09:32 | 22/01/2016 Investment
(VEN) - Many large companies invested in agriculture through the application of high technologies in 2015. This raised the possibility of a strong breakthrough for Vietnamese agriculture in the context of Vietnam’s deepening integration into the global economy.
Many large businesses such as Vingroup, Hoa Phat, and Him Lam sought opportunities to invest in agriculture. Hoanh Thanh Van, Director of the Department of Livestock Production under the Ministry of Agriculture and Rural Development, said that in recent times many businesses had registered investment in animal husbandry, mostly in beef, dairy, and animal feed production. One of these businesses was committed to investing US$1 billion from now until 2020.
Duong Minh Ngoc, Chairman and General Director of the Hung Vuong Joint Stock Company, believes there will be opportunities for the domestic animal husbandry sector to develop over the next decade. Foreign groups also invested in more than 10 animal feed processing facilities in Vietnam in 2015. In October the Hung Vuong Joint Stock Company announced its plan to invest VND2 trillion in breeding pigs to start selling pork in the third quarter of 2016.
In February, the Hoa Phat Group Joint Stock Company established a limited company specializing in producing and trading in animal feed with chartered capital of VND300 billion. The company is building its first animal feed processing plant with a capacity of 300,000 tonnes per year and expects the plant will sell its first products in the first quarter of 2016.
In March 2015, Vingroup announced the establishment of VinEco, a company specializing in agricultural production. With initial investment of VND2 trillion, the group pursues the goal of producing a range of safe fruit and vegetables for domestic sale.
Banks have also shown an interest in agriculture. At a conference held in November to discuss measures to develop the beef and dairy industry, Tran Bac Ha, Chairman of the Board at the Bank for Investment and Development of Vietnam (BIDV), said that in the short term, BIDV would lend VND25 trillion to finance agricultural projects, especially hi-tech agriculture. In the long term, the bank will provide VND80 trillion in loans for agricultural projects. In the field of cattle breeding, BIDV has issued a VND15 trillion credit package to finance beef and dairy production projects and pledged to apply preferential policies to businesses that apply high technologies in production.
Experts believe that investments from large businesses will help improve the quality and value of agricultural products so that farmers will no longer be affected by price pressures or price depreciation when they have bumper crops. Many businesses have successfully invested in agriculture and become a driving force in the application of new technologies and market development, creating a motive for economic growth in many localities.
Looking towards sustainable development
Most large businesses invest in agriculture in the direction of applying high technologies in agricultural production. Hoang Anh Gia Lai Group Chairman Doan Nguyen Duc said that mechanization and the application of new technologies were crucial to achieving high agricultural productivity. The application of technologies at all stages of cultivation has helped the group minimize production costs.
Vingroup has also followed this direction when investing in agriculture. VinEco has built greenhouses with smart irrigation and nutrition systems in Vinh Phuc Province to grow fruit-trees and vegetables. The group has equipped these greenhouses with automatic climate control systems that allow the company to control all elements affecting the growth of plants. Another VinEco hi-tech agricultural project is based in Quang Ninh Province, with total investment of VND650 billion. VinEco ensures that its agricultural products are of good quality and meet VietGap and Global Gap standards.
Professor, Dr. Vo Tong Xuan said the application of high technologies in agricultural production would help increase output and create cleaner products at lower costs, thus enhancing the competitiveness of Vietnamese agriculture. He believes investment by businesses will create a motive for boosting agricultural production as well as the sale of agricultural products.
According to economists, there are golden opportunities for the Vietnamese agricultural sector to attract investment to promote comprehensive restructuring. Agriculture is the sector where Vietnam has great potential and many advantages. However, to attract more investment into the sector, the state needs to facilitate business access to land and minimize difficulties facing them in implementing administrative procedures, and offer them tax preferences.
Dr. Dang Kim Son, former Director of the Institute of Policy and Strategy for Agriculture and Rural Development, proposed three solutions: 1) promoting infrastructure construction, focusing on transport facilities; 2) providing land for businesses and creating favorable conditions for land leasing, including land used by local residents and former farms; and 3) minimizing fees and taxes for businesses investing in agriculture, and deducting the value added tax on materials that are essential for agricultural production.
Investments in hi-tech agriculture by major firms will contribute to changing agricultural development in Vietnam towards a modern model capable of withstanding competition in the domestic and global markets.