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Agriculture and rural development sector is unattractive to investors

   2/15/2006

According to the Ministry of Agriculture and Rural Development (MARD) from 1999 up to now, Vietnam has received 782 foreign direct investment projects from 42 countries and territories in the field of agriculture, forestry, aquaculture with the total registered capital of around US$ 4 billion. At present, 623 projects are in effect with the total registered capital of about US$ 3.2 billion. In 2005 only, the agriculture, forestry and aquaculture sectors have attracted more than 100 investment projects with the total investment capital estimated at US$ 200 million. According to MARD, projects invested in the agriculture sector account for 14% of the total project numbers and 8% of foreign direct investment capital. The investors mainly focus on cultivation, sugar cane production, forestry development, and forestry product processing and development of paper material zones. Animal food production attracted a great number of investment projects during previous years. However, in 2005 investment in this field reduced partly because of the avian influenza. MARD appreciates foreign direct investment projects in the agriculture, forestry and aquaculture sector quite effective with annual turnovers of US$ 1 billion, of which US$ 300 million is contributed to the State budget. In addition, these projects have brought to Vietnam modern technology, high-yield and high-quality seedlings. Moreover, thanks to the fact that these products easily access the world market, these investment projects also help to enhance trade promotion and marketing of Vietnam agricultural products. This has made considerable contribution to creating more consumption opportunities for Vietnam agricultural and forestry products. Another important aspect is that foreign investment in the agriculture, forestry and aquaculture has contributed to improvement of socio-economic infrastructure in many localities and replacement of out-of-dated cultivation practices though foreign investment projects to develop material zones. However, evaluation shows that foreign investment activities in the field of agriculture, forest and aquaculture are still modest. Allocation of investment sources is uneven, leading to the “water running to the lower areas” situation. Particularly, investment projects in the agricultural sector are mostly focusing on main economic zones. Quite a number of projects get into losses. The ratio of investment projects in the agriculture, forestry and aquaculture sectors dissolves before the closing date is higher in comparison with other sectors. Besides, most of projects are implemented slowly due to different reasons.

Vietnam Investment Review
2/15/2006

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