Powerful corporations target hi-tech agricultural production

Many large corporations have incurred losses after investing in agriculture projects, but money continues flowing into the agriculture sector, while investors are preparing to ‘play big’.

FDI into agriculture accounts for 2.9 percent of total projects

According to Ministry of Planning and Investment, 49,600 enterprises, or 8 percent of total enterprises, have invested in agriculture. 

FDI into agriculture only accounts for 2.9 percent of total projects and 1 percent of total registered capital, according to Vietnam Chamber of Commerce & Industry (VCCI).

More than 92 percent of the enterprises are small, 2.06 percent are medium sized and 5.59 percent are large.

Agriculture is an export-oriented sector with key exports bringing $36-37 billion in revenue a year. The government, in an effort to encourage investment in the agriculture sector, has offered attractive investment incentives and simplified administrative procedures by cutting 40-50 percent of required procedures.

Though agriculture is considered a risky sector, private economic groups have poured money into the field in recent years while still developing their core business fields.

Agriculture is an export-oriented sector with key exports bringing $36-37 billion in revenue a year. The government, in an effort to encourage investment in the agriculture sector, has offered attractive investment incentives and simplified administrative procedures by cutting 40-50 percent of required procedures.

Hoang Anh Gia Lai pioneered investing in agriculture when it quit the real estate market and began growing rubber and fruit in Laos and Cambodia.

However, many investors have had losses. Hoang Anh Gia Lai has experienced hardships with rubber trees as the world’s rubber latex price is on the decrease. 

In 2016, its dragon fruit, banana and mango first hit the market. 

The group reported gross profit of VND893 billion in its Q4 2017 finance report. Though the business performance was not satisfactory, analysts say Hoang Anh Gia Lai has reasons to hope for a better future with the new investment from Thaco, an automobile manufacturer.

Vingroup, a real estate developer, also began developing agriculture projects in 2015 through VinEco, a subsidiary with the charter capital of VND2 trillion. 

In 2016, Hoa Phat group, a steel manufacturer, jumped on the bandwagon with pig, fowl and animal feed projects. Even SSI, a securities company, also joined the game three years ago.

Analysts say that the investors are still ‘groping their way forward’ in the new game and failure is anticipated.

However, despite failures, large Vietnamese corporations, when looking for new driving forces for their development, still believe agriculture is a promising field, while they prepare for more professional project development.

The Sai Dong Urban Investment & Development JSC, the holding company of VinEco, reported sales from farm produce and consultancy services in Q2 2018 increasing by 50 percent to VND217 billion.

PAN Group reported net turnover of VND5.419 trillion in the first nine months of 2018, twice as much as the same period last year.

US$1=VND22,000