Head of Research Department for Rural Development under the Central Institute of Economic Management (CIEM) Luu Duc Khai spoke with Nong thon ngay nay (Countryside Today) newspaper about the support industry for building agricultural machines.

*What are the realities of agricultural machine production in Vietnam?

Vietnam manufactures 30-40 percent of the agricultural machines used in the country. The rest are imported, mostly from China and Japan. We have not developed agricultural machinery production largely because the country's support industry is at zero. Our support industry meets about 20 percent of the country's demand, leading to difficulties in attracting investment.

We mainly import ploughs, pesticide sprayers, and harvesting machines.

*Can Vietnam develop a support industry for agriculture machine manufacturing?

One of the weaknesses in the support industry for agricultural machines was that demand was low, so the support industry could not attract investment.

Preferential policies have been developed for support of certain industries - such as computer electronics, and garment and automotive manufacturing - but not to agricultural machine production.

In addition, state management of the support industry was weak; the state was neither gathering statistics for nor standardising that area of agriculture.

Vietnam also has had insufficient policies for the industry development, and has been especially lacking in policies to encourage small and medium-sized support industry enterprises (SMEs).

Those businesses, mainly SMEs, have had a hard time accessing capital – a problem made even greater because support industry development required a capital amount 4-10 times greater than that of the assembly industry.

Experts estimate that the Cuu Long Delta region has suffered an average loss of tens of billions of dong yearly due to the lack of rice harvest and preservation machines.

*What are your thoughts on the country's policies to support agricultural machine building?

In localities, support industry policies haven't "reached" enterprises in that field.

The Government's Decision 12 on developing certain support industries in 2011 failed to attract certain support industry enterprises because those enterprises, under the new decision, would be treated like many other SMEs. And as such, those companies would have a difficult time accessing the loans they needed.

Therefore, it is necessary to have concrete and practical policies for support industry enterprises, such as land policy and tax incentives. Farmers also needed direct support, including loans with preferential interest rates or policies for farmers to borrow loans at banks.

*The Government recently adopted an action plan for development of the agriculture machine industry. How will that plan improve the current situation?

We plan to increase the country's mechanisation rate in agriculture fields. We have implemented programmes building and maintaining agriculture machines, and we have encouraged farmers to use those machines.

With the current internal weaknesses, Vietnam needs foreign support for the field, especially from Japan, in an effort to improve research and production capabilities.

As far as I know, the Government will draft a decision to promote agricultural mechanisation, in which a necessary fund from the state budget would be used to support localities towards implementing their mechanisation plans.

The Government will also set up criteria and technical regulations for farming and production machines, and better tax policies for manufacturers. However, we still needed more basic measures.

*What are those specific measures?

The most urgent measure now is to rapidly modernise technology and to train skilled workers in an efforts to provide as soon as possible products that meet required standards.

The Ministry of Finance and the State Bank should develop a financial mechanism that provides favourable conditions for enterprises to access long-term loans with preferential interest rates.

I think that it is necessary to encourage all economic sectors to invest in agriculture machine manufacturing. All of those individuals and organisations field should be treated equally as enterprises investing in rural area.

The Government should also create favourable conditions for local enterprises to form joint ventures with foreign firms in order to manufacture and assemble highly specialised tractors, as well as machines for harvesting rice and sugarcane. The Government also should encourage the importation of equipment that hasn't been produced in the country.-VNA