Need to create an environment for a wave of investment in agriculture

VCN - This is what Dr. Dinh Trong Thang (photo), Head of the Investment Policy Department, the Central Institute for Economic Management (MPI), shared with Customs Newspaper about attracting businesses to invest in agriculture.
need to create an environment for a wave of investment in agriculture
Many enterprises have successfully invested in agriculture. In photo: Vinh Phuc VinEco farm.

Compared with other industries, the number of enterprises investing in agriculture is modest and most of them are small. According to you, why are companies not interested in investing in agriculture and what is the most fundamental cause?

There are many reasons, but I think that the biggest reason is that the market mechanism is not strong enough and not smooth in the agricultural and rural areas, which makes it difficult for enterprises to access the production resources such as land, labor in rural areas, and market resources as well.

In particular, there is a huge issue that needs to be addressed and solved, namely the relationship between the objective of increasing income for farmers and the objective of securing the planted area for specific crops, including rice. Or, in other words, we need a new mindset, a new approach to food security, avoiding homogeneity between food security and the area and yield of some specific crops.

Resolving the above-mentioned issues will be a prerequisite for stepping up reform of market economy institutions in agriculture and rural areas; and for minimizing many barriers for access to resources such as land, labor and capital.

In addition to the above mentioned reasons, there is a minor issue of standards and norms. Currently, VietGap's products are sold on the market with no difference in price compared to the agricultural products that are not produced under VietGap. The problem is that the State has not done well with the role of certification, standardization, so they have not created a good market for products meeting the requirements of food hygiene and safety. When the product is marketed, if consumers do not believe in the standard certification, the companies do not have the investment benefits. And when no benefit is achieved, businesses will be less interested in investing in agriculture, especially clean agriculture, because of costly investment and high risk.

Regarding attracting businesses to invest in agriculture, it is suggested that businesses are not interested in agriculture not because of the inadequate incentive policies, but due to the inadequacies policy implementations. Do you agree with this view?

In order to encourage investment of enterprises, the Government issued the Decree No. 210/2013/ND-CP on incentive policies for enterprises investing in agriculture and rural areas with the aim of increasing investment resources in this field. However, this decree was promulgated before some laws including Land Law, Public Investment Law, Investment Law and Construction Law. Therefore some regulations were overlapped and remain obstacles in implementing guidelines, creating many procedures for enterprises when investing in agriculture and rural areas. After these inadequacies, this Decree is amended to conform to the orientation of socio-economic development in the new period.

In general, I think that the policies on encouraging enterprises to invest in agriculture, such as policies on supporting businesses access to credit, labor, market... is available but not fully. In addition, the current policies on supporting and encouraging businesses to invest in agriculture and rural areas are just at the Decree. However, many major difficulties of enterprises have not really been solved, such as land access, land accumulation ...while the policies on tax and fees incentives are really necessary for businesses, but not the most important things. In fact, there are many issues that need to be solved and removed for businesses but beyond the scope of a decree. Therefore, I personally think that it is necessary to have a resolution of the Government on orientation and solutions to attract businesses to invest in agriculture. It should be considered as a priority in the restructuring of agricultural economy in the coming time.

In spite of not many enterprises investing in agriculture, in recent years, some big companies in Vietnam have expanded their investment in agriculture such as VinGroup, FLC, T&T, TH True Milk, Hoa Phat, Thaco Truong Hai ... How do you evaluate this phenomenon?

This is a very good and praiseworthy signal. Once the large enterprises invest in something, they have a clear strategy and goals, and of course, they only invested when the profit opportunities are clear. When investing in agriculture, with the advantage of capital flow, management and business strategy, these enterprises may become the leading ones, the satellite to work with other enterprises to build the closed ecosystem, ensuring clean products with reasonable and most competitive price for customers. This is very encouraging. However, the State as well as the localities needs to pay attention to create a good environment for many SMEs to participate in this playground. From that we can create a wave of investment in agriculture from the SME sector, which accounted for more than 90% of all businesses in Vietnam, not just rely on large enterprises.

It is said that the land use right market should be formed to improve the efficiency of land use and exploitation, creating incentives for businesses to invest. Please tell me your opinion on this issue?

In my opinion, we need to evaluate policies through the socio-economic efficiency. For example, the current income of farmers from a single rice field in the Mekong Delta is only 5-6 million VND/crop, while they can get 56-60 mil/crop (10 times higher) if they plant orange or dragon fruit. But this change in use is limited due to a number of reasons, including the reasons for planning and regulation of rural land markets. This affects the access to land of enterprises. On the one hand, we talk about attracting businesses to invest in agriculture and rural areas. On the other hand, we do not have mechanisms for enterprises to invest in agriculture easily. In agricultural production, land is the decisive factor for the failure of investment, without land, enterprises cannot invest. Thus, there are many restrictions related to land such as planning, transfer, duration of use... that have been hindering businesses and reducing the attractiveness of agriculture for businesses. Therefore, the State needs to review the regulations, thereby allowing people and enterprises to transfer land use rights including rice land and especially remove the duration of agricultural land use.

Thank you Sir!

Ms. Thai Huong, Vice Chairman of the Board, General Director of North Asia Bank:

"The difficulty in investing in agriculture is that we should focus on applying science and technology. In order to get land for agriculture, it is necessary to apply science and technology to support people or cooperatives and to set a roadmap for the farmers to become members of the cooperative. The second difficulty is communicating science and technology, so cooperatives should be established, and then through these units, enterprises can order products for farmers with specific type and condition. It will be successful if we let the business guide, through cooperatives and connections with farmers, in which farmers play an important role. There are many agricultural areas; especially our country has a favorable climate. In order to attract enterprises in agriculture, it is necessary to have policies. Enterprises are not interested in it because the policies are not attractive. The policies needs to change a lot to encourage the business community".

Mr. Le Van Tam, Chairman of Lam Son Sugar Joint Stock Company:

"From the experience of enterprises, we believe that in order to develop high-quality and competitive high-tech agriculture, it is necessary to reorganize agricultural production in the direction of multi-branch and multi-level cooperation, develop agricultural enterprises, encourage businesses to invest in agriculture. In order to attract and create favorable conditions for enterprises to invest in agriculture, it is necessary to step up land consolidation, land accumulation, and to access simple and effective agricultural credit packages. At the same time, we need policies on supporting and encouraging enterprises to invest in hi-tech agriculture, support enterprises and farmers to build national brands and support the recognition and protection of intellectual property rights in high-tech agriculture".

N.H (record)

By Thu Hien/ Ha Thanh

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