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From the research on the effectiveness of public investment in agriculture in Vietnam, the author clarifies the theoretical and practical issues of public investment in agriculture and enhances the efficiency of public investment. The agricultural sector in Vietnam in the coming period and propose measures to improve the efficiency of public investment in agriculture in Vietnam.
MINISTRY OF PLANNING AND MINISTRY OF EDUCATION AND INVESTMENT TRAINING CENTRAL INSTITUTE FOR ECONOMIC MANAGEMENT NGUYEN THI NGOC NGA EFFECTIVENESS OF PUBLIC INVESTMENT IN THE AGRICULTURE AREA IN VIETNAM Major: Economic Management Code: 31 01 10 SUMMARY OF DOCTORAL THESIS HANOI - 2019 The thesis is accomplished in: Central Institute for Economic Management Research supervisor: Assoc Prof., Dr Vo Phuoc Tan Review : Assoc Prof., Dr Le Xuan Dinh Review 2: Assoc Prof., Dr Nguyen Quoc Thai Review 3: Assoc Prof., Dr Vu Thi Minh The thesis will be defended at thesis Evaluation Committee at Institute level to be held in Central Institute for Economic Management at (time): Access to the thesis is available at: - Library of Central Institute for Economic Management - Vietnam National Library, Hanoi INTRODUCTION The urgency of the thesis topic After more than 30 years of reforming agriculture in Vietnam, there has been an important change According to data from the General Statistics Office in 2016, Vietnam's agricultural sector contributes about 1/4 of total GDP, accounting for more than one third of total export value and creating jobs for two-thirds of the country's labor force Agriculture continues to grow at a high rate; ensuring national food security; some export products have a high position in the world market The socio-economic infrastructure of rural areas has been strengthened The material and spiritual life of people in most rural areas has been significantly improved The effect of public investment is an issue of concern not only in countries around the world but also more specifically in developing countries In Vietnam today, public investment activities in general as well as public investment in agriculture in particular are thought to be ineffective and in an alarming state "Strictly control of public investment" is a familiar phrase for many years by national financial managers However, the fact has not seen improvements when it is easy to see especially every day we have to witness a series of projects of capital investment from the State budget to cover or put into use inefficiently, many approved investment items, but the cost of loss, increase far beyond the plan compared to the budget, the project progress is long, stagnant causing annoyance to the people According to data from the General Statistics Office, in the period of 2011 2016, compared with other countries in the region, Vietnam Agriculture has a erratic growth rate and tends to decrease, from 4.02% per year 2011 is 1.36% in 2016, this is the lowest level ever The percentage of contribution to economic growth and the percentage of contribution to the economic growth of the Agriculture sector has decreased rapidly in recent times By 2016, the percentage of contribution to the economy was only 0.22, down more than 50% compared to 2015 and more than times compared to 2011; % contributed to economic growth at 3.5% in 2016, down 60% compared to 2015 and times lower than in 2011 According to the World Bank (2017), Vietnam's agriculture is facing many challenges Specifically, agricultural value chains are fragmented, collective cooperation activities are very limited at the farm level and coordination of vertical cohesion is weak These restrictions hinder private investors in the agricultural sector in Vietnam because of high transaction costs Currently, less than 2% of the value of foreign direct investment (FDI) is made in the agricultural business This is a very small rate and does not bring much value added Investors merely buy raw materials from farmers, then process and export non-value-added goods to foreign markets, where products are finished and sold at much higher prices Farmers are still the largest private investors in agriculture and most of them are not involved in agricultural value chains 2 According to the Ministry of Planning and Investment (2017), there are more than 49,600 enterprises investing in agriculture in the country, accounting for 8% of the total number of operating enterprises However, enterprises in the field of forestry aquaculture account for only 1% of the total number of enterprises with 7,600 enterprises The rest are businesses in the chain of agricultural related industries such as processing, supplying raw materials, commercial services… The capital of enterprises operating in the agriculture sector only accounts for 8-10% of the total capital of the whole enterprise sector, of which the capital of production enterprises accounts for only 1% In the last period, the turnover of enterprises in the agricultural sector tended to increase slightly, accounting for 15-16% of the total revenue of the enterprises in the economy but the profits of the enterprises in the direct production sector re-export tends to decrease In general, the average profit of an enterprise directly engaged in agricultural production is only 1.08 billion VND / year Development is a process with the impact of many factors Economic theories have shown the role of public investment in growth and development For Vietnamese agriculture, where investment from the private sector is limited, lacking in depth, focusing on areas that are profitable, public investment plays a decisive role with the development of agriculture in Vietnam However, public investment in agriculture has been on the downward trend recently Moreover, the items of investment allocation among the sub-sectors are unreasonable This has led to excessive investment in agriculture, affecting the growth rate of the industry (Nguyen Dinh Tai, Le Thanh Tu, 2010) Other causes represented by the Hi-Tech Agriculture Club indicate that the process of land accumulation is slow and fragmented because of the restrictions on allocation of land This is an obstacle for people and businesses to invest long term in agriculture while 96% of agricultural land has been allocated to households In addition, due to the lack of clear regulations on supporting enterprises to recruit or accept the contribution of agricultural land use rights of farmers, the implementation of investment projects of large-scale production enterprises encountered many difficulties Most of the enterprises are small scale, difficult to access large capital sources Therefore, technology is backward, which isdifficult to compete, high