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1. How would you describe the advantages and disadvantages of Vietnam in attracting FDI in the agricultural sector?
In the general growth of the whole economy in the first 6 months of 2021, the agriculture, forestry and fishing sector grew by 3.82% compared to the same period in last year (contributing 12.15% to overall national growth).
Recently, the government has published numerous policies to encourage companies to invest in the agricultural sector. For example, companies with special agricultural projects that lease or sublet land and water bodies to households and individuals to implement investment projects are eligible for investment incentives from the government. . The country will provide funding equivalent to 20% of land rent and water surface rent for the first 5 years after project completion and commissioning. Or, the government supports agricultural products processing establishments, livestock and poultry slaughterhouses with 60% of investment capital and no more than VND 15 billion / project to build infrastructure for waste treatment, transport , electricity, etc.
Human resources are not maximized: Abundant workforce is an advantage, but vocational training programs and projects are not really appropriate and effective, so the quality of the workforce is still low. In 2020, untrained agricultural, forestry and fishing workers accounted for around 12 million people, or 89.97% of the total number of agricultural, forestry and fishing workers of working age.
Small production is still the majority, product quality is not high: development and production are still scattered and small. Most of the production units are small scale with low investment capital, so the efficiency of production and enterprise is not high.
Environmental pollution is still a big problem: The agricultural production sector has revealed more and more clearly the weaknesses in the protection of the ecological environment in recent years. The collection and treatment of waste is still insufficient. Placing pesticide bottles and packaging directly in fields, lakes, ponds, canals, rivers and streams is quite common. In 2020, there are 4,096 municipalities nationwide that do not have a collection point for bottles and packaging of pesticides, which represents 49.37% of the total number of municipalities in rural areas.
Non-advanced agricultural technology: most (if not all) of agricultural production remains outside, which makes it easily directly affected by the risks of natural disasters, epidemics (in crop and animal husbandry, aquaculture) at any time, affecting production and business profits.
2. Under Decision No. 255 / QD-TTg approving the Agricultural Sector Restructuring Plan for the period 2021-2025, the country would focus on the development of sustainable agriculture as well as the improvement of quality. , the added value and competitiveness of local agricultural products. From there, how do you see the prospects for attracting FDI in the agricultural sector in the years to come?
According to decision 255, the following areas will be targeted over the next 4 years:
- Cultivation field
Vietnam aims to increase the proportion of fruit trees to 21%, vegetables to 17% to meet market consumption demand, helping to ensure national food security.
- Breeding field
Adjust the structure of cattle herds, aimed at reducing the proportion of pigs, increase the proportion of poultry and cattle herds.
- Fishing field
Promote offshore agriculture, focusing on objects of high economic value; development of organic aquaculture.
- Salt industry
Renovate, upgrade and modernize infrastructure, apply technical advances to increase the production of industrial salt and clean salt; to form a key industrial-scale salt production zone in the south-central provinces; Significantly reduce the manual salt production area, converting inefficient salt production areas to other areas with higher economic efficiency.
3. It can be said that one of the bottlenecks of investment in the agricultural sector is the local mentality. What are the solutions to overcome the barriers and attract more foreign investors in the Vietnamese agricultural sector?
- Create investment incentives for FDI projects in the agricultural sector, for example: preferential loans for investment projects in the development of raw materials for the sector, projects that apply biotechnology; support scientific research activities, tax incentives, land tax.
- By applying guarantee mechanisms for FDI firms, work with banks to create favorable access for foreign firms to private capital.
- Develop a support mechanism for projects affected by natural disasters or at risk of market price fluctuations.
- Develop one-stop-shop regulations for FDI investors, simplify investment procedures, especially with regard to land clearance.
- Develop the vocational training system in rural areas. Vietnam has many protocols with other EU countries aimed at exchanging agricultural knowledge in various forms which should be maximized.
- Promote the role of local organizations in supporting FDI investors to approach local farmers.
4. FDI in high-tech and sustainable agriculture is seen as a current trend and solution. What have been the main concerns of foreign agro-industries in terms of sustainable development?
The biggest difficulty when investing in agriculture for FDI companies is securing farmland. Even where there is a land fund for agriculture, the procedures are also relatively long and difficult. In addition, the transport of agricultural products between the place of production and the place of consumption is still difficult due to the lack of synchronous infrastructure.
Currently, foreign investors are not allowed to receive the transfer of agricultural land use rights, are not allowed to lease agricultural land directly to households, nor to use such leased land as collateral for loans, which limits the access to land resources and it is impossible for foreign investors to form an area large enough to implement large projects. However, in some localities, if there are land funds, priority is given to the development of industrial parks because they will generate higher and faster income.
5. What strategies should the government adopt during the period 2021-2025 to ensure that the country achieves these goals?
In addition to those mentioned in answer 2 above, other recommended strategies include:
- Guide e-commerce trading rooms to facilitate the adhesion of sellers and traders of agricultural products to the room; and
- Promote the application of high technology in the transport of agricultural products. Currently, the process of transporting and exporting agricultural products often damages around 40% of products, causing significant costs to the economy.
Please feel free to contact author Dr. Oliver Massmann at [email protected] Dr. Oliver Massmann is the Managing Director of Duane Morris Vietnam LLC, member of the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer present in Vietnamese language to the members of the NATIONAL ASSEMBLY OF VIETNAM.
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