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Meat-Investor Incentives: Vietnam Encourages Foreigners to Chip In

Posted on: Wednesday, 22 March 2006, 12:00 CST

By Chatrudee Theparat, Bangkok Post, Thailand

Mar. 22--HO CHI MINH CITY -- The Vietnamese government is urging foreigner investors to put more funding in the livestock industry to push revenue from the sector to 30 percent of gross domestic product (GDP) by 2010, from 20.5 percent or US$53 billion last year.

According to Do Kin Tuyen, head of the animal production division at the Department of Agriculture of Vietnam, the livestock industry is continuing to show strong growth in the country of 9 percent-10 percent a year, and provides a substantial income for farmers nationwide.

Revenue from livestock now accounts for more than 22.5 percent of the earnings of the total agricultural sector.

He said to cope with industry growth and to meet rising domestic demand for meat, the Vietnamese government had mapped out comprehensive plans to beef up the industry over the next five years, focusing on better hygiene in farms.

The plans aim to replace conventional farms that are at risk from disease and pollution. Most farms in Vietnam are small and not competent enough to produce high-quality meat to serve hotels and restaurants.

According to Mr Do, the government has designed a special programme to spur industry development.

It is offering privileges to foreign investors in a bid to standardise the farming system.

"The Vietnamese administration has offered incentives, including corporate tax as low as 10 percent with no specific timeframe, compared with the normal rate of 28 percent," he said.

"The government will also facilitate investors by providing appropriate locations for factories because this industry should be located in rural areas."

The government plans to raise the production of all kinds of meat to four million tonnes by 2010 from an existing three million tonnes.

It also wants to promote the dairy industry to improve Vietnamese people's health.

Fresh-milk production per capita is still very low. It was 0.14 kilogrammes in 1990; 0.28 kg in 1995; 0.65 kg in 2002 and 2.4kg in 2005.

Local supplies make up just one-fifth of local consumption, therefore, the country has to import dairy products from abroad.

In the last two years, there has been a rapid increase in dairy production in Vietnam. The population of dairy cattle and milk production has grown at a rate in excess of 100 percent each year.

Thai investors expected Vietnam's livestock development plans would draw more foreign investors to the country, especially from Thailand.

In the past, the livestock sector has attracted few Thai companies, said Prasert Phetmunee, director of Green Feed (Vietnam) Co, a Thai-based firm. Currently, Taiwan ranks as the biggest investor in Vietnam, followed by Japan and South Korea.

Two years ago, Green Feed established an animal-feed factory in Vietnam with registered capital of US$5 million, which increased to $30 million last month.

Current capacity is 20,000 tonnes a month, up from 5,000 tonnes from when the plant started up, thanks to rising demand.

Mr Prasert said that strong domestic demand had prompted the company to think about raising capacity to reach its full run, 60,000 tonnes a month in near future.

He said that there was plenty of room for foreign investors in Vietnam but they must be keen on their investments.

The low labour wage at $44-45 per month with investment incentives were factors that would drive more foreign direct investments, he added.

Approximately 100 Thai companies have invested in Vietnam, most are small and medium enterprises.

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Copyright (c) 2006, Bangkok Post, Thailand

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Source: Bangkok Post

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