March 19, 2015

Looking to seize opportunities created by the imminent free trade agreements expected to be signed this year with the EU and other partners, and the looming Trans-Pacific Partnership Agreement, Vietnamese business leaders are turning their attention to making investments and entering the farming and agriculture space.

The US$13.6 million steel group, Hoa Phat, announced the launch of a specialized livestock and animal feed production company that is scheduled to have its first products on the market in the first half of 2015, and is expected to reach a turnover of VND3 trillion (US$140 million) within its first three years.

Despite its potential for profit, many businesspeople are finding the real estate sector to carry unattractive risks and are shifting their resources toward investing in agricultural production. Doan Nguyen Duc, Vietnam’s second richest person and the owner of the property conglomerate, Hoang Anh Gia Lai, has invested in the production of maize, sugarcane, rubber and cattle in Laos, Cambodia, and Vietnam, and has recently announced that it is divesting itself of one of the biggest property projects in Myanmar to refocus on agriculture. In just a few years Hoang Anh Gia Lai has evolved from a real estate company to being one of Vietnam’s largest agricultural land owners with 100,000 hectares under cultivation. The group also plans to increase its current dairy herd of 30,000 head to 200,000 head, and is looking to invest in palm oil projects.

Thai Huong, vice chairwoman and CEO of BacA Bank, and one of Forbes more powerful businesswomen in Asia for 2015, entered the ag sector in 2009 with the formation of milk producer, TH. Since its formation, TH has grown to control one third of the fresh milk market with 400,000 cows, and 2014 revenues exceeding US$200 million.

Despite these examples, investment in Vietnam’s agriculture sector remains modest because of unclear government regulations regarding land compensation, taxation, and investment incentives.

In 2014 the country’s ag sector saw growth of 3.31% with export revenues of US$30.86 billion. If the country can clear its barriers to investment, upgrade its infrastructure, and dedicate large areas of land for crops, economist Nguyen Minh Phong believe that not only domestic investment in the sector, but foreign investment in the sector will grow as well.

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