Interview: Tiet Van Thanh
How can lending programmes for agricultural businesses in Vietnam be expanded?
TIET VAN THANH: Loans to the economy reached VND791.45trn ($35.4bn) in 2016, and 70% of these were agricultural and rural loans. Expansions of the lending programmes for agricultural businesses should focus on credit funds to support enterprises with preferential interest rates, simplified procedures for access to credit, shorter project evaluation times and the implementation of a policy for providing loans without collateral. This is in accordance with wider government policy, and the lending guidelines of the State Bank of Vietnam and local banks. Granting credit without collateral will help customers to gain access to loans. Vietnam should also focus on policies to promptly alleviate temporary financial difficulties for customers, enabling them to restore their production and business operations. We should enhance cooperation with relevant organisations such as the Vietnam Farmer’s Union, the Vietnam Women’s Union, the Vietnam Rubber Group and others.
In what ways can foreign firms play a greater role in the development of agricultural businesses?
THANH: In the present time of deep and broad integration in the global economy, foreign enterprises play an increasingly important role for the development of agricultural enterprises in Vietnam, supporting businesses with capital, technology and management experience. Their investment channels include the establishment of 100% foreign-owned enterprises or joint-venture enterprises of domestic and foreign investors, investment under cooperation contracts, shares purchase, merging, acquisition, the provision of input materials, export-market accession support and so on. Many foreign investors, for example from Japan or South Korea, are interested in cooperation and exploring opportunities to invest in the agriculture sector and rural areas. Foreign direct investment in agriculture shows signs of increasing. In addition, the presence of foreign enterprises in the sector makes the business environment more competitive, which encourages local agricultural enterprises to increase investments, and innovate to develop and ensure they can compete with foreign firms.
How can financial institutions help agricultural businesses protect themselves from environmental changes that are affecting commodity prices?
THANH: Financial institutions play an important role in supporting agricultural enterprises, primarily through credit and investment activities, and the provision of financial services to help agricultural businesses increase their financial capability and competitiveness, or acquire applications to effectively join the global value chain. Other essential services – such as providing payments for imports or exports, foreign currency trading, consulting services and derivative products – can also play a key role.
To what extent do you see the EU-Vietnam Free Trade Agreement (EVFTA) as a way to spur Vietnam’s agricultural and export development?
THANH: A stronger agricultural sector in general and the increased export of agricultural products in particular is one of the economic benefits from the EU-Vietnam Free Trade Agreement. The export and import structures of Vietnam and the EU have complementary features, and few areas of high and direct competition. The EU has agreed to provide Vietnam with preferential tariffs and diminish the application of non-tariff barriers for agricultural products, granting Vietnam a substantial quota for raw milled rice and fragrant rice – rice imported under this quota enjoys complete tax exemption. Products such as honey, fresh vegetables, processed vegetables and fruit juices will eventually be subject to total tariff elimination once the agreement enters into force.
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