production costs lead to low profits, no funding to expand and research new technology The limitations of public investment in agriculture, the challenges of Vietnam's agriculture under the pressure of integration, and the issue of sustainable development are sending an urgent message to the improvement of the social system The policy on public investment for public investment in agriculture brings about practical economic, financial, social and environmental values Therefore, how public investment in agriculture needs to be implemented effectively, how much public investment in agriculture is needed to actually generate growth dynamics, is a Major issues to address in the process of building modern Vietnam agriculture, building new rural Finding answers to the question of how public investment in agriculture is effective is a major problem in the process of socio-economic development in our country On the basis of that practice, the author chose the topic "Efficiency of public investment in agriculture in Vietnam" as research topic for PhD thesis Objectives of the study 2.1 Overall objectives From the research on the effectiveness of public investment in agriculture in Vietnam, the author clarifies the theoretical and practical issues of public investment in agriculture and enhances the efficiency of public investment The agricultural sector in Vietnam in the coming period and propose measures to improve the efficiency of public investment in agriculture in Vietnam 2.2 Specific objectives - Systematize the theoretical basis for the efficiency of public investment in agriculture - Assess the current status of public investment in agriculture in Vietnam, 2008 2017 - Analyze the limitations and causes of limitations of public investment in agriculture in Vietnam - Suggest solutions to improve the efficiency of public investment in agriculture Research questions Firstly, what are the limitations of the public investment in agriculture in Vietnam? Secondly, what are the causes of the limited effectiveness of public investment in agriculture in Vietnam? Thirdly, what measures should be taken to improve the efficiency of public investment in agriculture in Vietnam? Objects and scope of thesis research 4.1 Research subjects Effectiveness of public investment in agriculture in Vietnam 4.2 Research scope The research scope of the project is the agricultural sector in Vietnam in the period 2008-2017, which is broadly covered by agriculture, forestry and fisheries Methods of thesis research The topic uses the following research methods: - Synthesis method: Theory of succession to clarify the role of public investment in agriculture, systematizing the criteria for evaluating the efficiency of public investment in agriculture - Statistical methods are used to collect, analyze and exploit information from available sources related to research topics, including party documents, legal documents of the state Central and local, scientific research works of authors at home and abroad have been accepted and announced; National and international scientific papers published in the specialized journal on mechanisms and policies for public investment in agriculture 4 - Expert methodology is carried out by asking questions to a team of experts to collect information through analysis and debate of experts with in-depth understanding of the mechanism and policy of public investment in agriculture , the effectiveness of public investment in agriculture in terms of performance criteria with the following types of conferences: Discussion frank, often between the collaborators close to the topic Scientific seminars, given a number of questions to discuss, to debate to gather information about the object - Inductive methods: through a survey of the state of public investment, public policy, mechanisms and policies, the theme will propose policy and institutional solutions to improve the efficiency of public investment in agriculture - Analytical and deductive method: to clarify the theory of public investment in agriculture, to inherit the experience of other countries in the world, applying it to practical conditions in Vietnam - Comparison method: Based on the collected data, the thesis uses the comparative method to explain in detail the efficiency of public investment in agriculture - Applied research method: Based on the results of the assessment of causes affecting the efficiency of public investment in agriculture, the thesis proposes measures to improve the efficiency of public investment in agriculture in Vietnam in the future hybrid Theoretical and practical meanings of thesis research Firslyt, the thesis has fully and systematically compiled the most basic arguments for public investment in agriculture Secondly, the thesis analyzes the status of public investment in agriculture Analyze mechanisms and policies for planning and allocating capital and managing and supervising public investment in agriculture Thirdly, thethesis analyzes the efficiency of public investment in the agricultural sector, clarifying the data on ICOR in agriculture by sector, by territorial level, by management level, according to the program; analyze the relationship between public investment in agriculture and poverty reduction; wastefulness and debt of public investment in agriculture in the period of 2008 - 2017 Fourthly, the thesis has evaluated the efficiency of public investment in agriculture in the period of 2008 - 2017 on the basis of economic efficiency, social and environmental efficiency and at the same time draws the weaknesses and raw materials, the multiplication of these limitations In particular, there are two main causes for the reduction of the effectiveness of public investment in agriculture: objective and subjective Objective causes come from factors such as natural conditions and the impact of the environment and disease The subjective reasons came from factors such as the mechanism of agricultural development policy is unclear, lack of breakthroughs; The agricultural business environment is not attractive and limited; investment from the State budget and economic sectors in agriculture, farmers and rural areas is low, not meeting development requirements; The planning of infrastructure for agricultural production areas is not sufficient; Estimation, allocation and disbursement of capital sources failing to meet investment requirements, thus causing loss and waste of investment capital sources; The management, inspection and supervision of public investment are still inadequate Fifthly, the thesis proposed solutions to improve the efficiency of public investment in agriculture The system of solutions includes enhancing the investment in agriculture such