Under a draft decree which was now raised for public comments on the ministry's e-portal, the ministry proposed incentives and support to be given to foreign investors who invested in the farming sector.

According to the ministry, as FDI in agriculture helped improve productivity, quality and competitiveness of products and expand exports, great importance should be attached to FDI inflow to this sector.

However, the ministry pointed out that FDI in agriculture remained modest compared to the potential and strength of the sector which currently contributed around 20 per cent of the country's gross domestic product (GDP).

FDI in agricultural projects was mainly small scale, the ministry said.

Statistics showed that as of 2014, there were 512 existing FDI projects in the agricultural sector with total registered capital of US$3.34 billion, only accounting for 3.06 per cent and 1.35 per cent of the total number of FDI projects and the total FDI registered capital, respectively.

In the first 10 months of this year, only $303 million out of the country's total $19.3 billion FDI was invested into agriculture.

Besides small scale and dispersed production of Viet Nam's agricultural sector, shortage of human resources and raw materials, the lack of incentives and preferential policies as well as a strategy to attract FDI was a major cause for the modest FDI inflow.

"The draft decree was expected to trigger FDI inflow into the farming sector," the ministry said.

Under the draft, investments in four sectors would be provided with preferential policies, including producing and developing plant varieties and animal breeds, producing raw materials with high added value, processing agro-forestry and fisheries products associated with raw material areas and exports, and producing veterinary medicine and plant protection products.

Investors would be provided with incentives such as tax exemption and land use fee cuts.

The ministry expected that FDI inflow into the farming sector would help promote the production of quality products with high added value.

The FDI inflow into the agricultural sector was anticipated to hit $4.5 billion by 2020 and $6 billion by 2020 with the percentage in the economy's total FDI attraction to be raised to 4-5 per cent after 2020, according to the ministry.

The ministry also set goal that the export value of farming products' in the FDI sector would increase from 10 per cent to 15 per cent in 2020 against 2015.

VNS