A significant untapped space in Vietnam-US agricultural investment cooperation

Investments from American enterprises remain modest

According to data from the Foreign Investment Agency (Ministry of Planning and Investment), as of December 2022, there were only 13 active FDI projects in the field of agriculture from the United Stateswith a total registered capital of 149 million USD, representing less than 1.3% of the total FDI capital from the United States to Vietnam. This figure may not fully reflect US investments in Vietnamese agriculture, as many US companies invest in Vietnam through subsidiary companies in other foreign markets such as Singapore and Hong Kong. Nevertheless, these meager figures indicate a significant untapped space in investment cooperation that can be further filled by better exploiting the potential and strengths of both sides.

With the desire to create opportunities for Vietnamese and US businesses to meet and explore cooperation prospects in agriculture, on the morning of November 8, the International Cooperation Department (Ministry of Agriculture and Rural Development) organized a forum for Vietnamese and US agricultural businesses with the participation of Mr. Marc Elrich, Montgomery County Executive, and a delegation from the state of Maryland (the US).

According to the Director of the International Cooperation Department Nguyen Do Anh Tuan, US corporate investment in agriculture remains relatively modest and not commensurate with the potential of both countries.

Despite the United States being Vietnam's leading trading and investment partner, two-way trade between Vietnam and the United States has continued to grow in recent years and has surpassed USD100 billion for two consecutive years. Vietnam's exports to the United States account for up to 30% of the total export turnover to the world, and Vietnam is the 8th largest trading partner of the United States.

In terms of investment, the United States ranks 11th out of 143 countries and territories investing in Vietnam, with a total registered FDI capital of 11.8 billion USD and 1,306 projects as of October 2023. Direct investment from the United States has made a significant contribution to Vietnam's development with large-scale projects, helping to strengthen Vietnam's position in the global supply chain.

"Vietnam and the United States established a comprehensive strategic partnership in September during the visit of US President Joe Biden to Vietnam. It is hoped that in the near future, new, groundbreaking, deep, and effective cooperation will be implemented, helping Vietnam to integrate deeply into the global value chain," Mr. Tuan expected.

Investing in high-tech agriculture

According to the representative of the International Cooperation Department, the United States, with its strengths in science, technology, and innovation, can collaborate with Vietnam to develop a dynamic, modern, and sustainable agriculture sector. This collaboration not only benefits the country but also contributes to global food security.

As an example of effective scientific and technological cooperation between the two countries, Mr. Tuan mentioned the collaboration between Vietnam and the United States in producing vaccines for African swine fever. Despite facing many challenges during the COVID period, two Vietnamese companies have successfully produced African swine fever vaccines, which are currently undergoing market testing.

In addition, companies like Cargill have recently inaugurated the most advanced animal feed factory in Asia in Dong Nai, and PepsiCo provides Vietnamese farmers with international standard potato varieties, supports advanced irrigation methods, and utilizes high technology in weather monitoring. Mr. Tuan believes that these contributions are bringing about significant transformations in Vietnam's agricultural sector.

Mr. Nguyen Truong Duy, representing the Department of Science, Technology and Environment (MARD), stated that investing in high-tech agriculture is currently one of the top priorities in the agricultural sector. The agricultural industry is attracting a growing number of domestic businesses and large corporations interested in, researching, and making large-scale investments, especially in high-tech agricultural production models. From 2012 to 2020, the number of agricultural, forestry, and aquatic product businesses increased nearly 3.1 times, from 3,517 businesses to 10,766 businesses. In 2018 alone, 1,847 new businesses were registered. If we consider food processing and trading companies, there are nearly 50,000 businesses.

Alongside the rise of small and medium-sized businesses in agriculture, some large corporations are also aggressively investing in high-tech agriculture, such as Vingroup, Hoang Anh Gia Lai, Pan Group, Masan, Him Lam, Viettel, FLC, T&T, and more. Most of these large corporations apply modern technological processes in their agricultural investments, leading to a ripple effect in agricultural production.

Investing in high-tech agriculture will help reduce the impact of climate change on agricultural production, enhance production quality and productivity, ensure food security and nutrition, create high-value-added products, improve investment efficiency, and establish connections with consumption markets, ensuring a smooth food and agricultural supply chain.

Mr. Marc Elrich, Montgomery County Executive of Maryland, USA, mentioned that the participation of US agencies can play a significant role in preparing Vietnamese agricultural products for export to the US market. He believes that both sides need to strengthen connections not only at the government level but also at universities, research institutes, and places where valuable information is available, laying the groundwork for businesses to promote connections and investments.