Policies fail to increase forestry investment

Favourable conditions and policies will continue to be offered to attract sustainable and environmentally sound private investment in the forestry sector, an official of the Ministry of Agriculture and Rural Development’s forestry department has said.

Nguyen Nghia Bien, head of the department’s planning division, said businesses which invested in reforestation and wood processing projects in targeted areas would receive tax exemptions.

“In addition, investors have received low-interest loans, support for transportation and personal income tax exemptions,” Bien said.

Despite the incentives, investment in the sector had been limited, he added, with foreign investment accounting for only 1.2 per cent of the total forestry industry.

Private enterprises had invested in wood processing but paid little attention to sustainably forestry and afforestation, said the deputy head of the ministry’s Forest Research and Planning Institute’s northwestern region branch, Duong Van Coi.

“The investment trend could result in unsustainable development as most of the wood processed in the country is imported or illegally exploited from prohibited forests,” Coi said. “Policies encouraging private sector to invest in forestry would create materials for wood processing and more stable development.”

Private and foreign investment in the forestry sector had increased, with the former recently surpassing State investment, he noted. Last year, total investment in the sector reached VND704 trillion (US$33.5 billion), with VND278 trillion ($13.2 billion) coming from the domestic private sector, VND245 trillion ($11.6 billion) from State sources, and VND181 trillion ($8.6 billion) from foreign investment.

Forestry department statistics show that there are more than 2,300 non-governmental businesses operating in the sector in the north, including 54 major operators and the rest small- and medium-sized enterprises. Up to 88 per cent of all enterprises are engaged in wood processing, while only 4 per cent in reforestation.

Truong Loc Construction Investment and Commerce Co general director Hoang Van Huyen said the slow process to receive land use right certificates had created difficulties for companies seeking to do business in sustainable forestry.

“It has also been difficult to access bank financing, and the short-term nature of most loans were insufficient to allow time for reforestation,” Huyen said.

“Forest land allocation policies that are unclear as to rights, investment and technical support have contributed to the problem,” Coi agreed. “There’s an overlap among relevant agencies supervising forest land allocation.”

“Forest land planning which was not suited to reality and the process of clarifying the distinction between protective and special function forests have slowed down forest land allocation,” Bien added.

Households working in the sector, meanwhile, had been given two years to decide on reforestation methods and plans to sustainably exploit forests to which they had been assigned, he said. The Government would also assist households to borrow VND10 million ($476) for a five-year term to carry out their plans.

http://vietnambusiness.asia/policies-fail-to-increase-forestry-investment-2/