“Currently, some agricultural business start-ups and big corporations have shifted to agriculture. Spreading the experience of these businesses to rural areas to stimulate entrepreneurship among farmers is very important,” said Dr Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), at the Forum “Promoting business roles in new countryside construction” held by VCCI in Hanoi.
Revolutionary thinking and action in rural areas needed
Dr Loc said, although Vietnam has 10 years or so to restructure its agricultural sector, its confrontation to big economies is still very limited. Even big economies like Japan, an agricultural powerhouse, cannot retain their traditional business backgrounds and they have to find other markets, including Vietnam. In fact, after the Trans-Pacific Partnership (TPP) was concluded, Japanese business delegations visited Vietnam to seek a way-out for its agricultural sector and look for an agricultural belt to ensure its food supply in the future.
Meanwhile, Vietnam has a highly productive agriculture but its products do not have added value or high quality. Agricultural production is oriented to quantity rather than quality. Therefore, to develop the agricultural sector, we need a restructuring revolution.
Mr Loc said there are revolutionary thinking and action plans for agriculture and rural areas. The Government has many solutions but they need to be more consistent to attract more farming households and businesses to invest more in agriculture.
“We need to launch agricultural start-ups in rural areas nationwide. Rural workers must understand that flowing into industrial zones and big cities is no longer a No. 1 choice but some rural youth have set up their own businesses on their homeland. In this thinking revolution, we must clearly define the role of each entity where the Government plays a supporting role, entrepreneurs play a guiding role, businesses play a central role, scientists play an accompanying role, and farmers are actors,” said the VCCI President. The future objective of agriculture is not just smart agriculture, but an entire ecological economy. Vietnam has good conditions to do this.
Besides, Dr Loc said that it is necessary to incorporate modern agriculture and implement value chains where businesses play a nucleus role and entrepreneurs have a leading role in carrying out rural development objectives.
Little investment in agriculture, rural areas
According to statistics, after five years carrying out new countryside construction programme, Vietnam has 1,152 communes completing 19 new countryside criteria, accounting for nearly 13 percent. 15.4 percent of communes fulfil 15 out of 18 criteria. Especially, communes achieving less than five criteria fell sharply from 82 percent in 2010 to 6.75 percent in May 2015. Eight districts/towns have completed new rural standards. By the end of 2015, the country will have about 1,500 communes (accounting for 17 percent) and 16 districts/towns meet new countryside construction criteria.
Restructuring has helped maintain production and business growth. In 2014, agricultural production value rose by 3.49 percent and agricultural exports valued US$30.billion, up 11.2 percent over 2013. In the first six months of 2015, despite natural disasters and shrinking markets, the total production value still increased by 2.41 percent year over year. The ratio of value added in gross production value was 67.8 percent in 2014, higher than 64.7 percent in 2013. These results have contributed significantly to raising incomes and improving livelihoods of farmers.
Mr Tang Minh Loc, Head of Central New Rural Area Coordination Committee, said that a total of VND851,854 billion has been spent on new countryside construction in nearly five years. Of the sum, corporate investment made up of 4.9 percent, or VND20,408 billion. There are a lot of small agricultural businesses. For instance, Long Binh Enterprise based in Long An province annually purchases VND150 billion of agricultural products from farmers and funds VND52 billion to local new countryside construction. Phan Hai Enterprise in Quang Binh province financed VND70 billion for new countryside infrastructure projects.” However, in fact, very few companies invest in agriculture and rural areas. According to the General Statistics Office (GSO), in 2014, enterprises engaged in agriculture, forestry and fisheries only accounted for 0.96 percent of all business entities (foreign companies account for only 3 percent), made up for 1 percent of investment capital and employed 2.3 percent up of labour force.
How to attract?
Mr Tang Minh Loc noted that unstable planning, insufficient infrastructure, low-quality labour force, hard access to preferential credits and difficult land clearance are barriers to corporate investment in agriculture.
Therefore, to remove difficulties for enterprises, Provincial People's Committees must act as arbitrators in land allocation for businesses and strongly support infrastructure construction for big agricultural projects. In addition, they need to provide at least 20 percent of construction expenses for essential basic infrastructure for investment projects; have preferential credits for businesses investing in agriculture; and subsidise at least 30 percent of agricultural insurance for businesses. For start-up businesses, they need to have some more policies on scientific and technological application investment and trade promotion.
