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Red tape puts off investors
Cumbersome procedures and inconsistent regulations are scaring away foreign direct investment (FDI) from the agricultural sector, analysts warn.
Though the Government has been trying to encourage investors, particularly foreign, to invest in the farm sector, actual FDI has been falling relentlessly for several years now.
Ministry of Agriculture and Rural Development statistics show that FDI in agricultural projects accounted for 21.6 per cent of the overall figure in 1988-90 but plummeted to 8.3 per cent in 1991-95.
Last year it was just 6 per cent.
While commitments are low, actual disbursement of money is very sluggish. Less than half of the $4.7 billion committed to ongoing projects has actually been disbursed so far.
Complex and time-consuming procedures and arbitrary regulations make the agriculture sector unattractive to investors, especially foreigners, independent analysts said.
Besides, it is often riskier that other industries, they added.
Lai Chang An, director of Taiwan-owned Truong Thai Bao Lam Ltd. Company, said his company received a licence for a $1 million project in 2004 but has only invested 60 per cent so far.
He said that land-related procedures were so complex that his company just could not keep up with the schedule. For instance, investors have to fill between 15 and 20 different forms to obtain land for their projects.
Many other foreign companies investing in agriculture too said it took them a year or more to get land. TFB, another Taiwanese company, said it had received permission to grow O Long (Oolong) Tea in the northern mountain province of Ha Giang in 2004. But the project could not get under way even by 2007 because land could not be cleared.
Kien Tai International Company, a joint venture between a Taiwanese investor and a Kien Giang Province-based agro-forestry export company, faced a similar situation.
The JV planned to grow 60,000 hectares of forests for pulp production and build a pulp processing factory in Kien Giang.
But seven years after it got its licence, the company planted only 22,290 hectares while the pulp factory remains on paper.
A Kien Tai spokesperson said the company did not get its land because the province could not move out residents as promised.
Constant change
The fact that many localities often make capricious changes to their plans also scares away investors who normally prefer government policies to be constant.
A typical example is south-western Tay Ninh Province's sugarcane-related policies.
The province decided to reduce the area under sugarcane by more than 10,000 hectares in the last two years, causing a cane shortage for local sugar mills.
French company Bourbon Tay Ninh Joint Stock Company was initially licensed to grow sugarcane on 24,000ha but has now been restricted to 10,000ha.
Meanwhile, the company is built a sugar plant with a capacity to process cane grown on 24,000ha.
The analysts called for eliminating such actions in order to keep foreign investors working effectively with the agricultural sector.
The Ministry of Agriculture and Rural Development has stated that attracting FDI into farming is a priority, especially at a time when ODA and public funds are shrinking.
VietNamNet, Viet Nam News
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