Red tape puts off investors

HCM City (VNA) - Cumbersome procedures and inconsistent regulations
are scaring away foreign direct investment (FDI) from the agricultural sector,
analysts warn.

Though the Government has been trying to encourage investors, particularly
foreign, to invest in the farm sector, actual FDI has been falling relentlessly
for several years now.

Ministry of Agriculture and Rural Development statistics show that FDI in
agricultural projects accounted for 21.6 percent of the overall figure in
1988-1990 but plummeted to 8.3 percent in 1991-1995.

Last year it was just 6 percent.

While commitments are low, actual disbursement of money is very sluggish. Less
than half of the 4.7 billion USD committed to on going projects has actually been
disbursed so far.

Complex and time-consuming procedures and arbitrary regulations make the
agriculture sector unattractive to investors, especially foreigners, independent
analysts said.

Besides, it is often riskier that other industries, they added.

Lai Chang An, director of Taiwan-owned Truong Thai Bao Lam, said his company
received a licence for a 1 million USD project in 2004 but has only invested 60
percent so far.

He said that land-related procedures were so complex that his company just could
not keep up with the schedule. For instance investors have to fill between 15 and
20 different forms to obtain land for their projects.

Many other foreign companies investing in agriculture also said it took them a
year or more to get land.

TFB, another Taiwanese company, said it had received permission to grow O Long
(Oolong) Tea in the northern mountain province of Ha Giang in 2004. But the
project could not get under way even by 2007 because land could not be cleared.


Kien Tai International Company, a joint venture between Taiwanese investor and a
Kien Giang Province-based agro-forestry export company, faced a similar situation.


The JV planned to grow 60,000 hectares of forests for pulp production and build
a pulp will in Kien Giang.

But seven years after it got its licence, the company planted only 22,290 hectares
while the pulp factory remains on paper.

A Kien Tai spokesperson said the company did not get its land because the province
could not move out residents as promised.

The fact that many localities often make capricious changes to their plans also
scares away investors who normally prefer government policies to be constant.

A typical example is southwestern Tay Ninh Province 's sugarcane-related
policies.

The province decided to reduce the area under sugarcane by more than 10,000
hectares in the last two years, causisng a cane shortage for local sugar mills.


French company Bourbon Tay Ninh Joint Stock Company was initially licensed to grow
sugarcane on 24,000 ha but has now been restricted to 10,000ha.

Meanwhile, the company build a sugar plant with a capacity to process cane grown
on 24,000ha.

The analysts called for eliminating such actions in order to keep foreign
investors working effectively with the agricultural sector.

The Ministry of Agriculture and Rural Development has stated that attracting FDI
into farming is a priority, especially at a time when ODA and public funds are
shrinking.-Emditem