Prime Minister Nguyen Xuan Phuc has backed a credit support package of VND50 trillion ($2.2 billion) to develop the country’s agriculture sector.

The package would provide support to high-tech agriculture and feature favorable lending mechanisms, the PM told the Building Vietnam’s Agriculture and Industry conference held by the Vietnam Young Entrepreneurs’ Association (DAA) in Ho Chi Minh City on December 18.

He said his ambition is to build a modern agriculture sector that puts Vietnam among the group of leading agricultural countries. “Vietnam targets to become a center in the supply of high-tech agricultural products and have an important position in global value chains,” he said.

“The State Bank of Vietnam should provide a credit package worth from VND50 trillion ($2.2 billion) to VND60 trillion ($2.6 billion) with favorable lending procedures,” he went on. “Several commercial banks should also take part in the initiative to improve credit quality and prevent malfeasance.”

He also suggested Vietnam establish technical barriers under WTO regulations to protect domestic goods. He called for more support for producers of materials serving agriculture, improvements to the operation of cooperatives, and encouragement to self-employed individuals in rural areas to shift business models.

Mr. Truong Gia Binh, Chairman of the FPT Group and the DAA, called for the development of high-tech agricultural complexes. “This will contribute to changes in agriculture from low added-value and growth into an outstanding sector,” he said.

According to figures from the Ministry of Agriculture and Rural Development, export turnover in the agricultural, forestry and fisheries sector reached $2.69 billion in November, bringing the total value in the first eleven months to $29.1 billion, an increase of 5.9 per cent year-on-year.

The value of agricultural exports was estimated at $13.7 billion, up 7.2 per cent year-on-year, seafood $6.4 billion, up 6.9 per cent, and forest products $6.5 billion, up 0.8 per cent.

A recent World Bank report stated that Vietnam’s agriculture sector is now at a turning point. It faces growing domestic competition from cities, industry, and services for labor, land and water. Rising labor costs are beginning to inhibit the sector’s ability to compete globally as a low-cost producer of bulk undifferentiated commodities.

Going forward, Vietnam’s agricultural sector needs to generate “more from less”. That is, it must generate more economic value and farmer and consumer welfare, while using less natural and human capital and less harmful intermediate inputs. According to the report, the Vietnamese Government has played a major role in agricultural development but it will need to lead less and at the same time facilitate more to transform the country’s agriculture and agro-food system.

For example, the government could undertake less direct investment in agriculture while focusing more on facilitating a more active agricultural land market, supporting rural infrastructure, reducing the transaction costs on farmers and agro-enterprises, and revitalizing the country’s agricultural innovation system.