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PPP in agriculture: There are many challenges

14:31 | 05/12/2016

VCN - Over 6 years, the establishment of 8 working groups in the form of public-private partnerships (PPP) in agriculture have contributed significantly to promote the development of key agricultural products. However, to push the development of this form, and contribute practically to restructuring the agricultural sector, is not simple.

ppp in agriculture there are many challenges
Seafood sector is determined to falled behind compared to other sectors. Photo: Nguyễn Thanh

Coffee is "shining"

Speaking at the Annual Meeting of Working Group PPP sectors under Partnership for Sustainable Development of Agriculture Vietnam (PSAV), Mrs. Pham Thi Hong Hanh, Secretariat PSAV, Department of International Cooperation (Ministry of Agriculture and Rural Development) said that: Vietnam is pursuing a policy of openness of the market, has entered the contract and negotiated 17 free trade agreements (FTA), in that 10 FTAs ​​are in the process of implementation, the remaining 7 agreements are approved and are pending signing.

When signed and implemented these FTA, there are no tariff barriers for export & import enterprises. However, in order to approach international markets, agricultural products must meet stringent requirements, especially in terms of quality. It requires adequate investment in the whole value chain while it is also a weakness because the investment in agriculture is quite limited, especially direct investment FDI.

Accelerating the deployment of PPP also aims to attract enterprises in investment, as well as in response to a new vision within the framework of the World Economic Forum, to pursue the mission 20-20-20 is to increase 20% production, increase 20% of income for farmers, reduce emissions by 20%, etc.

According to Mrs. Hanh, since 2009, the agricultural sector has established a working group in the form of PPP that includes: Coffee, tea, pepper, seafood, fruits and vegetables. After that, based on the practical demand, there are two additional groups formed including agricultural chemicals and agricultural finance.

During that time, the operation of the groups has achieved positive results, the most typical sector is coffee. With the coffee groups, the implementation of PPP projects have helped to increase production by 17%, increase farmer’s income 14% and significantly reduce emissions and greenhouse gas, nearly achieving the 20-20-20 target. In addition, the coffee model projects also included training for farmers on sustainable production, support to plan the development of national documents, and applied not only in the project but also in all provinces that have coffee production in the country.

Besides that, for the tea groups, through the projects it has built documents for sustainable tea production, training and creating sustainable supply chains for tea, etc. For vegetables, the project has improved productivity through training activities such as planting, irrigation, and putting new strains into production.

For pepper group, recently, within the framework of the project has conducted a series of activities such as an action plan for sustainable development of pepper, organizing forums to set the vision for enhancing pepper's reputation in the world market.

Seafood took a step back

Having no positive results as above, the seafood group took a backwards step compared to other groups due to many factors, including the transfer to new investors, and the role of the General Directorate of Fisheries (Ministry of Agriculture and Rural Development) has not participated actively. "This is the PPP group, so it needs to have cooperation from both sides of Government and enterprises. So it also requires an active participation of the appointed authorities," Mrs. Hanh said.

In the group of agricultural finance, although implementing business connections, projects and banks, the international commercial investment banks in Vietnam and the major commercial banks in Vietnam do not have a branch in districts in the provinces so it leads to high transaction costs. Hence it is difficult to implement.

"In the near future, in order to achieve better results, it is suggested that we implement a Circular about guiding the implementation of some articles of Decree 15/2015 / ND-CP on investment in PPPs in the agricultural sector.” Mrs Hanh said.

Around this issue, Mr. Nguyen Do Anh Tuan, Director of the Institute of Policy and Strategy for Rural Agricultural Development (Ministry of Agriculture and Rural Development) analysed that: Although achieving certain results, the development of the PPP sector still has many challenges. Typically, how to push up and connects enterprise in and outside the country to expand the multi-deployment model because most new deployment models are just models.

"Indeed, for PPPs in agriculture, the participation of the public sector is not as expected, so can move into private projects. Also, the capacity and experience to promote the projects are limited, also has not formed a network of experts in this matter ... " Mr. Tuan said.

According to some experts, the problems also came from the arrangement of funds for the implementation of PPP projects is quite difficult (there are currently no private sources, still relying heavily on the budget of public investment plans). Besides that, the investment projects in the fields of agriculture, in rural areas often have low profitability, payback period usually is less attractive to investors than other sectors. Currently, not many investors are interested in agriculture, they understand and proactively suggest participation and implementation of PPP projects in the fields of industry, etc.

By Thanh Nguyễn/Thanh Thuy