Part 1: The expectation of forming many "heads" in agriculture

Recently, Vingroup is one of the "giant" investments in agriculture . Photo: Nguyen Thanh.

The leaders of the private sector are big corporations, with businessmen who made the list of billionaires by Forbes Magazine as Pham Nhat Vuong, Chairman of Vingroup; Ms. Nguyen Thi Phuong Thao - General Director of VietJet Air; Mr. Tran Ba Duong - Chairman of Truong Hai Automobile Joint Stock Company; Mr. Tran Dinh Long - Chairman of Hoa Phat Group etc.

Not only have they increased in scale, many corporations have been quick to seek development opportunities by expanding their investment into multinational corporations. These steps show that Vietnamese private firms have grown rapidly and are gradually playing an important role in the economy.

Part 1: The expectation of forming many "heads" in agriculture

Not only staying in their key fields has helped businesses create a name, a place in the market, there are a series of "giants" from many fields that have invested in agriculture. This shows that the desire of domestic private companies and corporations to promote the development of the sector is considered as the "support" of the economy, not allowing foreign competitors to occupy all opportunities in this important business. The economy is expected to soon form the "leading" groups, bringing Vietnam agriculture to a new level, firmly competitive in integration.

Impress the big corporations

From about 2015 to now, the agricultural sector witnessed many "giants" investing. In 2015, Hoa Phat Group (known as steel, real estate) suddenly launched the Hoa Phat Trading and Feed Production Company, with a chartered capital of 300 billion VND, focusing on production and trading of animal feed. In mid-2016, the company imported 500 breeding pigs, in order to develop new fields.

In the midst of food stagnation in 2015, Vingroup (the real estate and commercial sector) has officially entered the "game" of agriculture in the direction of supplying clean food source with VinEco brand name.

Also in 2015, Masan (specializing in food products) expressed interest in the feed sector through the acquisition of small businesses in the field.

In addition to the above mentioned names, there are companies such as, FPT Corporation and Truong Hai Auto Joint Stock Company, that chose to penetrate into the agricultural sector. FPT is actively investing in developing intelligent technology solutions for agriculture to support high-tech enterprises, Thaco has chosen to support the agriculture sector through their advantages, like mechanical engineering, logistics, agricultural infrastructure, etc.

Typically, at the beginning of 2017, Thaco - was still specializing in the production of automobiles, then connected in cooperation with Loc Troi Company (rice specialists) to implement the project of agricultural industrialization and closed chain operation, harvesting, processing, transportation, distribution in Thai Binh province. The project has a total investment of about 7,800 billion VND. On February 21st, the largest agricultural machine factory in Vietnam with a total investment capital of 500 billion VND has been inaugurated at the Chu Lai - Truong Hai Automobile Mechanical Complex, Quang Nam Province. Thaco set a target of 7% market share in 2018 with 500 tractors and 38% market share in 2026 with 2,100 tractors, etc. Some other companies also did not miss investment opportunities in agriculture, such as TH True milk and Vietnam Dairy Products Joint Stock Company (Vinamilk), they expanded investment in breeding farms; Hoang Anh Gia Lai Group invests in raising cattle etc.

According to the Minister of Agriculture and Rural Development Nguyen Xuan Cuong, 2017 is a special year. For the first time after many years, the number of enterprises expanding investment in agriculture increased a lot.

Talking to Customs Newspaper reporters, Dr. Nguyen Do Anh Tuan, Director of the IPSARD, MARD, said that this signal is quite positive not only for the agriculture sector but also for the whole social-economy in general.

"Enterprises invest in one of the country's advantage areas, instead of investing in sectors such as securities, banking, and real estate. This not only improves the production platform, but also creates more jobs, creates new value added, etc.", said Mr. Tuan.

Why are many large enterprises choosing agriculture as a fertile land to invest outside of their own industry in the current period? According to Mr. Tuan, enterprises see advantages in agriculture. At present, there are policies that are directing businesses to invest more into the production sector. Particularly in agricultural and rural areas, there are many preferential policies. Some domestic private companies invest in agriculture because of the national spirit.

According to some experts, over the past time, talking about the attractiveness of the agricultural sector cannot ignore the financial incentives. As of late May 2014, the State Bank of Vietnam (SBV) issued Decision No. 1050/QD-NHNN on a pilot loan program for agricultural development with a number of specific mechanisms such as the lending interest rate lower than the normal lending rate from 1-1.5% per year; the loan amount reaches up to 90% of the value of the project or project; Banks may consider lending to affiliated members without asset security if controlling the cash flow of the affiliate chain.

Recently, at the end of April 2017, the SBV issued Decision No.813/QD-NHNN on the lending program to encourage the development of high technology agricultural and clean agriculture in order to implement the Resolution 30/NQ-CP with the credit package of 100,000 billion VND. This amount will be disbursed at interest rates lower than 0.5% -1.5% per year compared to the normal interest rates.

From the time of 2015, when Hoa Phat Group officially invested in agriculture, Hoa Phat's representative also asserts that Hoa Phat Group's investment in agriculture is not about "fashion". After many years of research, enterprises have determined that the market is mature and financially viable in the livestock feed sector, with a target of 10% market share over the next 10 years.

The leading trains

Billions of dollars are invested by businesses in agriculture. What we expect now is the result.

Dr. Nguyen Do Anh Tuan said: Initially, many enterprises’ investment in agriculture has helped to form a number of production chains, some areas of raw materials to ensure quality, standards, even to meet the criteria standards of the international market. "Enterprises that invest in agriculture are for profit rather than waste. Many businesses investing in agriculture find a good market in the context of an extremely open agricultural market. Enterprises do not even have enough goods to sell when introducing new products with new technology, or competitive price", Mr. Tuan said.

According to Mr. Tuan, with the investment trend outside the industry by the "big names" into the field of agriculture, the big expectation is that these companies can become the leading companies to help agriculture creating many value chains, in accordance with international standards. If this is done, Vietnam's agriculture will surely grow to a new level.

According to the Minister of Agriculture and Rural Development Nguyen Xuan Cuong, to keep the business and build trust, first of all, focus on administrative reform. In addition, the state management agencies must go side by side with enterprises and resolve any difficulties for them, especially in the market. Not only the Ministry of Industry and Commerce, but also the Ministry of Agriculture and Rural Development must also focus on the implementation of the Government's policy to solve market problems.

There are two main market segments: foreign and domestic markets. Inland, the domestic market with 93 million people is the one to serve and exploit because it is growing fast. In the foreign market, it is necessary to focus on exploiting the advantages of the signed FTAs, the contents and regulations of the World Trade Organization.

"With these measures, we hope not to "constrain" but encourage, encourage more businesses to invest in agriculture. Enterprises will jointly discuss with local authorities about the development of new cooperatives to become a pillar linking with more than 10 million farming households, realizing the restructuring of agriculture towards commodity, closed value chain from raw materials processing and market development", Minister Nguyen Xuan Cuong emphasized.

Part 2: Born late and ambition to lead