Vietnam is one of the five countries that receive the biggest Official Development Assistance (ODA) capital in the world, according to a recent forum in Hanoi.
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The role of private aids is increasing, estimated at between USD49 billion and USD60 billion a year while funding for innovative programs is estimated at USD37 billion to USD60 billion, of which most aids are for climate change and environmental issues, said Eamonn Murphy, country director of the Joint United Nations Program on HIV/Aids (UNAIDS).
The biggest barrier for donors to invest in Vietnam is administrative procedures, said Victoria Kwakwa, Country Director of the World Bank in Vietnam.
Therefore, Vietnam needs reforms in administrative procedures and consistency amongst the agencies and departments.
The attraction of ODA for the agriculture sector faced many difficulties during the first 10 months, and those hurdles are likely to persist in the next few years, according to a recent report of the Ministry of Agriculture and Rural Development (MARD).
Since July, the country has not attracted any ODA capitals for agriculture projects.
During the first half of 2011, the sector approved 16 projects with total capital of USD250 million. The country gained USD490 million worth of ODA for the sector last year.
Since Vietnam has become a mid-income country with GDP per capita at USD1,000 per person a year, lesser ODA capital is set aside for the country due to the change in ODA lending policies of international organizations, such as the Asian Development Bank (ADB), said Luong The Phiet, director of MARD's International Cooperation Department.
Unlike the previous time, international donors have to consider focus for investment and potential for effective execution and strict supervision, he added.
In addition, the global economy is falling in recession, leading to more difficulties in attracting ODA, MARD reported.
Foreign capitals for agriculture down
Regarding the fall in Foreign Direct Investment (FDI) for the agricultural sector, Phiet said investing in agriculture is not an attractive field since capital from FDI is money of individuals of organizations, companies, and groups so their high priority is profit.
Therefore, they prefer investing in sectors with quick returns, not agriculture.
FDI for agriculture and rural areas accounted for a small proportion in Vietnam's total FDI attraction and tended to slow down from 8 percent in 2001 to only 1 percent in 2010.
In 20 years from 1990 to 2010, FDI for Vietnam's agriculture reached only USD4.3 billion (or 2.3 percent of total, averaging USD215 million per year.
This year the agriculture sector targets to draw around USD50 million of FDI.
According to MARD, in the period of 2010 to 2015, the agriculture sector is expected to draw USD2-2.25 billion, a 3-fold increase against previous periods but in the current context, the target is very hard.
