Agriculture is an important economic sector in Vietnam. In 2020, agriculture, aquaculture, and forestry sectors contributed 14.9 percent to Vietnam’s GDP, which is lower than 41.6 percent of the service and 33.7 percent of the industry sector.

Although agriculture has doubled in terms of value in the last decade, its share in GDP has witnessed an average annual decrease of 0.3 percent.

Science and technology are key to increasing the capacity and quality of products while improving farmer lives. Vietnam’s government in 2018 stated that it was important to develop a production value chain of high-added value farming products while promoting the link of cooperatives with businesses, as well as to encourage technology transfer and provide preferential loans to agricultural cooperatives.

This is where agricultural technology (Agtech) comes in. Agtech is the use of technology in agriculture with the aim of improving yield, efficiency, and profitability. Agtech can be products, services, or applications that come from agriculture that improve various input/output processes

Vietnam’s agtech industry is still behind other countries despite being an agricultural country. Given a large number of small-hold farmers, in contrast, there are limited agtech companies and projects in Vietnam. Agtech is a relatively unknown concept in Vietnam’s rural areas. While in more developed economies like the Netherlands, Australia, and Israel, technology has been integrated into agriculture for years; it is still challenging to integrate modern technology into Vietnam’s agricultural sector.

The government views biotechnology, automation, mechanizing technology, and information technology as fundamental to implementing sustainable agricultural practices, increasing productivity. Agtech could be a major boon for the green economy of Vietnam.

Vietnam has 12 areas certified for hi-tech agriculture. The three most prominent zones are Hau Giang, Phu Yen, and Bac Lieu provinces. The State Bank of Vietnam (SBV) along with commercial banks have also offered a financial package of VND 100 trillion (US$4.37 billion) to support enterprises applying high-tech farming.

There are more than 20 enterprises in the Central Highlands in Vietnam that have applied agtech in their operation and farming including IoT, big data, blockchain, plant growth monitoring cameras, environmental sensors, and greenhouses with automatic adjustment systems linked with computers and smartphones, LED light, smart GIS pest management, prediction systems, and electronic traceability.

Foreign agricultural firms also play a crucial role in promoting the agtech sector in Vietnam. Bayer Global (Germany), Charoen Pokphand (Thailand) are becoming strategic investors in local agricultural companies. Charoen Pokphand (C.P.), a Thai conglomerate, has worked on accurate data and applied automation in farming. C.P has also supported its partners that are small farming households and cooperatives in terms of technology to guarantee the quality standard of livestock and aquaculture output.

Since reforms in 1990, the Vietnamese government has shifted Vietnam toward a more market-oriented economy. The national GDP tripled in value from 2008 to 2019. Economic growth momentum remained strong and stable with a CAGR of 6.0 percent during this period. As with other global economies affected by the COVID-19 pandemic, Vietnam’s economy suffered significantly throughout the outbreak in 2020. In 2021, Vietnam’s economy is expected to recover to its normal pace. Aside from these, we examine some market drivers for Vietnam’s agtech industry.

As the government’s priority was national food security in which rice played a dominant role in the 1990s, the abundant labor force provided reliable resources contributing to sector growth as well as labor-intensive requirements. Since the macrostructure has shifted toward industrial and service sectors, the labor force in agriculture has shrunk in the past decade.

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This article was first published by AseanBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected].

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ASEAN Briefing features business news, regulatory updates and extensive data on ASEAN free trade, double tax agreements and foreign direct investment laws in the region. Covering all ASEAN members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam)

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