Motivating Investment in Agriculture

Agriculture, forestry and fisheries accounted for only one percent all FDI Vietnam in 2009 (VEN) - While foreign direct investment (FDI) in real estate, industrial and service industries skyrocketed, FDI in agriculture remains humble.   Do Nhat Hoang, the director of the Foreign Investment Department of the Ministry of Planning and Investment, said that agriculture, forestry and fisheries accounted for eight percent of all FDI in Vietnam in 2001, and that this rate decreased to only one percent in 2009. Meanwhile, service and real estate industries represented more than 70 percent of the sector last year, he said. Hoang attributed this to the fact that foreign investors in general are interested in industries that are quick-profit potential, such as real estate, cement, steel and services, while being less interested in agriculture. FDI project investing in agriculture in general have a small capital of US$20-30 million each. Hoang said that the hot growth of investment in real estate, cement and steel industries has begun to have certain negative impacts so a number of foreign investors have started being interested in agriculture, forestry and fishery in Vietnam. In September 2010, a delegation of more than 20 businesses from the Republic of Korea (RoK) came to Vietnam to learn about opportunities to invest in Vietnam's agriculture. They said that they are interested in farm produce processing and agricultural machinery provision. Hoang said that this is something good for Vietnamese agriculture, which is expected to make FDI in the country's agriculture to improve considerably in the future. The country's biggest granary, the Mekong Delta has favorable conditions for agriculture, forestry and fishery development and wants to attract foreign investment. It's time for foreign investors to invest in Vietnamese agriculture. Director Hoang said that the Government of Vietnam has many policies encouraging FDI in agriculture. On June 4, 2010, the Government issued Decree 61/2010/ND-CP encouraging investment in agriculture and rural development. According to this decree, the Government will provide businesses investing in agriculture and rural development with assistance in the form of land and assistance for technology transfer, workforce training, market approach, project consultancy and transport cost payment./.