"The TPP Agreement will impact the entire economy of Vietnam but the biggest impact will fall on the agricultural sector. Although Vietnam has 10 years to prepare for the zero tax, it is actually not easy to stand firmly when head to head with husbandry powerhouses like the United States, Canada, Japan and Australia,” said Dr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), at the Vietnam Entrepreneur Forum 2015 themed "Entrepreneurs and farmers integration" organised by VCCI.
Agricultural restructuring
Dr Loc said that the Trans-Pacific Partnership (TPP) Agreement entails requirements for agricultural restructuring. This is certain because individual farmers of Vietnam cannot compete face to face with developed farms in the world. Therefore, businesses and farmers essentially join forces together to become a strong entity. The Government creates the environment and conditions for farmers to develop but entrepreneurs still play a central role. No matter how many stakeholders engage in, entrepreneurs still play a central role. That is the basis of the market economy.
He said food scarcity may occur in the future and food prices will stay high. Hence, agricultural investment is a potential, visionary investment. The diversity of climate and soil will help Vietnam grow diverse, unique and potential products. So, developing a diversified agriculture economy as well as a diversified biological economy is the prospect of Vietnamese economy.
He noted that many big companies in Vietnam are investing in agriculture. Some food-short countries are seeking foreign countries to invest in agriculture and Vietnam is a potential destination for them.
Dr Ha Cong Tuan, Deputy Minister of Agriculture and Rural Development, said that Vietnam has an open agriculture with an annual export turnover of US$31 billion, equal to 23 percent of the nation’s export value. 10 commodities fetch more than US$1 billion a year.
He said Vietnam has signed eight free trade agreements (FTAs). In early 2015, the country inked FTAs with South Korea and the Eurasian Economic Union (EEU) under which Vietnam is committed to opening its domestic market for agriculture, forest and aquatic products. FTAs open vast free trade spaces for Vietnam with 55 partners, including all G-7 members, 15 out of G-20 members and the ASEAN Community.
In the coming time, the signing and enforcement of new-generation FTAs will make Vietnam’s investment and business environment more favourable and competitive in the region; will continue to open their markets to imported agricultural commodities that Vietnam does not have the strength; and will increase competitive agricultural exports to other nations.
However, Deputy Minister Tuan said that, alongside opportunities, new-generation FTAs also pose enormous challenges to Vietnam’s agricultural products like growing competition and production pressures; more trade disputes amidst insufficient knowledge and experience of anti-dumping, anti-subsidy; slow production structural adjustment to tap market opportunities and enhance comparative advantages.
Identifying opportunities and challenges to minimise adverse impacts
Deputy Minister Tuan added that many big businesses have invested in agriculture, including HAGL, FLC and TH True Milk. The Vietnamese agricultural sector has so far attracted only 512 FDI companies, representing 3.1 percent of agricultural companies. Thus, he urged greater investments for agriculture.
However, to utilise opportunities, leverage strengths, overcome challenges, push back risks and attracting more investment in agriculture, he noted that Vietnam should promote communication and raise awareness of new-generation FTAs, especially technical barriers. State management agencies, businesses and farmers must identify both opportunities and challenges to grasp opportunities and mitigate adverse impacts while enhancing the competitiveness of agriculture, forestry and fisheries by restructuring export-oriented agricultural production and products to meet consumer tastes and requirements in major markets; enhance the application of science, technology and technical standards to production and business to compete effectively with imports.
In addition, he added that it is important to improve corporate competitiveness and strengthen business associations’ roles; reform institutions and State apparatus and strengthen the integration capacity of State apparatus; adjust policies and mechanisms like reviewing legal documents and mechanisms and policies for necessary modification.
Mr Dam Quang Thang, Director of Agricare Co., Ltd
Vietnam's agricultural products have relatively good quality compared to the world and are widely accepted by the world market. However, exporters and processors like Agricare hope State management agencies will support us to zone production areas, plan production chains and create the best conditions for us to cooperate with farmers. Currently, the biggest barrier to companies of this sector is food safety. We want to apply science and technology to agriculture but we confront and complete a lot of procedural issues and processes to bring our products to the market. Therefore, authorities should have a more flexible mechanism, enabling businesses to apply their innovations to agriculture and associate inventors, businesses and farmers.
Mr Doan Trong Ly, President & CEO of Animal Production Processing and Import Export JSC
Agricultural achievements are extremely enormous. These achievements would be greater if investment conditions were better. Foreign investment in agriculture accounts for nearly 2 percent. And, compared with foreign investment in the country, agriculture takes a very tiny proportion. What the Vietnamese agricultural sector lacks is quality, not quantity, of products. Or in other words, we lack technological and biological content investment for agriculture. Therefore, the Government should have appropriate investment policies to give priority to hi-tech investment in agricultural development.
Besides, as the enactment of policies has latency, their effect weakens in reality. Therefore, it is necessary to simplify administrative procedures to bring agricultural investment policies into life as quickly as possible.
Mr Nguyen Minh Hong Quang, Deputy Director of Hoa Lac High Technology Transfer Centre under the Ministry of Science and Technology
Indeed, technology sellers and technology buyers do not have a common voice. Specifically, technology sellers want to end their responsibility after they sell or transfer technology. They do not have after-sales services to support technology buyers. As a result, that technology is not fully utilised and buyers lose trust in sellers as they think the technology is not as good as expected. Therefore, the role of technology transfer intermediaries should be appreciated and cared.
Dr Tran Duc Hanh, President of Duc Hanh Group, CEO of JSC Duc Hanh Maphavet Veterinary JSC
Agricultural and veterinary businesses in Vietnam still face some hurdles, particularly very cumbersome administrative procedures.
While businesses invest a lot to buy production lines powered by world-class advanced technologies, inspection authorities do not have any proper devices for performing their tasks. While companies hire foreigners to manufacture high-grade products to not only sell in the domestic market but also export to foreign markets, inspectors cannot speak foreign language and lack advanced knowledge of fields inspected. The long inspection time distresses businesses.
Competent authorities can support businesses by reducing troublesome administrative procedures for businesses. They also help disseminate the right knowledge of organic products. Then, Vietnamese businesses will be eligible and confident to compete and integrate.
Anh Mai
Vietnamese
