Under a plan for investing in the agricultural sector till 2010, priority will be given to building irrigation projects, shifting crops and animals, developing science and technology and expanding markets for key processed farm products.

The Ministry of Agriculture and Rural Development (MARD) recently held a seminar to remove barriers while seeking more foreign investment for the agricultural sector.

According to the International Co-operation Department under MARD, Vietnam’s agriculture has obtained positive developments in recent times as agricultural production output rose by more than 4 percent per year and agro-forestry products and food have secured a firm foothold on the global market.

Agricultural growth has helped ensure not only national food security but also increase export turnover, contributing significantly to socio-economic development.

However, to ensure effective and sustainable agricultural development in the international integration process, there remain many issues that should be addressed, particularly investment in agricultural development.

In the 2001-2005 period, the total investment capital for agriculture reached only VND109,000 billion, of which, capital sourced from State budget accounted for 11.7 percent. This investment level does not match up to the demands of agricultural development despite the sector’s efforts to maintain relatively rapid growth, from 3.4 percent in 2004 to 4.9 percent in 2005. Agricultural products make up one-fourths of the country’s GDP and currently, up to 67 percent of the labour force is currently involved in the agricultural sector.

By the end of 2005, there were 900 foreign direct investment (FDI) projects investing in agriculture with total investment capital of US$3.7 billion, making up approximately 7 percent of investment capital from the foreign-invested sector.

Agriculture is considered unattractive for foreign investors due to the high risks involved in agricultural production, ever-changing weather patterns, poor infrastructure facilities and land management, said deputy head of the International Co-operation Department Tran Kim Long.

In addition, investment promotion activities and investment attraction policies to not yet met the sector’s requirements. Director of the Legislation Department under Ministry of Planning and Investment (MPI) Pham Manh Dzung said that foreign investment attraction in the agricultural sector is facing certain obstacles relating to land zoning and selecting investment partners.

According the MARD’s Agro-Forestry Product Processing and Salt Industry Department, agro-forestry processing activities have attracted the attention and participation of many foreign investors. However, there still remain certain snags in luring more investment due to poor rural infrastructure, weather conditions and scattered material sources. The department reported that currently Vietnam has 16,000 enterprises operating in the agricultural sector, excluding 8,595 co-operatives, accounting for 10 percent of the total businesses in the non-State sector. Total investment of these enterprises is estimated at approximately VND7,500 billion. Nevertheless, only 60 percent of the total number of businesses make a profit and the remaining suffer from losses. This demonstrates the weak competitiveness of agricultural businesses in Vietnam.

During the seminar, the MARD presented a detailed plan on investment fields till 2010. Accordingly, priority is given to developing irrigation networks, changing the plant and breeding animal structure, applying scientific and technological advances, and promoting marketing for strategic agro-forestry products.

Head of the Agro-Forestry Product Processing and Salt Industry Department Bach Quoc Khang said that further investment in agro-forestry processing activities will create changes in the overall agricultural investment structure, as the move will help increase goods production output and sharpen the competitiveness of agro-forestry products.