Drafting new policy to entice more investments in agriculture and rural areas

Domestic pork prices are soaring (4 to 5-fold more than those in the United States, according to the Department of Foreign Trade – MoIT). As a result, it is necessary to include this subject and others in the supporting policy to revitalize and enhance the growth of the livestock production sector, as well as to foster fair competition and bring the cost of animal products down to a manageable level.

The Covid-19 pandemic has slowed agro-forestry-fisheries production and processing; therefore, a method and policy should be implemented to assist companies' recovery and development.

Additionally, the synthesis of data from local governments demonstrates that the current decree's supporting mechanism is not entirely apparent, making implementation much more confusing. Due to the inadequacy of the legislative framework, it is difficult to implement procedures and policies to promote the conversion and accumulation of agricultural land, as well as the establishment of a land fund to encourage businesses to invest in agriculture and rural regions...

Thus, the creation of a new decree is essential to maintain and enhance incentive mechanisms and regulations, as well as to foster an environment conducive to business investment in agricultural, forestry, and fisheries output in rural regions.

Exemption and reduction of land rent costs, encouragement of investment credit

Preferential and supporting policies, according to the proposal, include cost exemptions and rent reductions on state-owned land and water surface properties.

Enterprises lending state-owned land and water surface to implement special agricultural projects with investment incentives, in particular, are exempt from land and water surface rent for two-thirds (2/3) of the rental period, calculated from the date the State issues a land lease or water surface lease decision. While those implementing agricultural projects with investment incentives are free from land and water surface rent for one-half (1/2) of the rental term, calculated from the day the State releases a land or water surface lease decision.

Concerning land concentration support: Enterprises that rent or sublease land and water surface from households and individuals to implement special agricultural projects with investment incentives receive state support equal to up to 20% of the rental cost for the first five years after the project is completed and put into operation.

While enterprises implementing investment projects in agriculture and rural areas will receive capital contributions in exchange for the use of land by households and individuals to develop areas of raw materials for agricultural production and processing and will be aided in their construction by the state.

When it comes to investment credit, the draft specifies that businesses undertaking investment projects in agricultural and rural regions would be subsidized by the local budget via reduced interest rates on commercial loans used to execute the projects.

Interest rate support would continue up to 9 years from the date of the request for special agricultural projects with investment incentives, 7 years for agricultural projects with investment incentives, and up to 5 years for agricultural projects with investment incentives. The maximum rate of interest assistance is 70% of the total loan capital for the project...

Enterprises engaging in aquaculture would get VND 15 billion in assistance for each project.

According to the draft, businesses investing in cattle farming (including buffaloes, cows, pigs, goats, and sheep) for breeding, milk, or meat may get up to 40% of the entire investment in project infrastructure, or VND10 billion per project.

Enterprises undertaking aquaculture investment projects are eligible to receive up to 40% of the total project investment for infrastructure development, up to a maximum of VND15 billion per project.

Investments in livestock and aquaculture must satisfy the province People's Committee's minimum capacity criteria.

The State budget supports enterprises with ships that provide fishing logistics services at sea for VND 30 million per ton of deadweight tonnage (DWT), up to 40% of the total investment and a maximum of VND 15 billion per vessel.

The supporting condition is that the fishing logistics service vessel has a minimum tonnage of 200 DWT; it has been granted the Certificate of technical safety of the fishing vessel and the Certificate of registration of the fishing vessel for offshore fishing logistics service ships following applicable law.

Concerning assistance for human resource development and market growth, the draft explicitly stipulates that businesses undertaking investment projects in agricultural and rural regions would receive a maximum of VND 1.5 billion per year from the State budget.

In terms of support capital sources, the central and local governments spend about 5% of their yearly budgets on agricultural and rural development to execute this Decree.