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COVER STORY

Boosting appeal

The government needs to identify how to remove the bottlenecks
discouraging foreign investment in the agriculture sector.
T HONG NHUNG REPORTS

PHOTO: VIET TUAN

s Vietnam tries to drum up interest based, transparent, and in harmony with momentum. Foreign investors enjoy partial
from foreign investors in its agricul- international standards, according to Dr. Tan or full exemptions on corporate income tax,
A ture sector, the government has set Siang Hee, Executive Director of industry import tariffs, and land rentals. Regulatory
targets for added-value growth to reach 2.5- association CropLife Asia. restrictions on FDI have been removed faster
3 per cent per year on average and for annual Vietnam has major potential for agricul- than in many other Asian countries.
labor productivity growth to come in at 7-8 tural development, with inexpensive labor, But shortfalls remain. “Vietnam’s abundant
per cent on average under Decision No. large purchasing power, and political stability workforce is an advantage, but vocational
255/QD-TTg of the Prime Minister. It has coupled with its status as one of the leading training programs and projects are not really
also approved a plan on restructuring the exporters of rice, coffee, rubber, pepper, appropriate or effective, so workplace quality
sector in the 2021-2025 period, focusing on cashew nuts, and wooden products. “Under is still low,” said Dr. Oliver Massmann, General
developing sustainable agriculture as well as Vietnam’s model for investment promotion, Director of Duane Morris Vietnam. “Untrained
enhancing quality, added value, and the com- provinces compete with each other for foreign agriculture, forestry, and fisheries workers
petitiveness of local agricultural products. investment and have significant freedom in totaled around 12 million in 2020, accounting
offering incentives and support,” he explained. for 89.97 per cent of workers in the sector.”
Pros & cons “The combination of freedom and competition The sector’s development and production
Like other countries, Vietnam possesses has been a key ingredient in Vietnam’s remain scattered and modest. Most produc-
not only a lot of strong points but also many dynamism and success with FDI.” tion units are of small scale with low invest-
drawbacks in attracting FDI to its agriculture The government has recently issued a ment capital, so production and business
sector. One essential component underpin- raft of policies to attract businesses to agri- efficiency are not high. “Environmental pol-
ning the effort to attract more foreign capital culture, and fiscal incentives and reforms to lution is still a major issue,” he said. “Agri-
is a regulatory framework that is science- the regulatory framework have created further cultural production has revealed more clearly

16 | VIETNAM ECONOMIC TIMES | AUGUST 2021