Businesses show no interest in rural markets

The Head of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), Dr. Dang Kim Son, says only 30 percent of the total domestic businesses are involved in agriculture.

According to a 2010 survey conducted by the Ministry of Agriculture and Rural Development (MARD), there was only one business per 57,000 people in rural and mountainous regions, but one per 700 in other parts of the country, Son notes.

In most small-and-medium-sized enterprises (SMEs) the number of workers involved is 10 per 200 and they have created nearly half of non-agricultural jobs for three million people, equivalent to a quarter of the country’s workforce.

However, those in the countryside grow slowly by just two percent compared to the average 20-25 percent nationwide.

Son puts this down to different reasons.

First it is inadequate investment in rural infrastructure that often makes the transport of goods a time consuming and costly business.

Second, businesses are still weak as far as their competitiveness, human resource management and market approach are concerned.

In fact, some localities do not have long-term strategies for industrial development. They only focus on building electrical power plants, cement factories and houses while investing little in developing light industrial and labour intensive sectors such as garments and textiles and aquaculture-forestry-agricultural processing.

As a result, many workers remain unskillful and need vocational training.

Last but not least, businesses operating in the agricultural sector find it very difficult to access credit, let alone secured and unsecured loans from banks, says Pham Ngoc Thao from the Vietnam Sugar Association.

So, they can only be able to produce goods on a small scale without internationally recognized brand names.

Thao argues that a close link between businesses and farmers is the key to successfully promoting production and alleviating poverty in rural areas. Farmers cannot stand alone without businesses and the businesses cannot survive without State support.

The government should have incentive policies to encourage and keep both business and production purring along together, he insists.

To improve the situation, the Ministry of Planning and Investment is drafting an amendment to Decree 61/2010/NĐ-CP in the hope that businesses will be eligible for lower land use fees or even exempt from them and further supported in training human resources as well as upgrading their research and application of new scientific and technological advances in the agro-forestry sector.