Agriculture can be driver to attract overseas funds

Vietnam is expanding international cooperation as an effective solution to reach its target of attracting $25 billion in foreign investment in the agricultural sector by 2030.

Lee Chong Min, founder and managing partner of CMIA Capital Partners Singapore, and Nina Yang, CEO of Surbana Jurong (SJ), shared their interest in developing a high-tech agricultural eco-urban area in Ho Chi Minh City.

Min and Yang explained at a meeting with Prime Minister Pham Minh Chinh that the total investment could reach $1.1 billion for the eco-urban area, located in Cu Chi district. Min said he hoped the Vietnamese government would approve the adjustment of planning and the investment policy, officially allowing CMIA to be named the investor and developer.

At a previous MoU ceremony attended by CMIA and SJ and leadership of Cu Chi People’s Committee, investor representative Ken Chan said the area would include functional locations for food processing and logistics, and expect to bring about a turnover of $2 billion annually and more than 50,000 jobs.

“With our capacity and experience, we believe that this project will bring about a new motivation for developing Cu Chi and Hoc Mon districts as the first such high-tech area in Vietnam,” Chan said.

Prime Minister Chinh said that Vietnam welcomed CMIA and SJ and was committed to supporting the investors. The government also directed the building of synchronised transportation projects to connect Cu Chi district and nearby Binh Duong province to boost the district’s socioeconomic growth.

Once the venture is officially approved, it will contribute to realising the target of attracting $25 billion of foreign investment in the agricultural sector by the end of the decade. The target is part of a draft strategy for international cooperation in agriculture and rural development, which was unveiled earlier in February at a special conference.

As part of the strategy, policymakers will focus on improving Vietnam’s agricultural sector; strengthening partnerships, and building a stronger image of farmers and rural areas.

Speaking at the conference, Minister of Agriculture and Rural Development Le Minh Hoan emphasised the increasingly important role of international cooperation in the context of globalisation and integration, which contributes to attracting foreign-invested capital.

In the first month of 2023, Vietnam attracted five foreign-invested projects in agriculture with a registered capital of $5.43 million. In 2022, the figure was $80 million, which is deemed a tiny contribution to the total foreign-invested capital inflow of $27.71 billion for the country.

Additionally, there are a number of shortcomings that the country must urgently address to realise its goal. Truong Hung, vice chairman of the board at Nutifood, told VIR that the agricultural sector still consists of barriers that delay capital from overseas.

“Enterprises are concerned about the lack of a skilled labour force, which is limited in its professionalism and language ability. Although they offer high salaries, recruitment is difficult,” Hung said. “The current poor logistics system will cause inconvenience for delivering agricultural products, simultaneously pushing up the selling prices of products. I have made business trips to visit many countries and territories in the region, and I have seen that the expenses for storing and transporting agricultural products are higher than those in Thailand and Singapore, due to the incomplete logistics infrastructure.”

He complained that many provinces such as Long An, Can Tho, Vinh Long are focusing on fostering industry via expanding industrial park planning. “This is a waste of fertile soil source for the agricultural sector,” Hung said.

In late 2022, the Institute of Policy and Strategy for Agriculture and Rural Development under the Ministry of Agriculture and Rural Development built a plan to increase the effectiveness of foreign cooperation in the agricultural sector. The project emphasised the importance of developing a concentrated material area, land expansion, and the building of criteria to filter high-quality investors. The institute also proposed to revise legal requirements to allow foreign-invested enterprises to directly buy agricultural products from farmers, instead of buying via intermediate parties.

Vietnam Investment Review