Those Who Say FDI Ruins Agriculture May Want to Behold Vietnam's Coconut Exports

Tuoi Tre (Youth) News

Checking out my Google browser landed me on an interesting piece of news. It's all about Vietnam's coconut export to the USA may reach USD 1 Billion. Reading the news makes me wonder why hasn't the democratic Philippines reached this feat in contrast to Communist Vietnam? I also want to sing the English Filipino song "The Coconut Song". Civics and Culture classes talked about Philippine coconuts. Here's an excerpt of the article from The Star which I just shared:

According to food experts, Vietnam coconuts are known for their high quality and freshness. (Rich in nutrients: Vietnamese coconuts are also found to be rich in vitamins and minerals, including potassium, magnesium, and fiber, which can help support overall health).

As the US is about to open the market for Vietnamese coconuts and China allows official coconut import, local businesses are trying to develop raw material areas, apply for growing areas codes, and register to build organic material zones to meet the needs of the world market, Vietnam news agency (VNA) reported the official said.

"At the end of 2022, coconut export turnover was over US$700 million. But based on the momentum of the US and China agreeing to import Vietnamese coconuts, around the end of 2024 and early 2025, coconut export turnover will be up to US$1 billion," Thanh said.

In the past, there were not any plans for coconut areas. However, in 2021, the fruit was listed as one of Vietnam’s key industrial crops, especially in the context of climate change.

According to Thanh, about 20 large enterprises in the country have exported coconuts to the world. Up to 35 countries and territories are Vietnam’s importers.

It's really no surprise that the democratic US has opened its doors to Vietnam's Communist coconuts. Vietnam has focused on developing its economy instead of the current problem with Communist China. That's why I wrote that I can expect Vietnam may overtake China as well.

Was the key to Vietnam's progress in coconut farming an isolationist and protectionist country? 

One article I wrote back then was about Vietnam's agricultural great leap forward. The term Great Leap Forward creates a lot of negative connotations because it's associated with Mao Zedong. However, I have used the term positively to describe what Deng Xiaoping and the late Nguyen Duy Cong aka Do Muoi did to their respective countries. Vietnam, a country rich in natural resources, learned from the late Lee Kuan Yew in the book From Third World to First. One can always say (and losers like Teodoro A. Casiño as they insist) that Singapore either opened up only after becoming a first-world country or only because it lacks natural resources. However, I read LKY's book and thought of Do Muoi's encounters with LKY. 

From page 317 of From Third World to First, this important detail can be read from LKY's encounter with Do Muoi:

I (LKY, emphasis mine) reassured him (Do Muoi) that eventually, Vietnam could do better than Singapore. There was no reason why the present peace and stability should not last for a long time, for the lesson East Asia had learned from the last 40 years was that war did not pay. In two big wars, in Korea and Vietnam, and in the guerrilla war in Cambodia, there had been no victors, only victims. Do Muoi sadly agreed.

In fact, the Vietnamese had made progress. As a result of more contacts with foreigners and great information on the market economy, ministers and officials had a better understanding on the workings of the free market. Greater street activity, more shops, foreign businesspeople, hotels--these were all signs of prosperity in Ho Chi Minh City and Hanoi. 

On another visit, in March 1995, First Deputy Prime Minister Phan Van Khai led the discussions on economic reforms. He was reputed to want to move forward faster. Our investors had run into a thicket of problems. I told Khai that if he wanted to attract investors, he must make the early ones welcome. They should be helped to succeed after they had fixed their assets on Vietnam's soil. To treat investors with fixed assets in Vietnam as captives was the surest way to drive others away. Their officials dealt with investors as they dealt with American soldiers, as enemies to be led into ambush and destroyed. Instead, investors should be treated as valuable friends who need guidance through the maze of their bureaucracy with with its landmines and other traps.

The Vietnam Briefing offers this insight on FDI and agriculture:

Foreign investment in Vietnamese farms 

As far as investment goes, plant-based agriculture does not carry any conditions for foreign investors. The establishment and registration of a foreign company wishing to invest in agriculture simply needs to comply with the standard investment, enterprise, and company laws.

That said, the 2013 Land Law, does not permit foreign investors to acquire land to build farms in Vietnam. Therefore, in order to establish a farm in the country, foreign investors can only rent the land. To do this they must establish a foreign invested enterprise, either alone or with a local partner.

Foreign investors and local partners may enter into an investment cooperation agreement in either the form of a joint-stock company or a limited liability company. They can also enter into a Business Cooperation Contract without having to establish a legal entity in Vietnam.

Foreign investors in Vietnam’s agricultural sector

A number of foreign investors are already making headway in Vietnam’s agricultural sector and many of them have been operating in the country for quite some time.

With the aforementioned limits on land ownership for foreign investors, international firms tend to be concentrated in either ancillary services or high-value goods, such as nuts, coffee, or fresh cut flowers.

Three firms that have been relatively successful in the Vietnamese market are Cargill, Olam, and the Louis Dreyfus Company. 

Even more interesting, the Vietnamese Investment Review writes down how FDI has helped agriculture in Vietnam in contrast to what that idiot page, Philippine Anti-Fascist League (and they blame the US for Venezuela's plight) says: 

In the first five months of 2022, all economic sectors have witnessed quite high growth on-year, of which the most prominent is agricultural exports, which reached $23.2 billion, up 16.8 per cent.

The key agricultural exports have continued to maintain their positions and brands in the international market, such as pepper (first ranked in the world, up 25.7 per cent); coffee (second, up 54 per cent), rice up 10.3 per cent; seafood up 46.3 per cent, wood products up nearly 7 per cent, and more. These are very encouraging results.

