World Economy

Vietnam Eyes FDI in Farming

Vietnam Eyes FDI in FarmingVietnam Eyes FDI in Farming

Vietnam has had policies to attract more investment in the farming industry, especially foreign direct investment, but investors must overcome numerous challenges to achieve success, experts said.

The Vietnam Ministry of Agriculture and Rural Development has submitted to the government a draft of a strategy to attract FDI in Vietnam’s farming, forestry and fishery sectors by 2030, according to Tran Kim Long, head of the ministry’s International Cooperation Department, VNS reported.

Under the draft, the ministry has forecast that the FDI to the industry would reach $5 billion in 2020 and $8 billion by 2030.

Long said the capital was scheduled to fund 31 sectors producing added value and high competitive products, including deep-processing technologies for farming products such as rice, cassava, rubber, and coffee, in addition to cacao.

The draft included incentives for foreign investors, such as reduction in corporate income tax, import and export tax, and exemption of land rent for several years from the time the projects come into operation, it was reported.

Meanwhile, the ministry said there are 3,500 local enterprises, accounting for 1% of the total number of local entrepreneurs, who invest in the farming industry, but they have focused on trading services and not on producing farm products as they were afraid of unexpected risks.

Dang Kim Son, former head of the ministry’s Institute for Strategy and Policies on Agricultural and Rural Development, said the risks involved natural disasters, diseases, unstable markets and changes of policies because farming products need investment on a long term over several months or years, and even tens of years, as in the case of forestry projects, so the risks are very large.

In addition, local firms must face tough competition from foreign investors who have strong financial ability.

Therefore, Son said, local enterprises should conduct adequate market research and focus on investment fields that they could manage investment activities well. They should also build a friendly-environmental and sustainable production system.