Firms turn to agriculture alternatives
Firms turn to agriculture alternatives
While Viet Nam's property market is sluggish, Thu Duc Housing Development Corp has decided to invest in agriculture business as a subsidiary to the major business line, company chairman Le Chi Hieu told the Doanh Nhan Sai Gon (Sai Gon Entrepreneur) newspaper.
This year, the company will sign several export contracts of forestry products, worth over US$10 million each. Thu Duc has also been pushing the export of woodchips, materials that serve the paper industry, and cassava for making alcohol to Japanese companies.
Hieu said that the turnover of agribusiness may be lower than that of property projects; however, agribusiness was likely to have lower risks .
Thu Duc Housing is not the only company with such an emerging trend with traditional business lines of trading, but investment and property companies are also struggling to survive.
An Duong Thao Dien Real Estate Trading Investment JSC made its capital contribution to Ascentro Trading Investment JSC, which specialises in trading farm and forestry products and live animals.
Hung Thuan Group Corp, which specialises in investing, developing and trading real estate, established an in-house Vina Yen Eco Investment JSC for specialising in swiftlet farming, fish farming and orchid planting in the southern province of Long An.
Vina Yen's chairman Lam Truc Nho said that revenue from swiftlet farming was high and stable with a good provision of export to China, the United States and Japan.
In fact, Viet Nam spends $3 billion to import 2.5–3.5 million tonnes of corn every year for animal feed, even though the delta is suited to growing high-yield corn varieties. The government has hastened the development of domestic agribusiness through a wide array of privileged policies.
This was a good opportunity and lucrative new field that should not be missed, noted Bui Phap, chairman of Duc Long Gia Lai Corp.
Earlier, Tan Tao Group established a research and fragrant rice export company (ITA Rice) to cultivate rice paddies on 60.3 hectares in the Cuu Long (Mekong) Delta province of Long An. The company plans to expand its cultivation to 5,000 hectares in the coming years, according to Dau tu (Vietnam Investment Review).
At the shareholder meeting in April, Hoang Anh Gia Lai Group (HAGL), previously a major player in the real estate sector, announced that agribusiness will make up over 50 per cent of the corporate's revenue this year. This sector accounted for 60 per cent of the total revenue last year.
HAGL's president Doan Nguyen Duc said that one of the key factors to success was in applying high technology in every stage of agricultural production, from seeding and harvesting. Duc added that technology application cut costs of chopping cane to VND30,000 ($1.3) per tonne, instead of the average cost of VND200,000 ($9.3) in Viet Nam.
Nguyen Dinh Bich from the Trade Research Institute noted that investing money in agribusiness was a wise decision, as this sector was likely to grow as a result of the upcoming Trans-Pacific Partnership Agreement.
Bich pointed out that serious investors should not feel compelled to invest large amounts of capital into agriculture projects, and they can recover their investment capital and make a profit at a reasonably short period.
However, land fund is viewed as a hindrance to the development of an agriculture project and a substantial agribusiness economy.
Dang Kim Son, director-general of Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), was cited by Doanh Nhan Sai Gon that policies were needed to create favourable conditions for transferring, leasing and contributing land of individuals and State-run farms.
Moreover, taxation policy makers should cut or minimise relevant taxes and fees for agribusiness companies and deduct value-added taxes for imports of essential production tools.
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