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Dinh Vu

Economic Sector

Last updated: Monday, June 18, 2018


Groundbreaking Policies Needed to Draw More Agricultural Investment

Posted: Friday, January 20, 2017

The just-elapsed year of 2016 was considered an extremely difficult time for the agricultural sector due to disasters from region to region, e.g. droughts and saline intrusions in the Mekong Delta, floods in Southern Central Vietnam, and marine environmental incidents caused by Formosa in central provinces. The hardship toughened on global oversupply of essential agricultural products.

2016 also witnessed the highest concentration of the political system, especially the Prime Minister’s direction that agricultural sector of Vietnam must be competitive enough and bring a prosperous life to farmers. With drastic measures, Vietnam’s agricultural GDP expanded 1.2 per cent in the last six months of 2016 after suffering the first decline in 10 years in the first six months. The total export value still rose to US$32.1 billion, with nine commodities growing from 5 per cent to 30 per cent. 2016 also saw strong agricultural investments from leading companies in Vietnam like Vingroup and TH. With efforts proven and results achieved, the prospect of the Vietnamese agricultural sector is expected to be brightened in 2017. On the occasion of the advent of the Year of the Chicken in 2017, Vietnam Business Forum Magazine has an interview with Mr Nguyen Xuan Cuong, Minister of Agriculture and Rural Development. Le Hien reports.

What agricultural sector impressed you in 2016?
In 2016, nine exports brought home over US$1 billion. Brackish-water shrimp posted a growth of 10 per cent on favourable market as a result of 10-year adaptation and global consumers’ keenness on shrimp. Pig farming was also impressive. We reared more than 30 million pigs in the year with effective control of disease outbreak. We also had over 200 feed producers. Fruit and vegetable replaced rice in the list of high performers. Fruit and vegetable products earned US$2.4 billion from export markets while rice generated only US$1.9 billion. If we focus on this commodity, the export value may reach US$3 billion in 2017.

At a seminar held by the Vietnam Chamber of Commerce and Industry (VCCI) and the Ministry of Agriculture and Rural Development, data showed that agricultural investment accounted for only 6 per cent of total investment capital of the whole economy. Particularly in 2016, nearly 1,500 companies invested in agriculture. What do you think about these figures?
It is a pity that in a country with great potential for agricultural development, with many world-leading agricultural exports such as rice, coffee, pepper, seafood, wood and seafood, its appeal to investors is weaker than other economic sectors. Agribusinesses accounted for less than 1 per cent of total enterprises in the nation and most of them are small. Over 55 per cent of agricultural businesses have less than VND5 billion of investment capital. Therefore, creating the magnet for agricultural investment becomes more urgent than ever and we need to have more groundbreaking policies.

What are preconditions for agricultural restructuring to shape a high value, sustainable agriculture? What are breakthroughs?
We need to reorganise agricultural production and governance. We now have 13.8 million farming households and 78 million pieces of agricultural land. Fragmented production platforms prevent us from securing victory in the context of stiff competition on agricultural markets. This is the most difficult matter in modern agriculture development. Therefore, we must scale up household production, apply technology to agricultural production, and restructure agricultural production to cope with climate change.

Right from the first days of the new cabinet, the Prime Minister assigned tasks to concerned bodies to quicken the study and amendment of the Decree 210 on agricultural investment attraction. In particular, policies will give priority to enterprises to invest in high-tech agriculture and organic agriculture. The Ministry of Planning and Investment and the Ministry of Agriculture and Rural Development are working with relevant bodies to amend and advise the Prime Minister to issue a new decree. In addition, with such bottlenecks as land, credit and bank loan, the agricultural sector is also cooperating with concerned agencies to enact innovative, positive and practical policies to attract enterprises and economic sectors to invest in agriculture.

While waiting for legislation enforcement, what will the Ministry of Agriculture and Rural Development - the administrator of agriculture - do to accelerate the agricultural restructuring and engagement of the business community? What are the objectives of the agricultural sector in 2017?
In fact, in 2016, business dialogues of the agricultural sector were very active and effective. From the story of saying no to “dirty” foods to the policy roundtable on agricultural development received much attention and response. Agricultural restructuring aimed to shape larger commercial production from fragmented production reaped initial results. From the efforts of the Government and enterprises, the private sector should be encouraged to invest in agriculture and rural development because their presence in this sector tended to increase substantially recently. New agribusinesses rose from 2,397 in 2007 to 3,640 companies in 2015 and 4,080 in the first nine months of 2016. Many successful investors have become the locomotive of advanced scientific and technological applications, market development, and development motivations for many regions and localities and in many areas. Some sectors such as dairy, seafood and animal husbandry have approached world-leading technologies. Recently, the number of companies investing in agriculture tends to go up, specially the engagement of giant corporations like TH Truemilk, Dabaco Group, Vingroup and Hoa Phat Group.

Additionally, we focus on calling for investment from giant domestic and foreign corporations to carry out agricultural investment in the form of public private partnership (PPP) to establish multiple agricultural models. Most recently, the Ministry of Agriculture and Rural Development met with 15 major multinational corporations such as Nestlé, Syngenta, Bayer and Baconco to jointly build Vietnam's modern agriculture. They are not only financially strong but their superior technologies can bring huge benefits to farmers in remote areas.

In 2017, we have focused on two key national programmes: Agricultural restructuring and new rural construction. By all measures, the sector expects to expand 2.5-2.8 per cent and earn US$32.5 billion of export revenues in 2017, with 10 commodities bringing home over US$1 billion.


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