Bottlenecks Be Removed to Take Advantage of TPP

Former Deputy Minister of Agriculture and Rural Development, President of the General Council of Agriculture and Rural Development of Vietnam, Mr Ho Xuan Hung gave a brief summary of opportunities coming from the TPP signed on 5th November 2015 for Vietnamese agricultural sector: enterprises have the chance to join the global supply chain, to step into big markets of the world such as the US and Australia; Vietnam’s agricultural products could reach new markets, enjoying preferential tariffs, however they have to deal with growing competition in both domestic and foreign markets.

 

Also, joining the TPP generated pressure for Vietnamese enterprises in selecting investment and steering business production toward focusing more on products with a competitive advantage. In fact, this was an opportunity for businesses that were eager to jump ahead, noted Mr Hung.

 

On the other hand, the TPP required a strengthening of capital and technology’s quality in the process of direct investment and joint ventures in agriculture.

 

TPP would increase employment opportunities for workers and enable them to improve their income and skills.

 

Another important opportunity that would come with the TPP was the impetus to develop new industries and the motivation to perfect policy mechanisms.

 

A factual summation of the agriculture of Vietnam in the context of the TPP is coming into effect was studied by many experts and they have pointed out shortcomings that need resolving and obstacles that need removing if Vietnamese agriculture is to take advantage of the opportunities brought by the TPP.

 

From a general view, it can be seen that after 30 years of innovation, even though having always been considered a key factor of the economy, the agriculture of Vietnam still lacks sustainable development, farmers' income remains modest, productivity is low and the quality of agricultural products inferior.

 

A recent study of the agricultural sector showed that only about 60 percent of the social resources went to agriculture. Less than one percent of enterprises invest in agriculture; the number of capitalised businesses account for only three percent on the stock market.

 

Land fragmentation was currently the biggest hurdle on the way becoming a big manufacturing industry of agriculture. Over 80 percent of farmers owned less than one ha area and on average one household has four parcels of land.

 

Vietnamese agricultural production was dependent on natural conditions, which made investing in agriculture a risk, especially when it came to large investments. Support policies for agriculture in terms of capital and borrowing were too weak. Insurance system for agriculture was also not strong; insurers were reluctant even when the state implemented a variety of preferential treatments.

 

Many policies of the government were impractical, inefficient and unattractive to be able to draw investments into agriculture. The issue of overlapping taxes and fees had not been dealt with. Thousands of unnecessary administrative procedures were creating barriers and raising costs for businesses. Counterfeiting, shoddy goods, tax evasion and contraband, from the input to output stage of agricultural production, had been undermining fair competition, threatening the existence and development of honest manufacturers and businesses as well as the health of consumers.

 

Joining the big market door opened by the TPP and other bilateral trade agreements, Vietnamese businesses’ weak competitiveness will be even more visible. In particular, the weakest links lie in food safety and product traceability. For farmers, TPP remains a far-fetched notion as they continue farming on their small fields, not encouraged or not really having the desire to join force to raise production scale, to proactively apply the strict international level standards for agricultural products.

 

As the forecaster and supporter responsible for providing information about market, products, and the people planning production areas, this state system has yet to meet the actual requirements of farmers and businesses. In particular it lacks market research and analysis, especially the production forecasts, both domestic and overseas.

Other challenges requiring improvement from state management agencies are the incomplete policy environment and the weak monitoring organizations; a lack of useful tools to help ensure trade justice in cases of international disputes; the shortage of capital and advanced technology, especially in the fields of adaptation to climate change and disease control in agriculture. All are significant challenges for the capability of Vietnamese agriculture. There’s also the too low quality labour to proactively participate in international and regional markets.

 

According to experts, the most important factor in terms of agricultural policy when joining TPP was that Vietnam should quickly enact a code of production standard for agricultural products in general and individual agricultural products in line with the TPP. Also key was the implementation of a supervision and management mechanism to ensure manufacturing standards and product quality. It’s also crucial to appoint a specific agency responsible for providing official information about the market, timely and accurately, so that people and businesses had a place to come to when in need of information.

 

In recent years, transport infrastructure has been receiving big investment, in turn boosting production and business development. However, it’s important to maintain a good coordination between the two state authorities are the Ministry of Agriculture and Rural Development and the Ministry of Transport in the planning and implementation of transportation systems serving production zones which produce and process large-scale products for the domestic market as well as export. On the other hand, it’s also necessary to plan for the chain of processed products, production and consumption, identifying focus and priorities for commodity and markets, taking it as the basis for enterprises to plan their production and business activities in a proactive, consistent and effective manner.

 

In the 2015 review meeting of agriculture sector, Minister of Agriculture and Rural Development Mr Cao Duc Phat said the ministry was building and would soon submit to the government finalized legal provisions aimed at removing the policy bottlenecks on land accumulation, agricultural insurance, taxes and fees, policy and strategies for training human resources, and policies to support enterprises in building brands, trade promotion and market approach.