US agricultural businesses still await more ‘carrots’

Cargill in Vietnam illustration photo

Nguyen Viet Ha, managing director of US-backed major investment consultant BowerGroupAsia Inc, told VIR that although many US companies wanted to implement agricultural projects in Vietnam, they could not due to a series of impediments.

“The number of US investors in the Vietnamese agricultural sector now is negligible,” she said.

She said although foreign agricultural projects had theoretically been given big incentives like exemptions or reductions in corporate income tax, import taxes, land rental and many other priorities, clear and specific regulations on how to apply these incentives were still unavailable.

“These incentives remain on paper only,” she said. “For example, although land incentives have been prescribed for foreign agricultural projects, the majority of these projects have found it very hard to find land. Many projects to plant forests and sugarcane have only found small parcels of land despite their investment certificates stating they should have received large plots,” Ha said.

“Also, credit policies for foreign agricultural projects have become impractical due to very complicated procedures which lack transparency,” she continued, adding that the local agricultural sector was also characterised by small-scale production, amateurism and potentially large risks which made it difficult for investors to recoup their capital.

In 2013, two major delegations of US investors came to Vietnam to seek investment and business opportunities. However, none of them expressed an interest in agriculture.

In September 2011, 15 US food and agricultural companies came to Vietnam to explore business opportunities. They included US famous brand names like ACX Pacific Northwest, Case New Holland, Commercial Lynks, ConAgra Foods, Dantzler, Dragonberry Produce, Intervision Foods, John Deere, Novick Industries, PTC International, TRC Trading Corporation, Verdant Ocean, Wilbur Packing Company, and Zafi Beverages and Agriculture Technologies. They met with nearly 150 Vietnamese producers, importers, buyers, distributors, and investors to develop trade relationships. However, almost no investment deals were reported to have flowed from the meetings.

Ha said that only animal feed maker Cargill and Monsanto were currently operating in Vietnam’s agricultural sector.