“Vietnam holds great advantages for agricultural development. However, productivity, quality and added value has remained, plus slower agricultural growth in recent years,” Mr Nguyen Van Binh, Member of the Politburo and Head of the Central Economic Committee, said at the “Agricultural Business Development in the Course of Agricultural Restructuring and New Countryside Construction” in Hanoi.
Agricultural investment always accounts for low ratio
After more than 30 years of doi moi (reform), Vietnam has introduced many important guidelines and policies with regard to agriculture, farmers and countryside, particularly contents on agricultural and rural business development. From a food importer, Vietnam now not only meets the food demand of more than 90 million people and ensures food security and nutrition security, but also exports is agricultural products to other countries across the world, including high-positioned rice, coffee, rubber, pepper, cashew nut, pangasius, shrimp and woodwork.
However, Vietnam’s agricultural growth and development has mainly based on input-intensive production, human resources and natural resources in the past few decades, he said. Since 1990, productivity growth has slowed down and lagged behind most countries with similar development levels in the region because profitability from land intensification has reached a critical level. The labour productivity growth of Vietnam’s agricultural sector averaged 3.4 per cent in the 2000 - 2013 period, equal to less than a half of South Korea’s growth in the 1980 - 1995 period and much lower than that in China (7.5 per cent) in the same period. In 2014, the labour productivity in agriculture equalled only 39 per cent of the overall labour productivity of the economy. This made Vietnam’s agricultural development unsustainable and caused new economic impasses: Low added value, non-guaranteed food safety and low profitability of smallholding farming households.
This reality was attributed to Vietnam’s agricultural production mainly based on fragmented smallholding family-based production, slow business and cooperative development and poorly linked agricultural production and business. Agricultural enterprises account for a very tiny proportion in the business community and develop very slowly. In 2014, they made up less than 1 per cent of companies surveyed (only 3,844 agricultural businesses out of 420,251 companies surveyed). In the 2010 - 2014 period, the number of agricultural, forestry and aquatic businesses increased 10.6 per cent a year on average, lower than the overall growth of 10.9 per cent. In 2015, the number of agricultural companies decreased to 3,640, of which 96.53 per cent were small and medium-sized agricultural, forestry and aquatic enterprises and up to 50 per cent were micro-businesses (less than 10 employees). Most companies were engaged in agriculture (47.63 per cent), followed by aquaculture (35.43 per cent) and forestry (16.94 per cent). Besides, non-State sectors (including foreign-invested) invested merely VND30,419 billion in 2014 (an increase of 1.42 times over 2009). Agricultural and rural investment made up for 5.4 - 5.6 per cent of the country’s total investment capital, while agriculture still contributed 17.7 per cent to the national GDP in 2014.
Reasonable mechanism needed
Agriculture, farmers and rural area have a strategic position in the cause of industrialisation and modernisation of Vietnam. Hence, to strongly engage agriculture in global value chains, Vietnam needs to assess the real state of agricultural enterprise development in the course of restructuring in association with new countryside construction.
To encourage businesses to invest in agriculture and restructure agriculture, it is vital to do two things immediately: Accumulating farmland and developing collective agricultural economic production. With reasonable mechanisms, they will invest in agriculture, renovate technologies, link production chains, brands and commercial production, and improve competitiveness, added value and sustainable development of agriculture,” Mr Binh said.
Besides, it is important to get rid of unsustainable, ineffective and unfair business practices. Companies must compete equally and fairly on the market and the State will provide support policies like tax break for agricultural enterprises and interest rate subsidy.
Mr Nguyen Xuan Cuong, Minister of Agriculture and Rural Development, said, to increase agricultural investment, Vietnam needs to concretise its guidelines and policies to encourage and attract domestic and foreign private investment for target fields, focus on improving the business environment and supporting business development, simplify administrative procedures and save time and expenses in dealing with administrative procedures. It also needs to abolish unnecessary administrative procedures for businesses and citizens.
Quynh Anh
Vietnamese
