Danish investors see large potential of VN agriculture sector
Danish investors see large potential of VN agriculture sector
The Vietnamese agricultural sector is on the radar of many Danish investors wishing to implement their fresh initiatives in the Southeast Asian market.
At a seminar nearly two weeks ago to connect Vietnamese businesses with 13 Danish businesses in the agriculture and food sectors, trade counsellor of the Embassy of Denmark Troels Jakobsen said, “Danish companies and experts are very willing to share innovative ideas and technologies with their Vietnamese counterparts as well as look for opportunities to cooperate and make good and sustainable business together.”
Danish investors believe that low labour costs, as well as other factors, make Vietnam an enticing prospect
Shirley Vincent Ramesh, head of regulatory affairs of Novozymes, the world’s largest provider of enzyme and microbial technologies in the food and agricultural industries, said, “The aim of the collaboration is to discuss how we can work together to improve the regulatory processes such that Vietnamese marketers can also bring their levels up to the international benchmark and how we can contribute to better business between Denmark and Vietnam, as well as helping Vietnam reach a higher level in Southeast Asia.”
Many representatives of Danish food production and processing enterprises admitted that they highly appreciated the development potential of the Vietnamese agricultural market, and set high expectations for cooperation opportunities with Vietnamese businesses.
Bovine products group VikingGenetics, which has a presence in more than 50 countries, decided to choose Vietnam as one of its key markets on the basis of the strong growth rate of Vietnam’s dairy industry during the past 10 years. “We have many distributors all over the world. And we thought that the next step for us is to increase our presence in Asia, why not start by doing that in Vietnam?” said Ahmet Yilmaz, export and key account manager for VikingGenetics.
Vietnam’s milk and dairy products were exported to 48 countries with a revenue of more than $300 million in 2021. Vietnam is also leading in Southeast Asia in terms of industrialisation of the livestock and dairy industry, according to Tong Xuan Chinh, deputy director of the Department of Livestock Production under the Ministry of Agriculture and Rural Development (MARD).
With over 28,000 dairy farms and households with nearly 375,000 milk cows, Vietnam is one of the biggest markets that VikingGenetics is trying to partner with.
“We are here looking for potential distributors who are interested in working with us and can distribute our so farmers can boast cows that can produce more milk, live longer, get healthier, and become more fertile,” Yilmaz added.
The interest of leading Danish agricultural processors in the Vietnamese market can be considered somewhat of a surprise because agriculture is not yet an attractive field in terms of foreign direct investment (FDI).
Statistics from the Foreign Investment Agency under the Ministry of Planning and Investment showed that during the first seven months of 2022, agro-forestry-fishery only attracted seven ventures with the total investment capital of $22 million, accounting for less than 1 per cent of new projects and 0.37 per cent of total FDI in Vietnam.
One of the reasons why the agricultural sector is unattractive, according to many experts, is due to cumbersome administrative procedures and insufficient land.
Nguyen Anh Phong, director of the MARD’s Information Centre for Agriculture and Rural Development, said, “Land is now mainly owned by farmers. Foreign enterprises are not eligible to receive the transfer of agricultural land use rights, are not allowed to rent agricultural land directly from households, nor are they allowed to use this leased land as collateral for loans.”
Although there are limitations that need more time to be removed, some Danish investors see the advantages of Vietnam that can help their businesses grow faster in this market. “I think the low labour costs in Vietnam will make production more efficient,” said Rasmus Ellefsen, managing director of SKOV Asia Ltd.
SKOV deals with climate control and farm management for global animal production. In addition to its headquarters in Denmark, the company has representative offices in more than 25 countries worldwide.
In Vietnam, SKOV is represented by a local sales office. Ellefsen added, “We already see big companies like C.P. Group going in and setting up very large operations that can aid export back into Vietnam. We see the big companies are doing it already and they are choosing to invest in Vietnam. So I’m sure there’s a way forward for all these Vietnamese players”.
