SBV to issue guidelines for $4.4bn agri credit package

Guidelines for lending package to develop high-tech, clean agriculture to come this month. Photo: Duc Anh

The State Bank of Vietnam (SBV) has announced that a decision to guide and direct commercial banks in implementing a $4.4 billion credit package for agriculture with interest rates of 0.5 to 1.5 per cent lower than regular loans will be issued this month.

In order to implement the government’s policy on developing high-tech, clean agriculture, the central bank held a meeting with commercial banks with large outstanding loans to the sector. All supported the government’s policy and committed to lend at reasonable interest rates.

Deputy Prime Minister Vuong Dinh Hue previously requested the banking sector cut costs to reduce interest rates in the package.

He also asked whether credit should be disbursed according to the development stages of high-tech production and whether individual households involved in high-tech production should be included in the list of eligible borrowers, particularly large production households.

Vietnam’s agriculture sector targets growth of 2.5 to 2.8 per cent this year, production value growth of 3 to 3.2 per cent, and total export turnover of $32.5 billion.

According to Minister of Agriculture and Rural Development Nguyen Xuan Cuong, 2017 is a pivotal year in the 2016-2020 development plan in the context of the sector still battling many difficulties.

“The sector continues to implement the overall objective of building agriculture into a modern and sustainable sector,” Minister Cuong said, adding that safe agricultural products are a priority in 2017.

Recognizing that clean agriculture will develop strongly in Vietnam in the future, many large enterprises not in the field of agriculture are promoting investment in the sector.

Mr. Tran Ba Duong, Chairman of Truong Hai Auto, one of the largest private Vietnamese enterprises, recently announced investment in clean rice using high technology.

Dutch group De Heus signed a contract worth $50 million with local company the Hung Nhon JSC in southern Binh Phuoc and Dong Nai provinces to build a food safety valley to provide clean pork, chicken, eggs, and fruit and vegetables to the market.

Exports of agriculture, forestry and fishery products in 2016 reached $32.1 billion, an increase of 6 per cent year-on-year, according to the Ministry of Agriculture and Rural Development.

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.