as improving the system of policies, laws, preferential policies on tax, tax exemption on public investment for agriculture and rural areas, increasing investment capital Directly to develop agriculture, focus on the key projects rather than investment spread focus on human resource development, high technology application in agriculture; Organization of the apparatus, resources for implementing investment capital, publicity, transparency, management and use of investment capital for agricultural development; Institutionalizing the criteria for assessing the efficiency of public investment in agriculture; To closely monitor and supervise public investment in agriculture; To exploit and create sources for maintenance, operation and operation of infrastructure works in service of agricultural production, and a number of proposals to the State Structure of the thesis In addition to the introduction and conclusion, the thesis consists of chapters: Chapter 1: Theoretical basis for effectiveness of public investment in agriculture Chapter 2: The current status of the effectiveness of public investment in agriculture in Vietnam Chapter 3: Solutions to improve the effectiveness of public investment in agriculture in Vietnam 6 CHAPTER THEORETICAL BASIS FOR EFFECTIVENESS OF PUBLIC INVESTMENT IN AGRICULTURE 1.1 Investment in the agriculture area 1.1.1 Agriculture concept In this study, the concept of agriculture was broadly approached, including economic activities: agriculture, forestry, fisheries, but not including salt production 1.1.2 Public investment in agriculture Public investment in the agricultural sector is understood to be a major investment in the use of state capital to implement programs and projects to build infrastructure in the agriculture sector and programs and projects project for agricultural economic development for public benefit 1.2 Effectiveness of the public investment in the agriculture area 1.2.1 The concept of public investment effectiveness in agriculture The effectiveness of public investment in agriculture is the benefits, which are more focused on the economic, social and environmental aspects than on the financial interests of a country 1.2.2 Criteria for evaluating the effectiveness of public investment Most studies share the view that there are many criteria for evaluating the effectiveness of public investment, but there are three most important criteria for assessing the effectiveness of public investment in general as well as in the agricultural sector In particular, it includes criteria that reflect financial performance, criteria that reflect economic efficiency and criteria that reflect social performance 1.2.2.1 Criteria reflecting economic effectiveness - Incremental Capital-Output Ratio: ICOR - Impact on economic growth - Criteria for loss, capital wastage and construction debt 1.2.2.2 Criteria reflecting financial effectiveness - Net Present Value: NPV - Index of internal rate of return IRR (internal rate of return) - Annualvalue: AV - Sensitivity index e 1.2.2.3 Criteria reflecting social efficiency - Increased access to services for the poor (health, education, credit, transport, communications, electricity, water, etc.) - Create jobs, increase income, reduce the rate of poor households - Mitigate negative impacts on the environment 1.2.3 Factors affecting the effectiveness of public investment in agriculture 1.2.3.1 The objective factors - Natural environment - The level of economic, scientific-technical and technological development of the country 7 - Qualifications and skills of workers 1.2.3.2 The subjective factors - Mechanisms and policies on management of public investment in agriculture - Planning of public investment in agriculture - The allocation of investment capital - Managing and overseeing public investment - Publicity and transparency of investment projects 1.3 The experience of countries on improvement of effectiveness of public investment in agriculture and lessons for Vietnam 1.3.1 The experience of some countries in enhancing the effectiveness of public investment in the agriculture sector 1.3.1.1 China In its agricultural development strategy, China gives priority to investment in agricultural science and technology In addition to science and technology, China is highly committed to investment in transportation development, leading to significant drop in shipping costs 1.3.1.2 India For agricultural production, government spending on agricultural research and development (R & D) is most effectively, increasing agricultural output in India At the same time that increases the infrastructure in agriculture 1.3.1.3 Taiwan Given the limited agricultural land area, Taiwan focuses on agricultural science and technology 1.3.2 Some lessons for Vietnam Firstly, there should be a series of policies and mechanisms to help Vietnamese agriculture accessing to advanced scientific and technological application in the world and human resources from advanced countries Secondly, investment in rural transport infrastructure is an important step towards reducing the cost of shipping from one place to another, making agricultural prices more competitive when exported to countries in the world Thirdly, the establishment of agricultural research and development (R & D) centers to increase agricultural productivity, reduce input costs, and accelerate the shift of production structure 8 CHAPTER THE CURRENT STATUS OF THE EFFECTIVENESS OF PUBLIC INVESTMENT IN AGRICULTURE IN VIETNAM 2.1 Overview of public investment management in the agriculture area in Vietnam 2.1.1 Preferential policies to attract public investment in agriculture In general, the policies promulgated by the Government and implemented are extremely positive, reflecting the ever-expanding scale of agricultural production, the total agricultural, forestry and fishery export turnover being improved; rural infrastructure and irrigation, transport, electricity and telecommunications projects have contributed to creating jobs, poverty reduction and other socio-economic issues Although public investment policies in agriculture have many achievements, the development process still has some issues which need tobe solved 2.1.2 Planning of public investment in agriculture In general, the planning work is adjusted according to the actual situation, however, there are still many inadequacies In addition, the planning has many weaknesses, reflected in unclear assignment and decentralization Although there is a legal framework for planning, approval, management planning, there is still lack of consistent in terms of direction and implementation Besides, the lack of oordination among agencies during the planning process has led to the overlap between