INVESTMENT POLICY AND PROMOTION WEEK. Vietnam Agribusiness Investment Policy and Promotion Vienna October 15, 2015Viet

Size: px
Start display at page:

Download "INVESTMENT POLICY AND PROMOTION WEEK. Vietnam Agribusiness Investment Policy and Promotion Vienna October 15, 2015Viet"

Transcription

1 INVESTMENT POLICY AND PROMOTION WEEK Vietnam Agribusiness Investment Policy and Promotion Vienna October 15, 2015Viet

2 Importance of Agriculture 2

3 One of the largest exporters in the world Global Rank (Total Volume) Global Rank ( Total Value) Cashews (shelled) 1 1 Black Pepper 1 1 Coffee (Green) 2 2 Cassava (Dried) 2 2 Rice 3 4 Rubber 4 4 Tea 5 7 Source : Based on FAOSTAT

4 low prices compared to global averages Average Export Revenues per Ton, US$, 2011 Major Export Products Average Export Revenues, US$/Ton World Vietnam Value Gap Rice $639 $514 $125 (20%) Aquaculture products $2100 $1967 $133 (6%) Rubber $5307 $4189 $1118 (21%) Coffee $4037 $2191 $1846 (46%) Tea $3333 $1594 $1739 (52%) Observations Vietnam exports more than 7 million tons per year, but vast majority is exported as bulk, low grades. More than 30% is sold under high-volume, low-price G2G contracts Majority of seafood exports are filleted, graded and frozen, but average prices for Vietnamese seafood remain low, due to quality & certification concerns. Significant scope exists to increase exports of higher value fresh products, smoked products, etc. More than 75% of rubber is exported as natural rubber, whereas in countries like Malaysia and Sri Lanka more than 75% of rubber sector exports are finished products like gloves, condoms & tires More than 80% of coffee is exported as bulk green beans, most of this low-priced Robusta, whereas many other countries export higher-priced Arabica More than 90% of tea is exported as bulk tea, not blended or packaged Source: FAOSTAT, FAO Fisheries & Aquaculture Statistics Yearbook 2012, UNCTAD/ITC Trade Map

5 Low productivity

6 Small farm, low tech

7 State farm workers Inefficient supply chains Tea SOE Tea manufactory /company Source: Tea study (ADB) Tea Supply Chain Vinatea Contract farmers Tea leaves/buds assembling stations Leaves/bud trader Registered processing hh Tea processing Limited Company or Stock company Private export company Export Free farmers Tea leaves/buds collector Non registered processing hh Processed tea trader Retailer Superma rket Farmers of cooperative Cooperative Exporter Domestic consumer 7

8 Pork Supply Chain 8

9 Environment issues

10 Investment in agriculture is low, Bil VND Total investment Investment in Agriculture, forestry and fishing Source: GSO

11 Vietnam Agribusiness: Investment Policy and Promotion Framework to evaluate & select the priority subsectors for FDI promotion Subsector Prioritisation Criteria To what extent: Score Evidence Will additional FDI in this sector add value to Vietnam? Will new investors add value that is not already Quantity & quality of existing farmers, SMEs and investors already operating 1-5 provided by local farmers & existing investors? in this sector; impact of new investors on local SMEs in the sector Will new investors create additional jobs? 1-5 Potential jobs generated by new investments in this sector Will new investors increase farmer incomes? 1-5 Improved farmer incomes generated by new investments in this sector Will new investors increase export revenues or Potential export revenues or reduced imports generated by investments in this 1-5 reduce imports? sector Will new investors improve the performance of Potential impact on other parts of the value chain (improved inputs or 1-5 the value chain as a whole? improved sales opportunities for farmers) SUBTOTAL 5-25 Does investment in this sector offer an attractive proposition for foreign investors? Is the market (in terms of demand, supply and prices attractive? Is the local and regional market attractive? 1-5 Demand, supply & price trends in Vietnam and neighbouring countries Is the global market attractive? 1-5 Demand, supply & price trends in major global markets Does Vietnam offer competitive supply conditions for investors in this sector? Does Vietnam have competitive natural Availability of suitable raw materials, land, climate, proximity to key markets, 1-5 endowments (land, climate, location etc.)? etc. Does Vietnam have competitive infrastructure? 1-5 Availability and cost of power, transport, manufacturing sites, etc. Does Vietnam have competitive skills & 1-5 Availability & productivity of suitable workforce and supporting services supporting services? Does Vietnam offer a conducive business (regulatory/institutional) environment? 1-5 SUBTOTAL 6-30 Overall Evaluation: Absence of regulatory or institutional barriers that might deter investors or hinder their performance Evaluation Key: 5 = Very positive 4 = Positive 3 = Neutral 2 = Negative 1 = Very negative Note: weightings for each criteria can be adjusted based on priorities; analysis presented in this report assumes equal weigh t for each criteria 11

12 12 Vietnam Agribusiness: Investment Policy and Promotion Combining the scores for each subsegment yields the following conclusions for the crop subsectors Subsegment Seed production Agrochemical production Commercial rice farms General rice mills Specialty rice mills Rice products manufacturing Commercial coffee estates Robusta coffee mills Arabica coffee mills Instant/ground coffee mfg. Fruit/flower/veg farms Fruit/flower/veg storage/packing Fruit & Veg processing Lack of existing investors Value for Vietnam Extra jobs Farmer incomes Trade balance Local market Value Proposition for Investors Global market Natural assets Impact on valuechain Infrastructure Skills & services Business environ t Overall Evaluation Key: 5 = Very positive 4 = Positive 3 = Neutral 2 = Negative 1 = Very negative

13 The subsegments that offer the most value to Vietnam and the best value proposition to investors appear to be as follows Prioritisation of priority subsegments for proactive FDI promotion FDI would valuable for Vietnam, but proposition for investors is unclear Fruit/veg processing Fruit/veg storage/packing Dairy ranches Milk processing Feed crops Fish farms Specialty rice mills Fish processing Value of FDI for Vietnam Seeds Agrochemicals Fruit/veg/ flower farms Arabica mills Fish grading/packing Rice products Priority subsegments Dairy products Animal meds/vets Coffee farms Rice farms General rice mills Coffee processing Feed processing Robusta mills Attractiveness of Value Proposition for Investors 13

14 14 Vietnam Agribusiness: Investment Policy and Promotion The sector scan also identified a number of policy implications for increasing FDI in agriculture Key policy implications Policy implications for increasing FDI in agriculture 1. Fiscal incentives and government support 2. Investment promotion capacity 3. Regulations restricting operations of foreign investors in key parts of agribusiness value-chains 4. Establishment & enforcement of standards 5. Import tariffs on inputs 6. Continuing role of SOEs in many agribusiness value chains Other policy implications for increasing farmer incomes 7. Price-sharing formulae or equity/profit shares for farmers 8. Joint industry funds for R&D and marketing

15 Vietnam Agribusiness: Investment Policy and Promotion Progress to date: Adopted our recommended list of sub-sectors as FDI priorities. Now working on several key reforms highlighted in our scan, namely building investment promotion capacity, establishment and enforcement standards, State Owned Enterprise reforms, price sharing and promoting linkages between FDI and local agri firms. Our recommendations regarding building investment promotion capacity are reflected both in the FDI policy Decree and have been subsequently translated into a concrete action by MARD through the recent establishment of an Investment Promotion Task Force. The FDI Policy Decree now been formally approved by MARD s Minister. MOU with Dong Thap Province

16 INVESTMENT POLICY AND PROMOTION WEEK THANK YOU