Agriculture to bring more foreign investment

These days, Israel’s Duram Agricultural Industries is making preparations to expand to the Vietnamese market, where it sees a strongly growing agricultural sector.

Amnon Ben-Peret, director of the firm, told Nhan Dan (People) Online, “You see, these products will come to Vietnam in the time to come. I have come to Vietnam to study the market, seeing that it has great potential for us to expand our business.”

Duram manufactures different products for the electronic and automotive industries, for construction and plumbing, agricultural machinery, and communications systems and aviation.

“We are expecting to open a branch in Vietnam to sell our products soon,” Ben-Peret said.

Not just Duram, many other foreign firms also want to harvest a crop in Vietnam.

Nick Miller, chief financial officer of Australia’s AgUnity – a mobile blockchain platform that helps farmers and companies/cooperatives to build trust and enable farmers to get better access to share resources – currently wants to commence a pilot project around the rice value chain in Vietnam. He is working with Mekong Agritech Challenge (MATCh) and MBI – a regional private sector development facility between the ADB and Australian Government, which can help him to introduce the platform to Vietnam.

Through MATCh, AgUnity is connecting with two Vietnamese agricultural firms, Trung Thanh Hi Tech Farming JSC and Pan Group.

“If our platform is implemented successfully in Vietnam, we will seek to expand it to other value chains and local partners,” Miller told Nhan Dan Online.

AgUnity’s app allows farmers to record all their work on a block chain and perform various transactions such as hiring custom seeders and harvesters, co-operating with other farmers for bargaining power, taking their crop to market, monitoring it through the production process, and more.

An attractive investment spot

According to Vietnam’s Ministry of Agriculture and Rural Development (MARD), Vietnam has grown to become the world’s fifth largest exporter of agro-food commodities including aquatic products, rice, coffee, tea, cashews, black pepper, rubber, and cassava.

Inspired to situate hi-tech agriculture at the core of the economy, Vietnam is expected to house 200 hi-tech agricultural businesses and 10 hi-tech agricultural zones by 2020. The general plan of agricultural zones is to industrialize the agricultural sector by regionalising agricultural products. For example, tea production will be in the provinces of Thai Nguyen and Lam Dong and also in the Central Highlands region, while vegetables and flower plantations will be centred in Lao Cai province, Hanoi, and Ho Chi Minh City. Shrimp farming will be concentrated in the Red River Delta, the Mekong Delta, and north central, south central coast, and south-central regions.

MATCh’s co-ordinator in Vietnam Pham Hoang Ngan said that AgUnity is just one of many foreign developers of blockchain-based technological platforms who are greatly interested in investing in Vietnam’s agricultural sector, which has great potential for development, especially amid the country’s widespread use of smartphones.

Vietnam’s smartphone app usage climbs 21% annually. The rate of smartphone users in Vietnam is very high, at 85% of the population in urban areas and 68% in rural areas.

Interested foreign developers come from many foreign markets, such as Enzootic Ltd. (Israel and Hong Kong), GoodHout BV, SmartFarm Co Ltd, and Verifik8/FairAgora Asia (Thailand), GAGO Ltd (China), Intello Labs Pvt. Ltd. (India), Pycno Industries (Australia), Gintel (Taiwan), and Fluence corporation-NIROBOX (Israel).

They offer a wide range of platforms, in the format of apps, software, and cell transplantation technology.

Last month, Lina Network Joint Stock Company, inked memoranda of understanding with three Thai firms on deploying its technological solutions and supply chains for agricultural development in Vietnam. Lina Network is also seeking Vietnamese agricultural firms to deploy these solutions.

Over the past few years, many foreign firms have come to Vietnam to engage in agricultural investment projects, such as Cargill, CJ, CP, and Mavin Austfeed. Foreign sources of agricultural investment in Vietnam are largely focused on making animal feed, and processing farm produce. Currently, about 60 foreign firms own more than 70 animal feed mills, accounting for 65% of Vietnam’s animal feed market share.

However, at present, foreign direct investment (FDI) in the agricultural sector accounts for just 1% of the country’s total FDI attraction.

Boosting reforms

This year, MARD will review 508 procedures and propose simplifying or removing 287 out of them, or 56.5%.

MARD will also review 345 business and investment conditions and propose that 118 of those be amended and eliminated, equal to 34.2%.

Moreover, 18 out of 40 specialised inspection procedures will be reviewed, while quarantine and clearance time will be cut from 24 hours to about four hours for goods transported by land or air, and about 10 hours for those transported by sea.

The government has promulgated a new decree on incentives for agricultural and rural investments, which has been awaited for five years.

The decree covers many types of new incentives regarding the rental of land and water surface, land concentration, credit, transfer and application of high technology, human resources training and market expansion, and investing in the manufacture of agricultural machinery and equipment.

Notably, these incentives are specified more clearly than those stipulated in the most recent draft decree enacted last month.

Specifically, under the decree, the state will finance 60% of the investment cost to a maximum VND15 billion (US$666,670) for an agricultural product processing project to build its infrastructure systems for waste treatment, transport, electricity, water, workshop and equipment within the project’s fences.

Also, investors will also be funded with 60% of the investment cost to a maximum VND5 billion (US$222,220) for an equipment-manufacturing factory to build the same infrastructure systems.

Hong Sun, vice chairman of the Korea Chamber of Business in Vietnam, told Nhan Dan Online that the Korean business community in Vietnam “feels happy” that the government will have special new land, credit, and export-import incentives for agricultural investors.

“Many Korean firms are operating in Vietnam’s agricultural sector, and many more will come here to start vegetable and flower plantations,” Sun said. “Before they come, though, they need the big incentives that are similarly offered in many other nations.”