Foreign investors do not seem to be interested in the Vietnamese agriculture, forestry and fishery sector, according to the Ministry of Planning and Investment (MPI).
Foreign investors ignore agriculture sector
According to the MPI's statistics, as of late August, Vietnam had licensed only 512 FDI projects in this sector, which totaled USD3.4 billion, accounting for slightly over 3% of all FDI projects and 1.4% of FDI capital value. The agriculture sector ranked only 10th among the 18 economic sectors to have received FDI.
According to the MPI, the amount of FDI in agricultural has been on decrease. There are only 20 active FDI projects in the agricultural with a total annual value of USD130 million.
Most of the projects are small-scale with an average investment of USD6.6 million compared to an average of USD14.7 million in other sectors.
Most of these are in the areas of forestation, animal feed processing and wood processing, as these are the most likely to bring high returns. Meanwhile, FDI in agricultural processing remains very small.
Most investors in Vietnam's agriculture sector come from Asia and bring with them limited technology.
The MPI said that potential risks in the agricultural, forestry and fishery sector discourages foreign investors from coming to Vietnam.
Agricultural production depends on weather conditions and diseases, particularly in Vietnam, which is among the countries most vulnerable to climate change.
Meanwhile, agricultural production in Vietnam is still largely small scale and lacks cooperation between farmers and enterprises. Infrastructure in rural areas of Vietnam is underdeveloped, forcing investors to spend more money on works.
The quality of labourers is also a problem, as the number of skilled workers in the agriculture sector is low.
There is also a lack of area for processing factories, a very important factor for investors. Localities usually grant land for processing on a small scale.