sectoral, regional and provincial planning 2.1.3 Appraisal and allocation of public investment in agriculture The appraisal of public investment programs or projects is an important step and must be conducted before the competent person deciding the investment to consider, approve or approve the adjustment of the public investment project program or project To ensure the approval of public investment programs and projects in line with relevant strategies, plannings and plans and ensure their feasibility, efficiency and sustainability in the process of organizing the implementation of programs and projects government's Invest 2.1.4 Management and supervision of public investment in agriculture At present, the management of public investment in agriculture has followed the process However, constraints still exist in each stage of public investment management in the agricultural sector, which directly impacts the efficiency of public investment in general, in particular the process project evaluation 2.2 Current status of scale and public investment structure in the agricultural area in Vietnam 2.2.1 Status of public investment scalle in agriculture in Vietnam * Scale of public investment in agriculture The scale of public investment in agriculture in the period of 2008 to 2017 shows that although the domestic investment in agriculture at current prices increases steadily over the years; However, as well as the share of total public investment / GDP, public investment in agriculture / GDP tended to decrease, with the deceleration of public investment in agriculture / GDP faster than total public investment/GDP Table 2.1: Scale of public investment Unit:%, trillion VND Proportion of Public investment Total public Total public public investment in investment in Year investment/GDP in agriculture in agriculture/GDP agriculture (%) total public (%) (trillion VND) investment (%) 2008 14.08 1.44 10.23 81.00 2009 17.34 1.62 9.34 85.00 2010 15.97 1.58 9.92 92.00 2011 13.47 1.38 10.24 98.00 2012 12.53 1.24 9.90 111.00 2013 12.29 0.97 7.91 127.00 2014 12.15 1.01 8.30 135.00 2015 12.39 0.98 7.94 138.00 2016 11.33 0.94 8.30 146.00 2017 11.21 0.88 7.85 154.00 (Source: Authors' compilation from MARD,2018) * Comparison of public investment in agriculture and private investment and foreign investment If comparing public investment in agriculture with private investment and foreign investment, it shows that in the agricultural sector, private investment always accounts for the highest proportion, followed by public investment and, ultimately, foreign investment Considering the proportion of investment capital to GDP, both public investment, private investment and foreign investment in agriculture tended to decrease However, speed reduction is not the same Table 2.2: Scale of public investment compared with private investment and foreign investment in the agricultural sector Unit:% GDP Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Public investment 1.44 1.62 1.58 1.38 1.24 0.97 1.01 0.98 0.94 1.16 Private investment 1.73 1.55 1.95 1.68 1.39 1.22 1.27 1.38 1.23 1.19 Foreign investment 1.22 1.24 1.28 0.94 1.02 0.71 0.84 0.74 0.62 0.57 (Source: Authors' compilation from MARD,2018) 2.2.2 Current situation of the structure of public investment in agriculture in Vietnam 2.2.2.1 Structure of public investment in agriculture by sector 10 Table 2.3: Structure of public investment in agriculture by sector Unit: VND trillion, % Agriculture Year Forestry Proportion Scale (trillion) (%) Irrigation Proportion Scale (trillion) (%) Scale (trillion) Proportion (%) 2008 54.3 67.0 7.6 9.4 19.1 23.6 2009 61.2 72.0 6.0 7.0 17.9 21.0 2010 58.0 63.0 10.1 11.0 23.9 26.0 2011 72.5 74.0 3.9 4.0 21.6 22.0 2012 75.5 68.0 6.7 6.0 28.9 26.0 2013 90.2 71.0 4.1 3.2 32.8 25.8 2014 112.1 83.0 5.1 3.8 17.8 13.2 2015 107.6 78.0 1.8 1.3 28.6 20.7 2016 118.3 81.0 3.7 2.5 24.1 16.5 2017 126.3 82.0 9.9 6.4 17.9 11.6 (Source: Authors' compilation from MARD,2018) The structure of public investment in agriculture by sector shows that public investment in agriculture, forestry and irrigation over the past ten years has been on the opposite trend If the size and value of public investment in agriculture grows steadily over the years, in the opposite direction, the scale of investment and the proportion of investment capital in the irrigation sector shows a downward trend Meanwhile, in the forestry sector, although the scale of investment increased slightly, the proportion of investment mainly in the trend of decreasing 2.2.2.2 Structure of public investment in agriculture by category The structure of public investment in agriculture by category shows that the increased investment in quarantine stations also has a decisive impact on the quality of products produced in rural areas Considering irrigation is also particularly important Considering the forestry sector, investment in transport system accounts for the largest share such as transportation lines, timber storage, nurseries, forest protection and prevention facilities, forest fire prevention and fighting equipment Table 2.4: Structure of public investment in agriculture by category Unit: trillion VND Year 2008 Agriculture 54.3 61.2 58.0 72.5 75.5 a Inland traffic system 32.1 35.5 33.6 41.2 b Animal lodging 13.2 15.6 14.1 c Quarantine 7.1 8.1 d Other 1.9 19.1 Irrigation 2009 2010 2011 2012 2013 2014 2015 2016 2017 90.2 112.1 107.6 118.3 126.3 44.8 54.3 69.0 68.1 79.4 85.1 17.1 15.9 20.0 25.1 23.2 23.0 24.3 6.3 10.2 10.2 12.2 11.9 12.8 12.8 13.8 2.0 3.9 4.0 4.6 3.7 6.0 3.6 3.0 3.1 17.9 23.9 21.6 28.9 32.8 17.8 28.6 24.1 17.9 11 a Dykes 14.9 13.7 18.4 15.6 22.5 26.5 14.7 23.2 20.4 15.4 b Irrigation 2.6 2.5 3.4 2.8 3.2 3.3 2.2 2.7 2.1 1.5 c Other 1.6 1.7 2.1 3.2 3.1 2.9 0.9 2.7 1.7 1.0 Forestry 7.6 6.0 10.1 3.9 6.7 4.1 5.1 1.8 3.7 9.9 3.3 2.7 4.5 1.5 3.1 2.1 2.2 0.7 1.2 3.4 b Forest development 2.6 2.1 3.5 1.4 2.4 1.4 1.6 0.5 1.0 2.9 c Rangers 0.8 0.7 1.0 0.4 0.8 0.5 0.8 0.3 0.6 1.8 d Other 0.9 0.5 1.1 0.7 0.3 0.0 0.5 0.3 0.7 1.8 a Forest transportation system (Source: Authors' compilation from MARD,2018) 2.2.2.3 Structure of public investment in agriculture by region The structure of public investment in agriculture by regionshows that public investment in agriculture in the deltas is more valuable and proportionately greater than in mountainous areas Although the scale of public investment in all economic regions has increased over the past 10 years; However, in terms of proportion, except for the Mekong Delta, the share of public investment in agriculture in other deltas tends to decrease while the share of public investment in mountainous areas tends to increase increase Table 2.5: Structure of public investment in agriculture by region Unit: