VietNamNet Bridge – The local agricultural sector has set targets of attracting US$4.5 billion in foreign direct investment (FDI) by 2020 and US$6 billion by 2030, according to the Ministry of Agriculture and Rural Development.

Customers select farm products at a supermarket in HCMC. The Ministry of Agriculture and Rural Development is working on schemes to attract more foreign investors to the local agriculture sector

The figures are well above the US$3.43 billion registered for 512 valid FDI projects in the sector as of the end of last year.

Tran Kim Long, head of the ministry’s International Cooperation Department, told Vietnam News Agency that FDI in the agricultural sector accounted for a mere 3.06% of FDI projects and only 1.35% of total FDI capital pledged nationwide despite the sector’s remarkable contribution to the country’s gross domestic product (GDP).

Last year, the sector contributed 18.12% of GDP and posted export revenue of US$30.86 billion, up 11.2% over the previous year. It enjoyed a trade surplus of US$9.5 billion, up 7.7% over 2013.

However, FDI approvals for the sector have remained modest, Long said. He attributed the low FDI pledges to Vietnam’s small agriculture sector and lack of supporting services and infrastructure facilities. This is one of the reasons why the sector is easily vulnerable to natural disasters and farm produce price volatility on global markets.   

Moreover, policies for the sector are changing and inconsistent, and investment promotions are still weak, Long added.

To develop a strong agricultural sector, the ministry is executing a restructuring scheme with an aim to turn out more value-added products by applying high technology and strict quality and food safety requirements. The sector will spend more building strong brands for Vietnamese agro-aqua-forestry products.

The ministry is now working to deploy the public-private partnership (PPP) model in the sector as one of the measures to entice more foreign investors to coffee, tea, vegetable and fruit, seafood, pepper and spice processing projects, among others.

Some 500,000 households are expected to participate in PPP projects in the agricultural sector in 2017.

In addition to PPP, foreign companies are encouraged to partner with local counterparts and farmers and set up 100% foreign-owned firms to carry out projects in the agricultural sector.

Currently, the ministry is improving a draft strategy to call for more foreign investments in the agro-aqua-forestry sector for submission to the Government in the second quarter of this year. Based on this strategy, the Government is expected to issue incentives for foreign investments in agriculture and rural areas.

Long said in the past time many foreign investors including those from Japan and South Korea have asked the ministry about the opportunities in agriculture.

“This is a good sign for the sector,” Long said, adding investors from Japan and Korea seek to bring advanced technology here to produce quality and value-added farm produce.

The ministry is working with relevant agencies over action plans to cash in on the opportunities from major trade agreements.

With such new policies and investment promotion schemes, the ministry expects FDI flows into the sector to increase to 4-5% of total FDI pledges for projects in Vietnam after 2020.

A report of the Foreign Investment Agency (FIA) showed foreign direct investment (FDI) approvals last year neared US$22 billion, down 1.9% over 2013. The figure included US$16.5 billion for 1,843 new projects and US$5.41 billion for 749 operational projects.

SGT