VietNamNet Bridge – A number of Japanese enterprises and investors have been sounding out investment opportunities in the agricultural sector in Vietnam this year, which might help the sector gain access to high technology and export farm produce of higher value.

Enterprises seeking opportunities

Representatives of Japan’s Showa Denko have recently met the government of Ha Nam Province to express interest in growing clean vegetables using LED lights. The firm has got permission for an experimental model at Dong Van 2 Industrial Park in Duy Tien District.

According to Showa Denko, the northern province of Ha Nam has clean water and the company would expand the model if it is successful. The project will turn out products late this year.

Earlier, Japan’s big egg producer ISE Food presented a plan to cooperate and transfer egg production technology to HCMC at a meeting with HCMC vice chairman Le Thanh Liem in February. Shuntaro Ise from ISE Food said the company wanted to seek partners in Vietnam to exchange information and technology for raising chicken for eggs and introduce eggs produced by the company.

ISE Food also intends to share farming experience with Vietnamese farmers and wants the HCMC government to introduce enterprises and farms which it can cooperate with.

In his recent visit to Vietnam, Yoshinobu Nisaka, governor of Japan’s Wakayama Prefecture, said Vietnam has a developed agriculture in comparison with other countries in the region and a convenient geographical location to connect big consumption markets.

Vietnam’s demand for high-tech farming is also rising, which is one of the reasons Japanese firms want to boost investments in agriculture here in the country.

At the Vietnam-Japan cooperation forum on high technology in agriculture held in HCMC last month, Japanese companies said they are willing to transfer technology to Vietnam to produce farm goods for export to Japan.

Investment motivations

Enterprises said cooperation and technology transfer in the agricultural sector between Vietnam and Japan have not matched potential.

According to the Japan External Trade Organization (JETRO) in HCMC, Japanese investments tend to flow into agriculture and aquaculture. Japan has some hi-tech agricultural enterprises interested in seeking Vietnamese partners for technology transfer.

An agreement on agricultural cooperation between HCMC and Japan’s Ministry of Agriculture, Forestry and Fisheries inked early this year will serve as a platform to encourage Japanese businesses to further invest in HCMC.

However, the interest of Japanese firms in Vietnam’s agriculture has picked up since Japanese Minister of Agriculture, Forestry and Fisheries Yoshimasa Hayashi worked with his Vietnamese counterpart last June. Since then, a number of Japanese firms have come to Vietnam to explore cooperation and investment opportunities in the sector.

Chances of increasing value added exports

According to experts, another reason for Japanese firms shifting their investment focus to Vietnam is that Japan’s workforce in the agricultural sector accounts for 3-4% of the population and is mainly old people while up to 70% of Vietnam’s population is in rural areas.

As Japan will have to reduce protection for agriculture, especially under the Trans-Pacific Partnership, Japanese companies in the sector are seeking to step up overseas investments.

Japan’s agriculture meets only 45% of its domestic consumption, so its demand for farm import is high. Meanwhile, Vietnam is an ideal destination for agricultural investments of Japan due to good natural conditions.

According to Tu Minh Thien, deputy head of the authority of HCMC Agricultural Hi-tech Park, the TPP requires elimination of agricultural protection. Therefore, Japan is shifting investments to Vietnam.

Cooperating with Japanese investors in the farming sector will open up chances for Vietnam to deeper penetrate the Japanese market and other countries as Japan has high food safety standards.

However, to attract Japanese investments in agriculture, Vietnam needs to streamline export and import procedures to facilitate operations of Japanese enterprises.