Japan’s new agriculture policy brings great opportunities to Vietnam
The big changes in Japan’s policy on the country’s agriculture subsidization would force Japanese enterprises to cooperate with the countries which have advantages in agriculture production like Vietnam.
Vietnam’s agriculture experienced an unsuccessful 2013 with the production value increasing by 2.47 percent only over the last year. However, investors still have poured big money into the sector.
SSI, a securities company for example, has joined forces with LR Group to set up a fund to invest in agriculture with the expected capital of $150 million. PAN’s shareholders have agreed on the plan to raise VND650 billion worth of funds more to implement the plan to invest in agriculture, seafood and food processing.
Despite the current big difficulties, investors still can see a bright future for the Vietnamese agriculture, especially when Japanese government is considering cut down the agriculture subsidization.
What would happen?
“The opportunities are great,” said Pham Chi Lan, a well-known economist, when asked about the prospect of the Vietnamese agriculture production once Japan reconsiders its subsidization policy.
According to Lan, the statement by the Japanese government to stop subsidizing the rice production means that Japan would rely on rice imports to satisfy the domestic demand.
“The new policy would prompt Japanese enterprises to cooperate with Vietnamese enterprises to grow Japanese rice varieties in Vietnam,” Lan said.
“Cooperating with Japan is the good solution for the Vietnamese agriculture which is facing big difficulties,” she added.
Vietnam and Malaysia are the only agriculture producers among the countries negotiating for the Trans Pacific Partnership Agreement (TPP). However, Malaysia only makes some products such as rubber or palm oil. Therefore, Vietnam is considered the only agriculture country among TPP members.
Nguyen Phuong Lam, Deputy Director of the Can Tho Branch of the Vietnam Chamber of Commerce and Industry, has confirmed that his agency has received a lot of Japanese investors who expressed the willingness to invest in the Mekong River Delta.
China and Thailand were the favorite destinations for Japanese investors in 1980s. However, the investors now want to pour money into the countries with the advantages for agriculture production.
However, Lam admitted that the foreign direct investment (FDI) in agriculture remains modest. Only 10 projects were registered in 2013, including two from Japan.
The cooperation between Vietnam and Japan promises good prospects, because Japan has experiences and high technology, while Vietnam has advantages in the climate and labor force.
Economists all have urged the government to take actions to attract the Japanese investment into the agriculture sector. Vietnam got behindhand in comparison with Malaysia and the Philippines in attracting Japanese investment in agriculture. Therefore, it now needs to speed up to grab the opportunities.
Like any other countries in the world, Vietnam considers agriculture as a “delicate” sector which needs strict protection.
At present, agriculture is listed among the conditional business fields, i.e. the investors have to meet strict requirements to be eligible for making investment there.
Meanwhile, the Land Law with the limitations on the agriculture land area allocated by the State is believed to hinder the agriculture production in a large scale. The unclear investment incentives for the investors in agriculture may also discouraged foreign investors.