trillions of VND Northern Year Midlands North Red river and Central delta South Central Highlands South East Coast Mountains Mekong Delta 2008 5.265 15.39 18.63 14.904 4.86 13.77 8.181 2009 8.925 14.705 17.85 18.785 7.48 14.11 3.145 2010 10.12 16.376 20.24 17.48 6.256 15.456 6.072 2011 12.446 17.934 17.64 18.032 7.35 16.758 7.84 2012 13.986 20.535 20.535 19.647 8.547 17.094 10.656 2013 18.415 21.971 22.352 21.336 9.144 19.685 14.097 2014 20.25 24.03 22.95 21.735 12.69 22.005 11.34 2015 20.838 21.666 23.184 24.84 12.696 19.596 15.18 2016 20.732 21.608 24.236 24.09 16.936 20.148 18.25 2017 22.176 22.33 23.254 27.412 18.172 19.404 21.252 (Source: Authors' compilation from MARD,2018) 2.2.2.4 Structure of public investment in agriculture by source of capital In terms of the structure of public investment in agriculture by management level shows that equity investment accounted for the largest share of equity, followed by equitable investment in state budget funds and finally SOE funding In general, the size of public investment from the source of loans and capital from the state budget 12 tends to increase each year, and state-owned enterprises tend to decrease in recent years In terms of proportion, the proportion of equity investment from the state budget tends to decrease slightly, the proportion of equity investment in state-owned enterprises tends to decrease sharply, in contrast, the proportion of equity investment Loans tend to increase significantly Table 2.6: Structure of public investment in agriculture by capital Unit: trillions VND Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Capital from the state budget 34.02 36.125 41.032 39.984 42.957 48.006 49.815 48.714 48.764 53.13 Loans 32.805 36.04 38.64 43.904 54.279 61.976 69.795 71.898 85.994 92.708 Home business capital 14.175 12.835 12.328 14.112 13.764 17.018 15.39 17.388 11.242 8.162 (Source: Authors' compilation from MARD,2018) 2.2.2.5 Structure of public investment in agriculture by managerial level The structure of public investment in agriculture by management level shows that public investment in agriculture by central and local levels is increasing in scale, but the proportion of public investment by central level tends to decrease Table 2.7: Structure of investment in agriculture by management level Unit: trillions VND Year Center Local Scale Proportion Scale Proportion 2008 46.332 57.2 34.668 42.8 2009 46.8435 55.11 38.1565 44.89 2010 49.1556 53.43 42.8444 46.57 2011 50.0584 51.08 47.9416 48.92 2012 56.5656 50.96 54.4344 49.04 2013 61.2521 48.23 65.7479 51.77 2014 64.233 47.58 70.767 52.42 2015 65.343 47.35 72.657 52.65 2016 67.5834 46.29 78.4166 53.71 2017 69.531 45.15 84.469 54.85 (Source: Authors' compilation from MARD,2018) 13 2.2.2.6 Structure of public investment in agriculture by project program management level Regarding the structure of public investment in agriculture by project management level, it shows the share of public investment by project program accounts for the highest proportion, followed by public investment by investment program and product or service provision In general, the proportion of public investment under the program of investment in the project has a significant increase over the years, the proportion of public investment under the investment program and service delivery support has been decreasing sharply over the years, the proportion of public investment classified by investment to serve the activities of state agencies is almost unchanged Table 2.8: Structure of public investment in agriculture by program Unit: trillions VND Year Investment in the project program 2008 49.41 Invest and support the supply of products and services 21.222 2009 54.7485 21.369 7.1825 1.7 2010 60.4624 22.31 8.3076 092 2011 65.4738 21.6874 10.0548 0.784 2012 75.9795 22.2888 8.0697 4.662 2013 87.9348 23.6474 7.7978 7.62 2014 100.116 22.329 8.505 4.05 2015 101.7612 19.7616 10.8192 5.658 2016 110.4636 20.1188 11.023 4.3946 2017 119.0112 17.3712 16.0468 1.5708 Investing in activities of state agencies Other investment 8.91 1.458 (Source: Authors' compilation from MARD,2018) 2.3 Current status of public investment effectiveness in the agricultural area in Vietnam 2.3.1 Analysis of criteria reflecting economic effectiveness 2.3.1.1 Efficient use of public investment through ICOR indicators * The ICOR of the agricultural sector In the 2008-2012 period, the ICOR average of the investment program and product offering support was significantly lower than other programs ICOR is projected to increase from 6.35 in 2008 to 2017 In the period 2008 to 2012, ICOR is expected to increase gradually, while ICOR is expected to decrease gradually in the period 2013 - 2017 ICOR is expected to increase from 2008 to 2017 by an average of 6.38 In the period from 2008 to 2012, ICOR is expected to increase gradually Thus, 14 public investment in agriculture is based on the investment program and support to provide the most effective products Table 2.9: Scale and proportion of public investment in agriculture by management level Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 4.61 6.08 7.26 8.28 8.06 4.53 5.15 4.74 5.35 5.98 6.58 8.03 9.18 10.13 9.71 8.08 7.61 6.04 6.28 6.32 ICOR in agriculture General ICOR of the economy (Source: Authors' compilation from MARD,2018) * ICOR in agriculture by sector The ICOR index for agriculture is highest, followed by ICOR by sector, followed by ICOR by irrigation sector with the lowest index Table 2.10: ICOR index in agriculture by sector Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Agriculture 4.79 6.52 7.70 8.39 8.38 6.99 5.56 5.03 5.56 6.23 forestry 5.89 6.44 8.00 9.78 8.94 7.42 6.76 6.12 5.93 5.93 Irrigation 4.15 5.47 6.53 7.05 7.13 6.0 4.14 4.37 5.12 4.29 (Source: Authors' compilation from MARD,2018) * The ICOR in agriculture is territorial ICOR average in the agricultural sector from 2008 to 2012 reached 6.51 The average ICOR in the Northern Midland and Mountain Region ranges from 2008 to 2017 to 7.0, the North Central region average 5.93, the Red River Delta average 5.37, the South Central Coast average 5.82, the West The average age of the South is 5.51, the average South reaches 5.51 and the Mekong River Delta average 6.98 In general, public investment in the delta is more effective than public investment in mountainous areas * ICOR in agriculture is based on management level The ICOR managed by the Central Government from 2008 to 2017 average 6.71, ICOR managed by the local government from 2008 to 2017 average 6.20 In general, the efficiency of public investment management is slightly higher but not significantly higher than that of the central level Table 2.11: ICOR in Viet Nam by management level Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Center 5.3 7.5 6.7 9.1 9.1 6.1 6.1 5.6 6.1 5.5 Local 4.3 5.7 8.4 7.6 7.3 7.6 4.9 4.5 4.9 6.8 (Source: Authors' compilation from MARD,2018) * ICOR in agriculture according to the program In the 2008-2012 period, the ICOR average of the investment program and product offering support was significantly lower than other programs ICOR is 15 projected to increase from 6.35 in 2008 to 2017 In the period 2008 to 2012, ICOR is expected to increase gradually, while ICOR is expected to decrease gradually in the period 2013 - 2017 ICOR is expected to increase from 2008 to 2017 by an average of 6.38 In the period from 2008 to 2012, ICOR is expected to increase gradually Thus, public investment in agriculture is based on the investment program and support to provide the most effective products Table 2.12: ICOR in agriculture Unit: trillion VND Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Investment project program 5.23 6.96 8.14 7.83 8.82 7.43 6.00 6.47 6.20 5.67 services 3.99 4.72 6.90 6.59 7.58 5.19 4.76 4.23 3.76 5.43 Other investments 4.90 5.63 7.81 8.50 8.49 7.10 7.67 5.14 5.67 6.34 Investment and support to provide products and (Source: Authors' compilation from MARD,2018) 2.3.1.2 Impacts of public investment on agriculture on growth and poverty reduction In general, investment capital in agriculture has grown steadily over the years In addition, the growth rate of agricultural production has also increased over the years Notably, the rate of poor households in rural areas tends to decrease Table 2.13: Public investment in agriculture with growth and poverty reduction Unit : trillion VND Year Public investment in agriculture 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 81.00 85.0 92.0 98.0 111.0 127.0 135.0 138.0 146.0 154.0 32.8 36.7 32.9 34.5 34.0 33.5 32.3 31.7 33.7 39.7 6.23 5.32 6.78 5.89 5.03 5.42 5.98 6.68 6.21 6.81 4.81 2.14 3.28 3.97 2.86 2.88 3.67 3.94 3.99 4.25 16.1 17.1 16.7 15.9 14.4 12.7 10.8 9.2 8.8 7.8 Share of public investment in agriculture /total social investment in agriculture Economic growth rate Growth rate of agricultural production value Rate of poor households in rural areas (Source: Authors' compilation from MARD,2018) 2.3.1.3 Losses, wastes and debts of public investment in agriculture The waste of public investment capital and debt capital construction investment tend to increase every year 2.4 Evaluate the effectiveness of public investment in the agricultural area in Vietnam 16 2.4.1 Major achievements 2.4.1.1 Considering economic effectiveness Firstly, the efforts to tighten public investment and increase the mobilization of non-state investment over the past years have brought about practical results Capital efficiency has improved, though not much Secondly, increase investment and support programs to achieve effective products Thirdly, the structure of public investment is more appropriately allocated and focused on those with low ICOR, for example the special irrigation sector 2.4.1.2 Considering social effectiveness The agricultural sector has made important contributions to the socio-economic development Hunger eradication and poverty reduction achieved great achievements, the new face for the rural economy 2.4.2 The weaknesses and causes 2.4.2.1 The weaknesses Firstly, the efficiency of public investment in agriculture in the last two years has shown signs of decline Secondly, the composition of public investment is uneven between agro-forestry and irrigation Thirdly, the allocation of public investment capital in the regions has not really created a motive force to promote the development potential of each locality Fourthly, the waste of capital investment for slow projects and mistakes in the construction phase of the project tends to increase from 2016 to 2017 Fifthly, the capital construction investment debt is quite high in 2015 and 2016 2.4.2.2 The causes that reduce the efficiency of public investment in agriculture The causes that reduce the efficiency of public investment in agriculture include objective and subjective causes Particular attention should be paid to subjective reasons such as: First, the policy mechanism on public investment in agriculture has some shortcomings Secondly, the agricultural business environment is not attractive and limited Thirdly, investment from the state budget and economic sectors in agriculture, farmers and rural areas is low, not meeting development requirements Fourthly, the planning of infrastructure for agricultural production is not complete Fifthly, estimating, allocating and disbursing funds does not meet the investment requirements causing loss and waste of investment capital Sixthly, the management, inspection and supervision of public investment still have many inadequacies Seventhly, human resources in science and technology development is limited Limitations on the level of workers affect the access to science and technology 17 CHAPTER SOLUTIONS TO IMPROVE THE EFFECTIVENESS OF PUBLIC INVESTMENT IN AGRICULTURE IN VIETNAM 3.1 BACKGROUND AND ORIENTATION OF PUBLIC INVESTMENT IN THE AGRICULTURAL AREA TO 2030 3.1.1 Background and orientation of public investment in the agricultural sector in upcoming time * Opportunities for agricultural development in Vietnam in the coming time Firstly, the commitments made in the ASEAN Economic Community (AEC), the Free Trade Agreement (EVFTA) between Vietnam and the European Union (EU), along with mechanisms that have been in the process of being signed The government will help speed up the restructuring of the agricultural sector Secondly, with the expansion of the domestic market several times, Vietnam's agricultural products will have more opportunities to access more market segments, depending on the Chinese market for many agricultural products will also minimize Thirdly, in the context of an investor in the agricultural sector, but due to new opportunities from the integration, agriculture will welcome new investment flows, especially investment in hi-tech agriculture The industry will support the agriculture sector - which currently lacks the human capital to invest Fourthly, promote institutional reform, business environment in the country This is the impact that enterprises, producers really expect on the basis of the policy system will be adjusted in accordance with international practices * Challenges for agriculture in the coming time Firstly, public debt, bad debt and macroeconomic governance Secondly, the internal strength of the economy is weak, while competition pressure is increasing Thirdly, science and technology in agriculture is both lacking and backward Fourthly, the scarcity of natural resources and the pollution of the marine environment in the central