Foreign investment flows into Vietnam’s agriculture remain limited and do not match its potential although the country is a signatory to the landmark Trans-Pacific Partnership (TPP) agreement.
According to data of the Foreign Investment Agency (FIA
) under the Ministry of Planning and Investment, foreign direct investment (FDI
) pledged for Vietnam’s agriculture-forestry-fishery sector reached $3.54 billion as of September this year, accounting for just 1.2% of total FDI approvals.
The average size of project in this sector stands at $6.7 million.
In the first nine months of this year, FDI approvals for the agriculture were $76.33 million, accounting for 0.46% of a total of $16.43 billion committed in the period.
Most of foreign investment has been funneled into wood processing, livestock and animal feed production while little has been seen in farm produce and seafood processing.
Overseas presence will help Vietnam’s agriculture access advanced technologies, thus resulting in high value-added products, further integrate into the international supply chain, and aid the country in bettering the use of natural resources, the agency said.
A number of investors from Japan and South Korea have made field trips to Vietnam to explore opportunities in this sector. However, not many deals have been closed.
The agency noted that free trade agreements, particularly TPP, will open up market access for Vietnamese farm produce and provide a boost to foreign investment inflows.
Nevertheless, sophisticated and potential markets such as Japan and the U.S. set high technical barriers such as phytosanitary requirements.
“Vietnam needs to handle shortcomings related to infrastructure, land and human resources to elevate quality and productivity in order to join this large playing fields,” FIA suggested.
The Vietnamese government has been striving to fix weaknesses of the local agricultural production. It has recently called on farmers to gather land for large-scale fields in order to increase mechanization and productivity.