In the context where Viet Nam’s economy is strongly oriented toward sustainable development and enhanced competitiveness, agriculture continues to play a pivotal role as a cornerstone sector, ensuring food security and providing livelihoods for a large proportion of the population. However, the process of modernization and enhancement of added value in the agricultural sector requires substantial, stable, and effective investment resources. Therefore, the promulgation and implementation of Policies Encouraging Investment in Agriculture have become an inevitable requirement, aiming to attract enterprises, organizations, and individuals to participate in agricultural development in a high-tech, green, and sustainable manner.
I. Introduction to Policies Encouraging Investment in Agriculture in the Current Period
In the context where agriculture must undergo innovation to meet the requirements of sustainable development, the State has promulgated various preferential policies to attract investment resources into this sector. These investment incentive policies currently play an important role in improving production efficiency and promoting the modernization of agriculture.
1. Concept of Policies Encouraging Investment in Agriculture
Policies encouraging investment in agriculture are understood as a system of guidelines, measures, and legal instruments promulgated by the State to create favorable conditions, provide support, and attract organizations and individuals to invest in the agricultural and rural sectors. These policies typically include incentives related to taxation, credit, land use, infrastructure development support, science and technology, and mechanisms encouraging enterprises to participate in agricultural production, processing, and consumption.
The objective of these policies is to create an attractive investment environment, mitigate risks for investors, and concurrently contribute to the modernization of agriculture, enhancement of added value, and sustainable development of rural areas.
2. Practical Issues Related to Policies Encouraging Investment in Agriculture
One of the notable issues related to policies encouraging investment in agriculture at present is the gap between legal regulations and practical implementation. Although the State has promulgated numerous incentive policies, such as exemptions or reductions of agricultural land use tax, credit support, or incentives for high-tech agricultural investment, their application in practice still encounters many difficulties.
In certain localities, enterprises intending to invest in high-tech agricultural models (such as hydroponic vegetable cultivation or high-quality seed production) face obstacles in accessing land. Although policies provide for land allocation or land lease at preferential rates, the processes of land clearance, land allocation procedures, and project approval often take many months, or even years. This causes delays in project implementation, increases costs, and reduces the attractiveness of investment incentive policies.
The above issue demonstrates that, for policies to be truly effective, it is necessary to improve implementation procedures, strengthen coordination among authorities, and ensure transparency in the application of incentives for investors.
3. Necessity of Implementing Policies Encouraging Investment in Agriculture
The implementation of policies encouraging investment in agriculture is essential because agriculture continues to play a significant role in Viet Nam’s economy and social life.
First, agriculture serves as a pillar of the economy, ensuring food security and creating employment for the majority of the rural population.
Second, this sector has substantial development potential but attracts limited investment due to high risks, unstable profits, and strong impacts from natural disasters and climate change.
Third, incentive policies are instrumental in promoting the application of science and technology, improving productivity and product quality, and enhancing the competitiveness of Vietnamese agricultural products in international markets.
Finally, investment in agriculture contributes to narrowing the development gap between rural and urban areas, promoting sustainable development, and improving living standards for the population.
II. Legal Regulations Related to Policies Encouraging Investment in Agriculture
To promote agricultural investment in a coordinated and effective manner, the State has established a system of legal regulations to create a clear and transparent legal framework for organizations and individuals participating in investment. These regulations not only reflect the development orientation of the agricultural sector but also concretize incentive and support policies, ensuring their implementation in line with practical conditions.
1. Key Legal Provisions Related to Policies Encouraging Investment in Agriculture
Policies encouraging investment in agriculture are among the important instruments for promoting rural economic development, enhancing the value of agricultural products, and ensuring national food security. Pursuant to Article 16 of the Law on Investment 2020 (as amended by Point a, Clause 1, Article 6 of the Law amending the Law on Bidding, the Law on Investment in the Form of Public–Private Partnership, the Law on Customs, the Law on Value-Added Tax, the Law on Export and Import Duties, the Law on Investment, the Law on Public Investment, and the Law on Management and Use of Public Assets), agriculture-related sectors are classified as incentivized investment sectors and are entitled to various investment incentives.
In addition, investors participating in this sector may enjoy incentives related to taxation, land, and credit pursuant to Clause 1, Article 15 of the Law on Investment 2020. Specifically, agricultural investment projects may be entitled to corporate income tax exemptions or reductions for certain initial years in accordance with Clause 1, Article 14 of the Corporate Income Tax Law 2025. Where projects are implemented in disadvantaged areas, investors may also be entitled to exemptions or reductions of land rental or land use fees, thereby reducing initial financial pressure and facilitating project implementation in accordance with the Land Law 2024.
Furthermore, policies encouraging cooperation and linkage in agricultural production and product consumption are provided under Decree No. 98/2018/ND-CP.
However, to enjoy these incentives, investors must fully satisfy the prescribed conditions. Projects must meet criteria relating to scale, technology, socio-economic efficiency, and environmental protection. In addition, compliance with regulations on food safety, product traceability, sustainable development, and proper implementation of investment registration procedures under the Law on Investment 2020 and its guiding decrees is mandatory. Investors are also responsible for reporting on project implementation progress, ensuring investment efficiency, and fulfilling all financial obligations after receiving incentives.
Accordingly, policies encouraging investment in agriculture not only create development opportunities for investors but also orient agricultural development toward modernization, sustainability, and high added value.
2. Conditions for the Application of Policies Encouraging Investment in Agriculture
Policies encouraging investment in agriculture offer numerous development opportunities for investors; however, not all projects are eligible for incentives. Pursuant to Articles 15 and 16 of the Law on Investment 2020 regarding forms of investment incentives, investors may only benefit from such policies when projects satisfy specific conditions relating to sector, scale, efficiency, and legal compliance.
