The agricultural economy now contributes over 20 percent to the country’s gross domestic product (GDP). In 2011, the production value of agriculture, forestry and fishery rose 5.2 percent against 2010. In particular, agriculture expanded 4.78 percent, forestry increased 5.74 percent, and fishery enlarged 6.39 percent. The overall annual growth was some 3 percent. In 2011, these sectors earned nearly US$25 billion from exports, up 29 percent year on year. With a trade surplus of US$9.2 billion, the agricultural sector has made positive contributions to the country’s balance of trade. Vietnam has a lot of agricultural companies but they are not very strong.
Difficulty - an incurable disease
Mr Pham Ngoc Thao, an official of the Vietnam Sugar and Cane Association, said at a recent seminar on agricultural enterprises that agricultural companies hardly access bank loans, especially small businesses, because of inherited subjective causes like unfeasible business plans, weak financial capacity, disqualification for loan security, etc. There are also other causes: weak access to international markets due to insufficient information about markets and international trade regulations, substandard exports, and small production capacity. To date, a very few of Vietnamese products are widely trusted in the world. These problems hinder market approach of Vietnamese agricultural enterprises, said Mr Thao.
In reality, Vietnam has a large number of agricultural enterprises. As the Government is reshuffling State-owned enterprises, the structure of State-owned and private-run agricultural enterprises is changing. Mr Pham Xuan Hoan, Deputy Director of Agricultural Enterprise Renovation and Management Committee, said: The number of wholly State-run enterprises is decreasing while the number of private businesses is on the rise. Over 98 percent of agricultural enterprises are SMEs. A company has more than 40 employees on average. More than 90 percent of agricultural enterprises have an individual capital of less than VND10 billion; 6.5 percent have the capital from VND10 billion to VND50 billion; and over 1 percent have the capital of over VND200 billion.
Working capital to a worker in an agricultural enterprise is VND200 million, equal to a quarter of the average capital of the entire economy. This proves that the operating scale of agricultural enterprises is small in relation to other economic sectors. The small scale is a difficulty in expanding production and business operations and expanding the market.
Most Vietnamese agricultural enterprises have backward scientific and technological levels and low-skilled workers; thus, the quality of agricultural products and services is low, the competitiveness is weak, and cost prices are high. Besides, the deficiency in IT and foreign language capabilities is another weakness of Vietnamese agricultural companies in the process of international economic integration.
Mr Trong Doan Ly, President and General Director of Animal Production Processing Import and Export Joint Stock Company (APROCIMEX), said: The Government has many priority policies for agricultural businesses but they are not very helpful. For instance, big banks have abundant money for lend but they prefer lending smaller banks to agricultural enterprises. Smaller lenders will then lend agricultural companies with higher interest rates.
Privatisation - key to unlock hardships
According to statistics, Vietnam witnessed some 50,000 companies dissolved since 2011. But, there are always the way for businesses to go if they can find out it, said Mr Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM).
Mr Pham Xuan Hoan, Deputy Director of Agricultural Enterprise Renovation and Management Committee, said the Ministry of Agriculture and Rural Development will support agricultural companies by providing land with zero or discounted rentals, training human resources, developing markets, and applying science and technology.
There is a clear tendency that agricultural businesses are eager to be privatised. Mr Mai Xuan Trieu, Director of Maize Research Institute and Director of Maize Consulting, Research and Development Company, said his company is an affiliated unit to the institute although it is operating in accordance with the Law on Enterprises. Thus, its competitiveness is weak. A lot of meetings, discussions and time are needed to solve a simple job. If the company is equitised, it will be more active in all activities.
Besides, some experts recommended merger of agricultural companies to form larger and stronger business entities.
In 2012, agriculture and countryside are one of four top-priority investment fields. This is a good opportunity for companies living trough this tough time, said Mr Nguyen Viet Manh, Director of Credit Department under the State Bank of Vietnam (SBV).
Nguyen Thanh
Vietnamese
