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Farming investment remains inadequate

Update: July, 04/2015 - 09:46

According to the MARD figures, the FDI capital in agro-forestry and fishery accounts for just 0.6-1 per cent of the total investment in the economy. — File Photo

HA NOI (VNS) — Investment in agriculture and rural development seems to be decreasing year by year in total socio-economic development, according to the Ministry of Agriculture and Rural Development (MARD).

In the year 2000, investment in agriculture accounted for 14 per cent of total investment in Viet Nam. The percentage dropped to 7.5 per cent in 2005 and to 5 per cent this year.

The lack of interest is because investment in agriculture and rural development is high risk and the returns are slow and low.

So far, most agricultural projects are backed by the State Budget. Capital mobilisation from the private and foreign direct investment (FDI) sectors has been facing many difficulties.

According to the MARD figures, the FDI capital in agro-forestry and fishery accounts for just 0.6-1 per cent of the total investment in the economy.

Although more than 70 per cent of country's population is engaged in the agricultural sector which contributes 20 per cent of GDP, the sector is small scale and backward compared to other countries in the region.

In fact, enterprises that want to invest in the sector face many obstacles. To invest in agricultural production, businesses first need land. But at present, agricultural land is divided into small scattered plots. This creates difficulties for large-scale production and the application of high technology.

Vu Van Tien, president of Geleximco Group in Thai Binh Province told Tin Tuc (News) newspaper that several farmers had abandoned their cultivated land, but the group still could not negotiate with thousands of householders to acquire land for large-scale production.

This was a major obstacle that needed support from local governments, Tien said.

Co-operation between farmers and enterprises could be effective. However, the model had failed in many regions because farmers had kept to their old ways and did not trust businesses, he told the newspaper.

The nation's legal system lacked incentives to encourage enterprises to invest in the agricultural sector.

Many enterprises complain that they had invested money in such things as high technology flower planting or extracting collagen from Tra fish cartilage, but they hadn't received any priorities, such as tax exemption, according to Vu Tien Loc, president of the Viet Nam Chamber for Commerce and Industry (VCCI).

Sustainable development

The agricultural sector wants to sustainably develop and be able to compete with other countries, especially when Viet Nam joins the Trans-Pacific Partnership (TPP). This means the sector must reform its production methods and increase investment capital.

Experts said the investment should be focused on advanced technology application so as to raise the productivity and product quality.

The Government should give further incentives on credit and loans to help farmers expand their production.

Incentives should be given to enterprises and foreign investors to form large-scale production regions to meet increasing domestic and world demand.

According to Loc, along with supporting agriculture-related businesses, the Government should also assist farmers to invest into high technologies.

During the international integration, farmer households were very vulnerable, Loc said. So the Government should instruct them to co-operate with enterprises to develop production but not transfer their cultivated lands to businesses.

MARD deputy minister Le Quoc Doanh said it was necessary to promote the model of public-private partnership (PPP) to develop the agriculture sector.

MARD had launched a programme of public private partnerships in 2011 and promoted in farms growing tea, coffee, vegetables, pepper, and aquaculture, Doanh said.

The model had brought higher productivity, incomes, and lower costs, he added.

Doanh said the model was planned to expand in the future.

As estimated, there will be 500,000 households joining the PPP model in 2017. — VNS

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