VNBusinessNews – This year, foreign direct investment (FDI) into Viet Nam will be affected by the global financial crisis and neither the global nor the domestic economy is showing any signs of recovery.

The online Viet Nam plus talked with Nguyen Xuan Trung, deputy head of the Foreign Investment Agency (FIA) about the slowdown in FDI in the agricultural sector recently.

The country is attracting record levels of FDI in comparison to 20 years ago. What do you think about the agricultural sector’s ability to attract FDI over the last three years?

In recent years, FDI has had an active role in changing the structure of the agricultural economy and rural areas, creating more jobs for farmers and helping eliminate poverty.

However, compared with FDI in other sectors, investment in the agricultural sector is still low and distributed unevenly over cities and provinces nationwide. Almost all FDI is concentrated in key economic regions in the north and the south, while only a tiny amount of FDI has been poured into remote regions.

Foreign investors have put money into a variety of projects, but in general the projects have been implemented slowly.

Investment in the agricultural sector accounted for 6% of the national total FDI in 2006, 5.24% in 2007 and 3.3% in 11 months of 2008.

Why is FDI in the agricultural sector so low?

The agricultural sector expects to attract more FDI in the future, but the sector does not have a specific strategy to lure FDI.

Land-use policy, site clearance and plans for agricultural sector raw materials have created obstacles in attracting FDI. Calls for FDI into the sector have not resulted in the development of key foreign investors and key projects. Agricultural production depends on natural conditions. so investment into the sector has high risk; the sector has also experienced low profit.

The quality of agricultural workers, the level of management and the sector’s access to advanced technology are still low. Investors must pay more money to train workers and hire experts to teach workers about technical advances.

In addition, a dearth of electricity for production and a substandard transport system make transporting agricultural materials expensive.

These factors have contributed to the fall of FDI flowing into the agricultural sector and the collapse of some FDI projects.

What should the sector do to attract more FDI?

The decline of FDI in general and into the agricultural sector in particular is mainly due to effects of the global and domestic economic crisis. However, so far this year, no FDI investor has withdrawn their capital.

I believe that the economic solutions unveiled by the Government will attract FDI, especially to the agricultural sector.

However, this year, the sector should combine the land-use plan with the plan to develop the sector, improve the policy on foreign investment incentives and boost consumption of agricultural products from FDI projects.

If the sector follows this advice, it can expect to receive more FDI for this year. (VNS)