According to new countryside construction and agricultural restructuring orientation in the 2016-2020 period, Vietnam needs to basically complete essential infrastructure systems in communes (particularly traffic, electricity grid, irrigation network, clean water, schools, cultural houses and medical stations); ensure effective connectivity with district and provincial infrastructures; and focus on production development in association with restructuring to enhance effectiveness, sharpen competitiveness, and raise incomes for farmers, he added. Particularly, it needs to further study and amend policies, provide the most favourable conditions for rural people to promote their initiative and creativity in new rural construction and restructuring, encourage businesses to invest in this sector (focusing on land, capital and tax policies); increase resources for new rural construction programmes and restructure public investment to enhance capital efficiency; and accelerate the reform and upgrading of State management apparatuses in charge of agriculture and countryside to meet new development demands.
Mr Nguyen Van Tien, Director of Agriculture Department, Central Economic Commission
There are four challenges to investment attraction for new rural construction. First, weak agricultural and rural technical infrastructure cannot meet development demands. Second, companies operating in agriculture and rural areas account for a tiny proportion of the business community in the country by both number and scale, thus resulting in poor interaction. Third, agricultural and rural investment has low profit in the face of numerous risks, while State supports and insurance policies do not provide investment opportunities in agriculture and rural development. Fourth, farmers’ low incomes, small production scale and capacity, limited production and business organisation restrict the formation of agricultural enterprises.
To strongly promote business roles in agricultural and rural development, Vietnam must communicate and canvass the implementation of the Resolution on agriculture, farmers and rural areas and the National Programme for New Countryside Construction. At the same time, it is necessary to review and improve quality and manage plans such as land planning and agricultural development planning; boost the publicity and transparency of investment planning and project proposal; build uniform and consistent policies and procedures; adopt effective rural production and service models; support and facilitate businesses to access new technologies, apply science and technology, improve productivity, product quality, and others.
Dr Nguyen Tri Ngoc, Vice President and General Secretary of the General Council of Agriculture and Rural Development of Vietnam
To develop agriculture and rural areas in the new period, I propose the Government assess and review two-year results of implementing Decree 210/2013/ND-CP, with special attention given to settling the current hardest issue, land. Accordingly, businesses will only need to pay to buy or rent once to end the current reality that they negotiate land purchase deals with farmers and then pay rents for their purchased land. The Government needs to have policies on land accumulation to soon form a true land market for businesses to develop and expand production.
The Government also needs policies to support and stimulate agricultural business start-ups, including insurance for agricultural products as it is piloting with three agricultural products in 13 provinces and cities. It also provides insurance support for rural workers, particularly those in smallholding farms and businesses.
Besides, it needs preferential credit packages for businesses engaged in agricultural and new countryside construction investment as well as policies on scientific and technological application and production technological innovation.
Mr Nguyen Dinh Long, Deputy Director of Cooperative Policy and Development Committee, Vietnam Cooperative Alliance
For new-generation cooperatives, this will be a dual impetus that lays the foundation for Vietnam's agricultural development in the new period because it upholds the interests, efforts and creativity of every farming household.
However, cooperatives are yet to promote their roles as a collective economic force. Particularly, some transformed agricultural cooperatives still wearing the old cloak of old-style cooperatives where members do not contribute a share of capital. Many cooperatives cannot sell products for their members. Many find it hard to access credit sources, including unsecured and secured loans, because there is no preferential policy for rural production units without land for land security.
To address the above issues, Vietnam must strengthen communication and enhance perception of State officials, Party members and people in purpose, significance, importance and responsibility of new countryside construction. Particularly, it is necessary to review and complete mechanisms and policies on agriculture and rural development to attract big corporations to invest in production development; and focus resources on building new rural areas by integrating development programmes, balancing budget allocation for programme implementation. It is also important to mobilise resources from farmers, and solicit non-refundable aid from successful enterprises and entrepreneurs for their homeland.
Vietnamese
