The Ministry of Agriculture and Rural Development will contribute capital to public-private partnership (PPP) projects in the farming sector, instead of only providing policy incentives.

PPP has been adopted in the agricultural sector over the past six years but the State has made no financial contributions to PPP agricultural projects. In the coming time, however, the ministry expects to provide as much as 30% of capital needed for a project, heard an annual meeting of the Agricultural PPP Task Forces in Hanoi on November 30.

Vietnam now has eight Agricultural PPP Task Forces, up from the initial five set up in 2009. The formation of other forces in livestock, rice and milk is underway, said Pham Thi Hong Hanh from the Secretariat of the Partnership for Sustainable Agriculture in Vietnam (PSAV) at the ministry’s International Cooperation Department.

Previously these task forces were mainly financed by the private sector, with the Government simply serving as a consultant.

In the coming time, six projects will be piloted, including those in collaboration with partners such as IDH, Unilever and Nestle. The Government may contribute up to 30% of capital and partner companies will be responsible for the remainder.

The projects have been submitted to the Ministry of Planning and Investment for registration. The agriculture ministry has completed the drafting of a circular governing agricultural PPP, which would be a legal basis for the ministry to make financial contributions. The draft is awaiting Government approval.

Vietnam is firm on its market openness policy, which is evident in 17 free trade agreements which the country has joined, 10 of them already in force. This does not mean local enterprises will be able to gain easy access to international markets; they must meet stringent export requirements, said the International Cooperation Department.

Thus, it is indispensible to boost investment in agriculture to improve product value, quality and income for farmers.

By the end of 2015, the nation had attracted only 521 FDI projects in agriculture with total registered capital of US$3.63 billion, or a mere 1.3% of total FDI approvals nationwide.

The agricultural sector, said Minister of Agriculture and Rural Development Nguyen Xuan Cuong, is paying more attention to private sector investment so that it can turn out more value-added products.

Experts at the meeting said the PPP projects in agriculture were facing multiple woes such as a lack of a full-fledged legal framework, financial constraints and inadequate human resources. Low profitability and a long time of capital recovery also make agricultural investments less attractive.

Source: SaigonTimes