Vietnamese agriculture thirsty for investment

Super small agricultural enterprises

In recent years, the agriculture sector has attracted larger-sized investment projects, says Dr. Nguyen Do Anh Tuan, Director of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) of the Ministry of Agriculture and Rural Development. In the field of fruit processing, for example, large-scale projects using modern technology usually receive orders immediately after beginning their operations, including orders for a period of 5-10 years, while small ones have a hard time finding buyers and accessing credit to grow, Tuan said.

According to the Head of the Vietnam General Council of Agriculture and Rural Development Ho Xuan Hung, the number of enterprises investing in agriculture is still limited, and investment in agriculture remains incommensurate with the potential and expectations.

The sector attracted a record 2,200 investment projects last year, taking the total number of enterprises investing in this industry to 9,235, only nearly 5,000 of which invested according to chains, Hung said.

In late 2018, the Vietnam Chamber of Commerce and Industry (VCCI) surveyed more than 8,000 private enterprises, including 572 agricultural businesses. Most of the surveyed agricultural enterprises were small and medium in size, 58 percent of them faced difficulties in finding customers, 46 percent found it hard to access capital, 44 percent encountered difficulties due to market changes, and 33 percent faced difficulties finding business partners. Some 29 percent had trouble finding suitable personnel, 24 percent were affected by changes in policies and laws, 18 percent faced difficulties in implementing administrative and legal procedures, 68 percent had trouble implementing land-related administrative procedures, and 54 percent borrowed capital from banks. The smaller they were, the more difficult they found it to access bank loans, according to the survey.

Nguyen Thi Anh Dao, Director of the Hung Dung International Company Limited said her company had to take out commercial loans and buy land at a high price from residential households to build and run a high-technology farm of 500 pedigree pigs, more than 1,000 meat pigs and a turmeric starch-processing factory with an annual capacity of three tonnes. This is far beyond the ability of newly established enterprises.

Although the state encourages credit support for businesses like Hung Dung, policies remain problematic and overlap, she said. Usually, land is allocated to organizations and/or households to manage, leaving little land for central livestock breeding, Dao said. This makes it hard for businesses like hers to expand production and build long-term strategy, she added. Enterprises like Hung Dung need state support if they are to succeed in market expansion including sales promotion and branding, Dao said.

Improving business environment for agricultural enterprises

Vinaseed General Director Tran Kim Lien said there should be a legal corridor enabling businesses to accumulate land for production restructuring, and conditions should be created for them to participate in national and international trade promotion programs, and get foreign market demand forecasts to properly restructure agricultural production.

The Head of VCCI’s Legal Department Dau Anh Tuan said removing institutional and policy barriers is most important to attract investment in agriculture. The National Assembly passed the 2017 Planning Law, which eliminated many agricultural sector plans. The Ministry of Agriculture and Rural Development nowadays provides farmers and businesses with information on a regular basis instead of issuing rigid, out-of-date plans.

Business/investment conditions have been simplified and the right to do business has been expanded and diversified. It is necessary to update inspection methods by applying risk control tools. Policies on protecting the ownership rights of enterprises are important to attract investment in forestry and fishery sectors.

National Assembly Deputy Tran Hoang Ngan (from the Ho Chi Minh City delegation) said the agricultural sector has, for a long time, attracted very few foreign investment projects so there should be policies to promote investment in this field. In particular, it is necessary to ease logistics-related bottlenecks in the agricultural sector, Ngan said.