(28-08-2007)

Workers install machines used in agricultural production. The Ministry of Agriculture and Rural Development is to issue a strategy for the 2006 - 2010 period aimed at attracting more FDI in agriculture and enhancing the efficiency of investment. — VNA/VNS Photo Hong Hoa

HA NOI — A new strategy designed to attract more effective foreign investment for agriculture will be published next month, the director of the Agriculture and Rural Development Ministry’s International Integration Department, Le Van Minh, has confirmed to Viet Nam News.

The strategy is intended to have FDI account for about 11 per cent of the VND150,000 billion (US$9.4 billion), targeted for agricultural investment from 2006 – 2010.

Minh said the strategy would include three major measure:

Enhancing the effectiveness and quality of each branch of agriculture and their produce;

Perfecting ways to encourage FDI for agriculture, including preferential policies; and

Improving infrastructure and enhancing the effectiveness and promotion of FDI.

Minh said legal regulations would be changed to eliminate shortcomings and difficulties for investors and to minimise risk for FDI enterprises.

These would deal with the opening of accounts abroad, produce certification, non-retrospective regulations and the application of international law.

The ministry would also put a new preferential policy for the attraction of FDI for agriculture to the Government during the fourth quarter of this year, he said.

Spending from the State budget and Official Development Assistance to develop rural infrastructure, job training for farmers and for the improvement of research and technology transfer would be increased.

"These activities would create more favourable conditions for foreign investors in agriculture," Minh said.

The investment would provide substantial resources, especially in the highlands and remote Viet Nam which has great potential for the development of land and forestry resources as well as livestock breeding.

"This investment will help narrow the gap in economic development between cities and provinces throughout the country," Minh said.

The Viet Nam Government encourages FDI for such activities as the processing of crops and forestry products and the planting of forests and livestock breeding so as to gradually increase the value of the country’s agricultural exports and decrease the import of raw materials.

Although FDI for agriculture has not yet met its potential, it has contributed significantly in supplying investment capital for agriculture, forestry and rural development.

The output from FDI enterprises has had easy access to international markets and this paved the way for the penetration and promotion of Vietnamese agricultural produce, Minh said.

"This would substantially increase the industry’s export revenue," he said.

Foreign direct investment for agriculture, especially projects providing input materials, also played a social role by modernising obsolete cultivation methods and improving poor infrastructure.

FDI-funded forestry and aquaculture projects employ 75,000 permanent workers and numerous seasonal employees.

Viet Nam has comparative advantages in agriculture against its regional neighbours through its cheap labour, diversified natural resources and a stable economic and social environment that ensured safe investment.

Viet Nam’s policies for attracting investment and its regulations were about the same as other regional nations.

But investment in agriculture carries the risk of seasonal produce that depends on nature for success without the prospect of immediate profit.

Further, margins for agricultural produce were low.

Tran Thi Thu of the Planning and Investment Ministry’s Foreign Investment Agency maintains that FDI in agriculture and forestry is modest and unstable when compared with other industries.

"Further, FDI for agriculture hasn’t been equally distributed throughout the country," Thu said.

Most was confined to key southern and northern economic zones and scattered in remote regions, she said.

Viet Nam lists 758 working FDI agriculture projects with registered capital of about $3.78 billion or about 5.6 per cent of the country’s total FDI.

Although 42 nations and territories have invested in agriculture, most are from Asia – Taiwan accounts for 19 per cent and Thailand 12 per cent followed by Singapore.

Viet Nam has yet to attract significant FDI for agriculture from such major agricultural countries as the US, Canada and Australia. — VNS