Agricultural investment slows in Vietnam

The country has seen an annual fall in agricultural investment over the past 20 years, Dr Son said at the launch in Hanoi on October 16 of Oxfam’s "Growing a better future” report. The report highlighted challenges for Vietnam’s agricultural development and solutions that the organisation has proposed to improve the situation.

He also added that investment into Vietnam’s agriculture sector is among the lowest in Southeast Asia.

According to Dr Son, only 30 percent of local enterprises have invested in the agriculture sector. Agriculture contributes to around 20 percent of the GDP, but, only 6.3 percent of the state budget is poured into it, down from 13.8 percent a decade ago.

Meanwhile, the government investment has prioritised irrigation works rather than improved rural traffic infrastructure and research to increase agricultural productivity.

Hai Quan Newspaper cited statistics by the Ministry of Planning and Investment’s Foreign Investment Agency that by the end of August this year, Vietnam had 500 valid foreign direct investment (FDI) projects in the agriculture sector with total capital of USD3.28 billion, accounting for just 2 percent of the country’s total registered FDI. In the last 10 years, FDI in Vietnam’s agriculture sector dropped from 8 percent in 2001 to 1 percent in 2010.

The FDI in Vietnam’s agriculture sector remains very modest compared to the country’s agricultural development potential, Son said, noting that the government should change its strategy to focus on agricultural advantages to lay the foundations for the development of other sectors.

Vietnam targets to become a modern industrialised country by 2020 but in fact, up to over 70 percent of the country’s total populations still live in rural areas. They will be a key labour force for Vietnam’s economic development. Therefore, investment to fully tap the agriculture sector is essential.

Challenges for Vietnam’s agricultural development

Despite achievements, Vietnam still faces big challenges for its agricultural development, according to the Oxfam report.

The report indicated that Vietnam’s fight against the poverty and food shortages will continue therefore the government’s policies need to pay more attention to farmers. Currently, up to 80 percent of the country’s farmer households have less than half a hectare of land, while 8.5 percent of rural households in Vietnam face food shortages.

Environmental pollution, climate change and volatile market prices pose a risk for agricultural production in Vietnam, according to the report.

Land conversion is also creating additional pressures. As many as three million Vietnamese people have had their lives disrupted as a result of land reassignment in the last five years. Meanwhile, small-scale farmers have coped up with an increase in crop and animal diseases, while also having to face the depletion of forests and natural resources and a decline in ecological diversity.