Shortly after the coming into force early last month of a decree on preferences for businesses investing in agriculture, foreign capital inflows into this field has increased, in which Japan is emerging as one of the most active players, according to the Vietnam Business Forum, an English-language magazine of the Vietnam Chamber of Commerce and Industry (VCCI).

Recently, the Vietnamese and Japanese governments signed agreements to promote bilateral agricultural cooperation. Along with that, the Japanese government is considering the reduction of subsidies for domestic rice cultivation - meaning this country will start steering itself toward becoming an importer.

In fact, the "preparation" by Japan for Vietnam's agricultural development started a couple of years ago. Tsuno Motonori, Chief Representative of the Japan International Cooperation Agency (JICA) in Vietnam said that so far, Japan had supported the agriculture and rural development sector with more than 25 technical assistance projects, non-refundable aid, emergency assistance of about 120 million USD, and four big loan projects of about 450 million USD in irrigation and forestry to help Vietnam improve infrastructure and stimulate sustainable agricultural and rural development.


The increasing investment in agriculture from Japanese investors will open up an attractive prospect for Vietnam's agriculture which is facing many challenges under the impact of factors such as the market economy, technological weaknesses and unstable production output, the magazine said.

If everything goes smoothly, the current weaknesses in quality, branding and supply processes of the Vietnamese agriculture will soon be overcome by the use of advanced technology from the second largest economy. Then the Vietnamese agricultural products will become internationally well-known for high quality and reputable brand. Vietnamese farmers will enjoy a higher income; get rid of the "nightmare" of cheap agricultural sector.

The significant increase of foreign capital influx in Vietnam's agriculture will likely create a "momentum of integration" - as predicted in a study by Vu Thanh Tu Anh, Director of Research, Fulbright Economics Teaching Programme.

As analysed by the expert, out of the four "wheels" to promote economic development, including state-owned enterprises, private enterprises, agricultural sector and foreign investment enterprises, right now only the fourth wheel is running smoothly.

Vietnam's agriculture sector, at the moment, has both "benefits" and "opportunities" for foreign investors. "Benefits" means agricultural strengths including favourable climate and land conditions, abundant labour resources while "opportunity" refers to incentives toward foreign investors in agriculture.

Dang Kim Son, Director of the Institute of Policy and Strategy for Agriculture and Rural Development, said Vietnam cannot "close out" foreign investors if it wishes to develop. Sluggishness and slowness will only obstruct domestic businesses, even leads to bankruptcy, he said.

Therefore, the country should take advantage of the opportunity to develop its inherent strengths, he added.

To do this, Son believed that it's necessary to have breakthroughs in selecting strategic sectors along the value chain to create market products based on potential and strengths of each locality. These strengths are divided into three categories: national strength (competitive and exportable), regional strength (can deliver to other regions), and local internal strength (specialty and strengths of each commune, district and province).

Borrowing international strengths to develop is a strategy which the agricultural sector has been using for many years. Yet "potential and opportunity is one thing, it is important to take advantage of opportunities and potential to promote the sector's position to have a sustainable agricultural development" - Son affirmed.

In his recent speech, Minister of Agriculture and Rural Development Cao Duc Phat also said that with experience and valuable lessons of integration accumulated in recent years, "agriculture is totally capable of taking initiative to overcome new challenges in the integration process today,... and the agricultural sector will certainly reap even more successes in integration, performing the role of a pillar of the national economy in all conditions and circumstances."/.