Foreign investors show little interest in Vietnam’s agriculture sector

By Bui Hong Nhung October 29, 2016 | 08:15 pm PT

Women work on a tea field at Suoi Giang village, in northern Yen Bai province, Vietnam. Photo by Reuters/Kham

Only 1 percent of foreign funds pouring into the country is cultivating the agriculture sector.

Foreign Direct Investment (FDI) into Vietnam's agriculture sector remains limited despite the industry's vast potential to develop, according to the Foreign Investment Department.

Data from the department showed that as of September this year, there were 518 FDI projects inolved in the field, accounting for just 2.4 percent of the total number of projects.

Each agricultural project costs $6.7 million on average while the average investment capital of all FDI projects stands at $14.7 million.

In addition, the proportion of investment in agriculture remains modest though it has increased over the last few year. Last year, one percent of total FDI was spent on agriculture, up 0.4 percent against 2012.

The department explained that Vietnam’s agriculture sector appears unappealing to foreign investors as it depends heavily on natural conditions and lacks cooperation between local producers as well as the infrastructure to develop, especially in urban areas.

The Mekong Delta region, which contributes 40 percent to Vietnam’s total agricultural output value, only attracted one project in agriculture with registered capital of $46,000 over the first half of this year, while another construction project in the region drew $247 million.

To attract foreign investors in agriculture, the Vietnamese government has introduced preferential policies such as reducing import-export tariffs, cutting corporate income tax and cutting land rental fees.

Last year, Showa Denko, a leading Japanese chemical engineering firm invested $1 million in a factory to grow organic vegetables in the northern province of Ha Nam.

Vietnam’s leading information company FPT and Japanese multinational information company Fujitsu also opened a center that uses modern technology to produce fruit and vegetables in February this year.

Vietnam has set a target to raise the rate of FDI investment in agriculture to 4-5 percent by 2020.

> Vietnam to claw in $3 mln from shrimp exports this year: Agriculture Ministry