region are important factors that pose great challenges to Vietnam's agriculture Fifthly, climate change has been occurring, greatly affecting our country's agriculture Sixthly, the team of agricultural science is not strong 3.1.2 An initial view of agriculture in the year 2030 Firstly, public investment in agriculture, farmers and rural areas is an important part of the country's socio-economic development strategy Secondly, the State must play a key role in investment in agricultural development, farmers and rural areas Thirdly, synchronous development of rural socio-economic infrastructure in combination with fast-growing rural economy, building new rural areas, improving material and spiritual life of farmers These are important contents for the best 18 implementation of solutions for agricultural development, farmers and rural areas according to the Resolution of the 12th Party Congress on agriculture, farmers and rural areas Fourthly, to ensure uniformity in the institutional system and public investment policy; Associated with the implementation of the PAR Master Program, the country's socio-economic development strategy and in line with new international practices so as to be able to mobilize and attract domestic and foreign investment 3.1.3 Orientation of public investment in agriculture in Vietnam until 2030 Pursuant to the Prime Minister's Decision No 800 / QD-TTg dated June 4, 2010 approving the national target program on new rural construction in the period 20102020 and Decision No 124/2012 / QD -TT dated 02/02/2012 of the Prime Minister approving the master plan for agricultural development up to 2020 with a vision to 2030 3.2 Solutions to improve the effectiveness of public investment in the agricultural sector in Vietnam by 2030 3.2.1 To perfect the system of policies and laws on public investment in agriculture Firstly, the Ministry of Finance should soon complete the draft of the State Budget Law (amended) in line with the direction of increasing investment expenditure for agriculture and rural areas; State budget allocations ensure the harmonization of interests of localities with conditions for industrial development with purely agricultural localities Promulgation of the Law on Public Investment, Public Procurement, Planning Law, Law on Irrigation, Veterinary Law and Employment Law Amendments and supplements to the Land Law, the Law on Cooperatives, the Law on Vocational Training, the Law on Fisheries Reviewing, amending and supplementing the law provisions on state budget, bidding, investment, enterprises, construction, compensation, support and resettlement, agricultural insurance, vocational training, housing housing, environmental sanitation, monitoring activities Secondly, to continue implementing preferential policies on collection of land use fees, value added tax and corporate income tax to encourage enterprises to invest, especially investment projects applying technology high technology, agricultural products, post-harvest food processing, investment projects in difficult areas Thirdly, continue to set aside preferential credit for investment in agriculture, encouraging banks and credit institutions to provide loans with incentives for agriculture and rural areas Fourthly, divert spending, which spends more on welfare (education, health, housing, social security) Fifthly, the renovation of mechanisms and policies should be carried out in order to renovate the thinking in the direction and administration of agencies and levels of government such as finalizing the regulations on reward and fine enough the deterrence of violations in the field of investment; Agencies should have a mechanism to closely 19 coordinate the verification and issuance of investment certificates for the most important projects, such as large-scale projects; To apply measures to accelerate the disbursement and not to grant investment certificates to projects with backward technologies for application to agriculture or projects with bad impacts on the environment; To examine carefully projects on the use of agricultural land under planning and conditional land assignment according to the project schedule Sixthly, the localities continue to accelerate administrative reform, especially administrative procedures, such as introduction of locations, granting of investment certificates, land allocation and building permits for investors when conducting investment in their locality Seventh, the State needs to accelerate the progress of compensation and ground clearance to facilitate the implementation of investment projects, actively support the private enterprises, foreign investors in the compensation compensation Land clearance to quickly complete the basic construction to bring enterprises into operation soon Eighthly, the formulation, modification and operation of the information system for the monitoring, inspection and evaluation of public investment projects in agriculture to create conditions for investors and management levels In synthesizing, making and sending reports on supervision and evaluation of investment projects through websites on supervision and evaluation of investment projects 3.2.2 Complete the planning of public investment in agriculture Firstly, resource planning is in line with sectoral, regional and product master plans, reflecting the overall and synchronous strategic vision from central to local Secondly, resource planning must be in line with the development trend of the socialist-oriented market economy and the need for international integration Thirdly, to improve the land use planning in the direction of thrift and efficiency 3.2.3 Increase direct investment capital for agricultural development Increase the share of state budget in total social investment for rural areas Besides increasing the budget for agriculture, it is necessary to attract FDI capital to invest in agriculture 3.2.4 Limit investment spreading for programs and projects Strengthen management, avoid investment spread, loss, waste Limited resources, so each budget should be used in the most effective way Increased responsibility and strict treatment of managers, for all investment inefficiencies, resulting in loss of capital 3.2.5 Organization of the apparatus, resources for implementing investment capital, publicity, transparency, management and use of investment capital for agriculture To organize the State management apparatus, in which the full-time personnel shall be arranged with full capacity to advise on investment and financial planning in 20 the agriculture domain To make public and transparent in the management and use of public investment capital 3.2.6 Institutionalizing the criteria for assessing the effectiveness of public investment