According to statistics, this sluggishness has been evident in the level of foreign direct investment (FDI) invested in agriculture for many years. While the FDI flow into Vietnam has been increasing in the recent past, becoming a regional economic phenomenon, the agriculture-forestry-fishery sector appears to have been left out of this boom.

Since the promulgation of the Foreign Investment Law in 1988, the agricultural sector has annually attracted investment in 49 projects, worth 238 million USD. Investment capital for a single project in other sectors has increased to tens of billions of US dollars, while the total registered capital in the agricultural sector peaked at just under 570 million USD in 1995.

As of November 2008, there were 965 valid FDI projects operating in the agricultural sector, with a total investment capital of more than 4.7 billion USD, representing 10 percent of the total number of projects in the nation and 3.3 percent of the total FDI capital invested in the country.

Of the total investment in the sector, 37 percent was pumped into the cultivation of crops and farm produce processing projects; 35 percent went to forest planting and timber processing projects; and 21 percent to livestock breeding projects, feed production and the processing of related products.

The Ministry of Agriculture and Rural Development (MARD) admitted that the shortcomings in land, materials supply, post-harvesting technology and product sales have created limitations in the attraction and implementation of FDI projects in the agricultural sector.

However, the amount of capital being invested in agricultural, forestry and fishery projects has been increasing lately. While the additional capital represents only 3 percent of the total registered capital for the 1991-1995 period, this increased to 32 percent for the 1996-2000 period and nearly 40 percent for the 2001-2005 period.

On measures to attract long-term investment to this sector, economists from the Foreign Investment Association and the Vietnam Tea Association stressed that it is necessary to train personnel in project management and to perfect the country’s legal system in order to ensure sustainable development and maintain levels of environmental protection.

The MARD also plans to implement a programme to improve the efficiency of FDI in the agricultural sector throughout 2008-2015, stating that FDI attraction is a priority matter, particularly at a time when ODA flow is in decline and the level of available capital from the state budget and other domestic sources is limited.

Source: VNA