New policy to lure investment into agricultural and rural development

As agricultural investment has been boosted, the legal framework and policies are being formulated and will be issued soon to encourage further agricultural investment.

The government has grand designs for agriculture

In addition to Decree No.57/2018/ND-CP of the government on the mechanisms and policies required to attract investment into agricultural and rural development issued on April 17, 2018, the government has assigned the Ministry of Planning and Investment (MPI) to formulate a Draft Circular on guiding the implementation of the decree to guide private sector investment into the agricultural sector and rural development.

According to the draft circular, the portfolio of projects investing into agricultural and rural development will prioritise projects using local materials or employing a staff of more than 100. Projects producing environmentally friendly mechanical products, agricultural equipment, spare parts and auxiliary products will also be prioritised.

The state will allocate at least 5 per cent of its annual investment development capital to implement this policy. Local budgets will also set aside at least 5 per cent for the sector’s development.

At the meeting between the MPI, localities, and businesses yesterday (August 9), representatives supplied a line of comments for this draft. The representatives of the Departments of Planning and Investment discussed the portfolio which needs to be created and finalised before deployment. This may not align with the wishes of businesses and hinder investment into agriculture.

Dinh Ngoc Minh, deputy general director of the MPI’s Department of Agricultural Economy, confirmed that the portfolio will be reviewed, edited, and updated every year. Projects in the portfolio will be developed quickly.

Meanwhile, localities are afraid of not having enough funds to support businesses. Ha Giang province estimated to need to spend around VND30 billion ($1.33 million) to assist agricultural firms under this draft circular. But one project of TH Group alone needs VND200 billion ($8.85 million) of assistance. Thus, the 5 per cent of the local budget stipulated by the draft circular is not enough.

The draft circular will be up for comments and revised to comply with practical demand and the legal framework.

Last week, at the national conference on boosting agricultural investment, Prime Minister Nguyen Xuan Phuc set the target for Vietnam to become one of the 15 most agriculturally developed countries over the world within the next ten years, with agricultural product processing ranking in the top 10.

The prime minister required ministries, relevant government agencies, and localities to strictly implement Decree No.57/2018/ND-CP on the mechanisms and policies required to attract investment into agricultural and rural development.

Decree 57 covers many types of new incentives regarding the renting of land and water surfaces, credit, transfer, and the application of high-technology, human resources training, market expansion, and investment in the manufacturing of agricultural machinery and equipment.

For example, under the decree, the government will provide a maximum of VND15 billion ($664,000) to finance an agricultural produce processing project. The funds will be used to build waste treatment infrastructure systems as well as for transport, electricity, water, workshops, and equipment required for the projects.

In the time coming, Decree No.55/2015/ND-CP on credit policies for agricultural and rural development will be amended to raise the maximum loan value without increasing collateral requirements for individuals and households. The amendment will expand the list of beneficiaries of the credit policy in the field of high-tech agriculture, and allow for the use of assets made from the loans of high-tech agricultural projects as collateral.