in agriculture Most public investment projects in general and public investment in agriculture in particular have not been evaluated seriously The cause of this situation is due to the lack of formal evaluation criteria, the inspection and supervision left the lane, the management and use of public investment is limited Therefore, besides overcoming the shortcomings of monitoring, management and utilization, the institutionalization of criteria for assessing the effectiveness of public investment in agriculture is necessary 3.2.7 Close monitoring and supervision of public investment in agriculture As we all know, many public investment projects in general and public investment in agriculture in particular have been badly damaged after being put into operation Causes of this situation include unclear inspection and supervision, creating openings for investors and other parties involved in cutting down works and projects Therefore, it is necessary to change the inspection and supervision work in order to improve the quality of the works in particular and to improve the efficiency of public investment activities in general 3.2.8 To focus on the development of human resources and the application of high technologies in agriculture To implement well the planning on human resource development in agriculture To implement the policy of recruiting and arranging the effective use of labor in agriculture, especially the human resources for State management over agriculture and training of skilled human resources and intellectual standards in rural areas To invest in the development of special education, which is the reform of education by the model of implementing practical technology applications at the universities of agriculture, forestry and economics to train high-quality human resources for the first private agricultural development 3.3 Some recommendations 3.3.1 Developing professional systems software to evaluate public investment projects in agriculture The government should develop a system for evaluating the results of programs and projects after finalizing and publishing financial data in a transparent manner, avoiding misuse of power and influence drainage and wastage affect the economic and social efficiency of the programs and projects as well as affect the general efficiency in the agricultural sector 3.3.2 To set up an independent organization specializing in consultancy and appraisal of public investment projects in agriculture before the Government approves the implementation of public investment programs and projects To set up an independent organization specializing in consulting and appraising public investment projects in agriculture as well as the application of research on 21 international standards on analysis and appraisal of investment projects while ensuring the calculation of investment projects professionalism, while ensuring transparency and objectivity in the assessment process, avoiding sensitive issues about the interaction between group interests and individuals, At the same time, the authorities and powers at the competent agencies affect the objectives and plans of the project implementation 3.3.3 To set up a specialized and independent agency to inspect and supervise public investment projects in agriculture To set up specialized and independent agencies to inspect and supervise public investment projects in agriculture in order to raise the efficiency of public investment examination and supervision, thus contributing to raising the economic efficiency for projects The main function of this agency is to inspect and supervise programs and projects from approving policies and investment decisions to implementing organizations and competent authorities to propose violations monitoring process This is a focal point of the National Assembly, which coordinates and monitors the other agencies that have the function of supervising and directly supervising the private construction of the project CONCLUSION Public investment in the agricultural sector has been on the downward trend recently This has led to unbalanced investment in agriculture, which has affected the overall growth of the industry In addition to the constraints of public investment in agriculture, the challenges and strategic objectives of Vietnam's agricultural development under the pressure of integration require the improvement of the institutional system and policies In the field of agriculture, the values of economics, finance, society and the environment should be brought about Through the use of a combination of methods such as synthesis methods, statistical methods, inductive methods, and analytical methods, the thesis has achieved its research objectives The contributions of the thesis include the complete and systematic collection of the most basic arguments for public investment in agriculture, the analysis of the state of public investment and the effectiveness of public investment in the agricultural sector To clarify the data on the ICOR in agriculture, to evaluate the efficiency of public investment in the agricultural sector in the 2008-2017 period on the basis of economic efficiency, social and environmental effects and withdraw Given the weaknesses and the causes of these shortcomings, the system of solutions includes enhancing agricultural investment 22 THE PUBLICATION OF THE AUTHOR Nguyen Thi Ngoc Nga (2017), "Effectiveness of Public Investment in Infrastructure Construction, Agricultural and Rural Development: International Experience and Relevance to Vietnam", Asia Pacific Economic Review, (504), pp 4951 Nguyen Thi Ngoc Nga (2017), “Improving the efficiency of public investment through agriculture, fishery extension and industrial extension funds for rural areas'', Journal of Rural Development Science, (36), pp 24-28 Nguyen Thi Ngoc Nga (2017), “Evaluating public services in agricultural production in the Mekong Delta", Journal of Economics and Forecasting, (676), pp 6366 Nguyen Thi Ngoc Nga (2017), “Improving the effectiveness of public investment policy in agricultural development in Vietnam", Journal of Finance, (10), pp 24-26 ... improve the effectiveness of public investment in agriculture in Vietnam 6 CHAPTER THEORETICAL BASIS FOR EFFECTIVENESS OF PUBLIC INVESTMENT IN AGRICULTURE 1.1 Investment in the agriculture area. .. Vietnam 2.2.1 Status of public investment scalle in agriculture in Vietnam * Scale of public investment in agriculture The scale of public investment in agriculture in the period of 2008 to 2017 shows... for public investment in agriculture, the analysis of the state of public investment and the effectiveness of public investment in the agricultural sector To clarify the data on the ICOR in agriculture,