The agricultural sector has remained unattractive to foreign investors, which is evident in its small proportion in total foreign direct investment (FDI) approvals.

Those FDI projects committed to the agriculture sector are small, the Ministry of Agriculture and Rural Development said at separate meetings held last week with relevant agencies in preparation for a draft decree on foreign investment in agriculture.

By end-2014, agriculture had lured 512 FDI projects worth a combined US$3.43 billion, making up 3% of the total number of FDI projects and 1.35% of total capital pledges nationwide, data of the ministry shows.

Chronic problems with infrastructure, human resources, material sources, land and production, as well as lack of policies and strategies conductive to FDI activity are to blame, according to the ministry.

Recently, a South Korean firm approached a local real estate brokerage to seek support for finding a 50-hectare area near Lien Khuong Airport in the Central Highlands province of Lam Dong for growing vegetables. This company did not come to local authorities for help as it feared local landlords would know its intention and thereby demand high land prices.

It is the case not only in Lam Dong but also many other parts of the nation. Doan Nguyen Duc, chairman of Hoang Anh Gia Lai Group, has chosen to develop sugarcane and rubber farms in neighboring Laos, instead of Vietnam, because he could secure 10,000 hectares of land for cultivation a lot easier.

As for fish, the number of firms growing and processing tra fish and shrimp, two major export earners of Vietnam, has virtually become saturated, making construction of more fish and shrimp processing factories unnecessary.

Data of the Vietnam Association of Seafood Exporters and Producers (VASEP) shows the country has 568 enterprises processing seafood for export but only13 of them are foreign-invested.

Regarding rice, the nation has opened up the market with foreign firms allowed to export the staple food since 2011 in line with its commitment to the World Trade Organization (WTO). However, under the current regulations, FDI firms can only export rice when they have warehouses and facilities able to process paddy into rice that meets export standards, said the Ministry of Planning and Investment’s legislation department.

Such rules make life hard for foreign investors since a lot of local firms already have facilities for husking paddy and storing rice, according to the Vietnam Food Association (VFA).

Source: Saigontimes