In mid
2011, Thai Hoa Group Joint Stock Company came up with a public-private
partnership (PPP) model in growing coffee in Lam Dong, Quang Tri, Son La and
Dien Bien provinces. By that time, the company expected the PPP project could
bring breakthroughs in local coffee production, creating a stepping stone to
form a successful coffee production chain.
The
model, however, failed after a half year’s implementation with farmers turning
their backs on the project. Thai Hoa incurred losses of VND120 billion ($5.7
million) from the project in 2011.
Another
PPP coffee growing project handled by Nestle Vietnam in association with some
foreign firms including Yara, Syngenta, BASF, Bayer, EDE Consulting, Cisco and
some others, however, is faring well.
The
project, with support from an international non-governmental organisation,
takes place in Central Highlands’ Dak Nong province with around $24 million in
investment and attracting 17,250 farmers.
“The
project is evolving so quickly,” said Nestle Vietnam’s external relations head
Vu Quoc Tuan.
“Our
PPP project involves businesses in diverse areas like fertiliser, pesticide and
trade. Farmers get from us fertiliser, pesticide, production techniques and the
promise to buy end products, a crucial factor to attract farmers,” said Tuan.
Nestle
Vietnam’s PPP project success partly came from the fact that the project was
planned scientifically from sourcing capital, training staff and farmers to
setting responsibilities for businesses and farmers. Violators, either firms or
farmers, would incur a penalty or even face filling in court procedures.
In
fact, PPP projects’ success and failure mainly relies on firms’ capacity and
policy frameworks. Firms argued the current PPP state regulations did not cover
PPP in agriculture.
For
instance, in the prime minister’s draft decision on corporate income tax
incentives to companies having cooperation contracts with the state, firms
signing contracts with farmers benefit from incentives, while the draft does
not mention groups of companies doing the same thing.
When
investment capital comes into agriculture has trended downward, PPP is expected
to unblock capital channel into this field. In fact, PPP projects into
agriculture are resuming quick pace with five PPP taskforces currently in place
and active support from 14 multinational groups in Vietnam.
“Vietnam
is viewed as rich in PPP agriculture. However, the game is not only for
multinational groups but also for local companies,” said head of the Institute
of Policy and Strategy for Agriculture and Rural Development Dang Kim Son.
“With
current five PPP taskforces and one about to take shape there will be more PPP
projects in agricultural sector in the coming period,” Son asserted.
Thuy
Lien | vir.com.vn
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