encourage Korean enterprises to develop an agricultural production chain in Dong Thap.
In recent years, the southern city of Can Tho has also promoted investment in agriculture, especially from Japan. The State Bank of Vietnam said commercial banks have realized a VND100 trillion credit package for high-tech agriculture, more than VND36 trillion of which was already invested as of November 2017. The banks include the Vietnam Bank for Agriculture and Rural Development (Agribank), the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), and the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), among others. A Vietcombank representative said three months after the bank joined the program, it has lent more than VND2.5 trillion to high-tech and organic agriculture businesses.
Risks and advantages
According to a project entitled “Enhancing attraction and management of FDI in agriculture, forestry and fishery in 2014-2020, with a vision to 2030”, investment in agriculture remains risky. The risks stem from Vietnam’s agricultural development being scattered and based on small-scaled and self-supply production. The project calls for the development of farming modes suitable to farmers’ conditions, sustainable connectivity, stable policies and detailed FDI attraction strategies.
Nguyen Do Anh Tuan, director of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), said agriculture and information technology are sectors in which Vietnam enjoys major advantages.
However, despite the advantages, given the short-term investment risks, investors should be offered tax incentives, he said.
Vietnam has many advantages and huge potential for agricultural development. It has become a world top-five rice, coffee, pepper, and rubber exporter. FDI plays a vital role in Vietnam’s agricultural and rural development, contributing to transforming agricultural production structure and rural economy towards large-scale production of high quality commodities with added value for domestic sales and exports.