Nguyễn Đức Thành, Director of the Việt Nam Institute for Economic and Policy Research, under the Việt Nam University of Economics and Business, speaks to Hải Quan (Customs) newspaper about the need to develop enterprises serving as locomotives in agricultural development

What is your opinion on the “expansion” of foreign direct investment (FDI) enterprises in the agricultural sector?

Generally speaking, in agriculture, FDI enterprises are much stronger than Vietnamese enterprises in terms of scope, investment capital, know-how and market access. In addition, these FDI enterprises are members of global value chains. So they are stronger than private enterprises, not only in Việt Nam but also internationally.

In your opinion, why do domestic enterprises struggle in Việt Nam against foreign firms?

The reason is very simple. FDI enterprises are financially strong and have advantages in all aspects over domestic enterprises.

In our case, more recently, we have failed to create big Vietnamese corporations strong enough to compete with FDI enterprises. Further, private Vietnamese enterprises are not strong enough, in terms of finance, technical know how, management skills and penetration skills in global value chains. That’s why our enterprises are in much weaker positions than their FDI peers.

In my opinion, Việt Nam’s strategy for private and State-own enterprises development is still unclear. Though the number of State-owned enterprises has been reduced, they are still in a dominant position in almost all aspects of life, particularly in agriculture. This is the key factor leading to the present domination of FDI enterprises in our agriculture sector.

Việt Nam has signed many Free Trade Agreements (FTAs), do you think that in this context, if we don’t adopt breakthrough measures, Vietnamese enterprises will continue to struggle against FDI enterprises?

As Việt Nam is integrating deeper internationally, we will have many more foreign competitors, not only in agriculture but in other fields too. In such a context, our private enterprises will face stronger competition from their foreign peers.

Recently, some Vietnamese groups, like Hoàng Anh Gia Lai, TH True Milk or Vingroup have increased their investment in our agriculture sector. Though it is late, it’s “better late than never”.

Experience shows that investment needs not only money and technology, but also accumulated experience.

Further more, private enterprises need stronger support from the Government so that they can compete with their foreign peers.

What are the “bottle necks” that must be removed to help Vietnamese enterprises be more competitive?

Recently, the Government has vowed to become a government of constructivism and facilitate conditions for private enterprises to develop. It will take time to turn the Government’s policies into life. In my opinion, what they need are policies and mechanisms to help them to develop.

In addition, private enterprises need support from State enterprises and from big corporations as “midwives”.

If these two conditions are available, I’m confident that our primary industry – agriculture will fly high. So will our private agriculture enterprises! — VNS