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Foreign investors show declining interest in agriculture sector

Update: October, 08/2014 - 08:39

Fifteen years ago, the FDI in the sector accounted for 15 per cent of the country's total FDI, but this declined to less than 0.5 per cent in the past three years.— Photo baodautu

HA NOI (VNS) — Foreign direct investment (FDI) in Viet Nam's agricultural sector witnessed a sharp decline in the past 15 years, according to figures from the Foreign Investment Agency (FIA).

In spite of this, FIA officials noted, agriculture remained as the primary economic sector, contributing 20 per cent of the country's gross domestic product per year and 70 per cent of the country's total employed workforce.

FIA officials revealed that the FDI in agriculture made up a modest percentage and was on a downtrend. Fifteen years ago, the FDI in the sector accounted for 15 per cent of the country's total FDI, but this declined to less than 0.5 per cent in the past three years.

Figures showed that as of end-August 2014, there were only 512 FDI projects in the agricultural sector, or 3.03 per cent of total FDI projects, with a registered capital of US$3.4 billion, or 1.4 per cent of total registered FDI capital.

Agriculture ranked 10th among 18 economic sectors which attracted FDI, and the projects were small-scale, noted FDI officials. Figures showed that FDI projects in agriculture had an average investment capital of just $6.6 million, compared with the average investment capital of $14.7 million for all FDI projects.

In addition, the allocation of FDI to agriculture was uneven and mainly focused on forest plantation and wood processing, which accounted for 78 per cent. The country's agricultural sector also failed to attract investors from countries with advanced agriculture such as the United States, Japan and the European Union.

The agency pointed out that foreign investors were hesitant to pour investments in the sector because of the heavy dependence on natural conditions and small-scale and dispersed production, as well as the shortage of infrastructure.

In addition, the country lacked a long-term strategy to attract FDI into agriculture, and current regulations, policies and incentives for investments in agriculture remained vague.

To address the alarming FDI decline in agriculture, a project to boost FDI in the agriculture, forestry and fishery sectors has been proposed.

At a conference to discuss the draft project last May, Agriculture and Rural Development Minister Cao Duc Phat said the Government would create an advantageous investment environment, reduce procedures and costs and tackle policy inconsistencies to encourage foreign investments in agriculture.

The FIA has proposed five solutions to boost FDI in agriculture that includes policy incentives, as well as enhancement of agricultural production planning, land planning, development of agricultural raw material production and development of human resources. — VNS

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