In order to further develop the agricultural sector, firstly, the government will direct the renovation of the organisation of production and business in agriculture, from investment in research, selection and breeding to the planning and construction of standard raw material areas, and forming large-scale agricultural production areas. It is also needed to promote the application of science and technology to produce clean and high-quality agricultural products to meet domestic and international consumption demand.

Secondly, the government will direct the expansion of trade promotion and negotiate conditions on technical barriers and trade barriers so that agricultural products that have no market can soon be officially exported to major markets such as Europe, the US, and China. This will contribute to gradually reducing small-scale exports across the northern border while limiting the congestion of goods taking place at border gates.

Next, there will be a stronger mechanism to support credit, exempt and reduce fees and taxes in order to attract businesses into investing in the production of agricultural materials and fertilisers. The government will also direct the review and assessment of the overall demand for raw materials for animal feed processing, from which we can make plans and build production areas to serve the feed industry and gradually ensure our own supplies.

Finally, the government will focus on proposing amendments and supplements to the Law on Land; formulating mechanisms and policies to promote land resources; forming and developing a market for land use rights in agriculture; and creating conditions to support farmers in exploiting and effectively using land.

Can Venezuela blame the US? Can North Korea blame South Korea? The answer is no. It's because their poor economic policies have led to such problems. Another older essay I wrote was about how FDIs can help in farming. One can say that I'm citing "imperialist propaganda" but taking a look at countries like North Korea and Venezuela can tell you they are both incredible failures. Did the US tell Venezuela to carry out the latter's lousy policies? Did South Korea tell North Korea to carry out its lousy policies? This time, maybe I need to ask did Vietnam tell the Philippines to become so restrictive in the name of Filipino First Policy? It's been many decades and its apologists refuse to accept the fact that the Filipino First Policy is a big reason why it failed.

Vietnam carried out whatever new technology it could do. Was the technology good for farming and the environment? It didn't matter if the technology was Vietnamese or foreign. What mattered with the Doi Moi program was that it would produce the results. The result was that the Vietnamese export might even exceed the Philippines.

What can the Philippines learn from Vietnam as a friendly competitor?

I was looking for some news on coconut exports. Hopefully, this essay will reach Philippine President Ferdinand R. Marcos Jr. and all his colleagues. Hopefully, the Liberal Party of the Philippines (and I wish that Atty. Maria Leonor Gerona-Robredo will read this) will read this essay too and be a constructive opposition. From June 30, 2023, this year, Marcos Jr. expressed his desire to modernize coconut farming. However, Marcos Jr. hasn't done well when he said that constitutional reform isn't a priority. The president must realize that it's a top priority if he wants to see coconut farming modernized. 

This one should be a call to Marcos Jr. why constitutional reform is a priority:

In a statement, the PCA said the coconut industry remains to be the Philippines’ top dollar-earning export.

Coconut oil ($1.431 billion), desiccated coconut ($396 million) and copra oil cake ($67.54 million) ranked first, fourth and tenth, respectively in 2021.

Coconut production rose by 1.6 percent, from 3.20 million metric tons in the first quarter of 2022 to 3.26 million metric tons in the first quarter of 2023.

Coconut exports declined by more than half, from $1.04 billion in January to April 2022 to $490.16 million in the same period this year, according to the Presidential Communications Office.

The Philippines needs to remove what would be called overly restrictive policies. That's why I've been quoting from an economist (and blatant supporter of Mrs. Robredo) Andrew James Masigan. I may have voted for Atty. Rodrigo R. Duterte last 2016. Masigan is obviously anti-Duterte but I respect most of the guy's criticisms of the voted for. I think the only reason why Philippine Senator Robinhood Padilla is berated is because of what he's holding. Come on, Padilla has already served his sentence for an offense many years ago which he already served his term. I may not agree with Padilla in every area but I still am appreciative of his efforts. Ironically, many of Padilla's critics are people who are addicted to personality recalls.

These are among the boldest words of what Masigan said even when we're both at different ends:

Unfortunately, the Philippines is rated the most restrictive in the whole of ASEAN as far as accepting foreign capital is concerned. No surprise, our FDI to GDP ratio is the second lowest among the region’s ten economies. From our peak intake of $10.256 billion in 2017, FDIs declined to $9.9 billion in 2018, $8.7 billion in 2019 and $6.4 billion in 2020. Our FDI intake is only half of that of Vietnam and a third of Indonesia’s.

The main impediments to the flow of FDIs in the country are the economic provisions of the 1987 Constitution. The Constitution was written to protect industries for Filipinos, but it backfired. It has instead starved us of capital, jobs, export revenues and taxes. It created oligopolies made up of conglomerates owned by just a handful of families. These conglomerates control every aspect of the economy – from infrastructure to public utilities to retail. The few families that own these conglomerates earn scandalous profits even though they are inefficient.

Simply put, the 1987 Constitution is the reason why we have become the economic laggard in the region and why our income inequality is the worst among ASEAN’s major economies.

If you don't want an oligarchy--we must stop and remove the unnecessary FDI restrictions! Vietnam followed LKY's advice. Do Muoi carried out Doi Moi and you can imagine what it did. Just imagine why the Philippines is left behind. People can continue to insist that the 1987 Constitution of the Philippines is the best in the world. Their best source? Hilario Davide Jr.! If they want to insist on that that's why I wrote an article daring them to prove their claims to the Lee Kuan Yew School of Public Policy. Can they prove their claims even to its founder, Kishore Mahbubani, who's also a public policy expert? Need I mention that Mahbubani is a geopolitical expert? I think they're probably going to throw insults to hide the fact that they're chickening out. 

Vietnam had done what the Philippines was afraid to do. Get rid of all the unnecessary restrictions. One can say that the Philippines isn't Vietnam, that it's so unique that it must self-industrialize? That kind of thinking only made the Philippines left behind. What the Philippines needs is to learn from better countries for it to do better.