- Projects must fall within incentivized or preferential sectors. For example, high-tech agriculture, clean agriculture, production of high-quality plant and animal breeds, agricultural processing, or projects linked with cooperatives and rural economic organizations are included in the list of encouraged sectors pursuant to the List of Incentivized Sectors in Appendix I to Decree No. 57/2018/ND-CP. This is a prerequisite to ensure that investment projects genuinely contribute to sustainable agricultural development, enhancement of product value, and promotion of the rural economy.
- Projects must meet criteria relating to scale, technology, and socio-economic efficiency. This is stipulated in Clause 6, Article 15 of the Law on Investment 2020, under which investment incentives are applied for a definite period and are dependent on project performance. The application of advanced technology, environmental protection, food safety assurance, and product traceability are critical factors for eligibility for incentives.
- Investors must fully comply with legal procedures. Pursuant to Article 22 of the Law on Investment 2020, projects must be registered for investment, granted an Investment Registration Certificate, and fulfill progress reporting obligations to competent state authorities. In addition, pursuant to Articles 4 and 6 of Decree No. 57/2018/ND-CP (as guided by Article 2 of Circular No. 04/2018/TT-BKHDT), projects seeking tax, fee, land rental exemptions or reductions, or preferential credit support must demonstrate their legality, feasibility, and efficient use of resources.
From the above analysis, eligibility for policies encouraging investment in agriculture depends not only on whether a project falls within prioritized sectors but also on meeting technical criteria, socio-economic efficiency requirements, and strict compliance with legal procedures. A thorough understanding of these legal conditions helps investors minimize risks, safeguard their lawful rights and interests, and contribute to the development of modern and sustainable agriculture.
3. Measures for Handling Violations Related to Policies Encouraging Investment in Agriculture
Policies Encouraging Investment in Agriculture create numerous development opportunities for investors; however, violations of investment-related regulations may result in serious legal consequences. Pursuant to Articles 17 and 22 of the Law on Investment 2020, investors are required to fully comply with obligations regarding investment registration, implementation of projects in accordance with approved schedules, scales, incentivized sectors, and technical, food safety, and environmental standards. Where violations occur, competent state authorities shall apply appropriate handling measures to ensure the strict enforcement of the law and the equitable protection of the lawful rights and interests of relevant parties.
One of the common handling measures is the adjustment or withdrawal of investment incentives. Pursuant to Article 22 of Decree No. 31/2021/ND-CP, investors shall not be entitled to investment incentives as stipulated in the Investment Registration Certificate, the Decision on Approval of Investment Policy, or incentives self-determined by the investor in cases where the investment project fails to satisfy the conditions for enjoying investment incentives. This measure aims to ensure that incentive policies are applied only to projects that are genuinely effective and aligned with agricultural development objectives.
In addition, investors may be subject to administrative penalties or be required to compensate for damages if they violate regulations on environmental protection, food safety, or technical standards, in accordance with Decree No. 31/2021/ND-CP and guiding documents for the implementation of the Law on Investment. For example, projects that fail to implement environmental protection measures or use obsolete technologies causing pollution may be sanctioned, suspended from operation, or even compelled to remedy the consequences.
Accordingly, measures for handling violations in the field of investment incentives for agriculture not only focus on direct consequences for investors but also aim to ensure the effectiveness of policies and the protection of public interests. A clear understanding of the legal basis and handling measures enables investors to comply with regulations, minimize legal risks, and contribute to the development of modern, sustainable, and efficient agriculture.
III. Responses to Frequently Asked Questions Related to Policies Encouraging Investment in Agriculture
During the implementation of agricultural investment projects, many investors encounter concerns and difficulties related to the conditions for applying incentive policies, the benefits they are entitled to, and the legal obligations to be fulfilled. In addition, regulations on tax incentives, preferential credit support, exemptions or reductions of land use fees, and measures for handling violations often raise questions regarding implementation procedures and investor responsibilities.
1. What is the procedure for applying for Policies Encouraging Investment in Agriculture?
Applying for Policies Encouraging Investment in Agriculture is an important legal process to ensure that investors implement projects in line with objectives, prioritized sectors, and legal regulations. Pursuant to Articles 22 and 38 of the Law on Investment 2020, all agricultural investment projects seeking incentives must complete investment registration procedures and obtain confirmation from competent state authorities.
Investors must first determine whether the project falls within an incentivized or preferential sector as stipulated in Article 16 of the Law on Investment 2020 and Appendix I to Decree No. 57/2018/ND-CP. This is a crucial step to ensure the legal basis for enjoying incentives such as corporate income tax exemptions or reductions, land rent exemptions or reductions, preferential credit support, or support for training and technology transfer.
Subsequently, investors are required to prepare an investment registration dossier in accordance with Article 22 of the Law on Investment 2020 and submit it to the competent investment registration authority. The dossier includes, inter alia, a project proposal, capital utilization plan, explanation of applied technologies, socio-economic efficiency, environmental protection measures, and documents evidencing compliance with prioritized sector standards. The investment registration authority shall appraise the dossier, assess feasibility and conformity with incentive policies, and issue an Investment Registration Certificate.
After obtaining the Investment Registration Certificate, investors must implement the project in accordance with the approved schedule and registered commitments, and periodically submit reports on implementation progress, results, and use of incentives to the competent authorities. This ensures the maintenance of incentive entitlements and enables authorities to evaluate policy effectiveness and promptly detect and handle violations, if any.
Accordingly, the procedure for applying for Policies Encouraging Investment in Agriculture includes determining project eligibility, preparing and submitting investment registration dossiers, appraisal and issuance of the Investment Registration Certificate, project implementation in accordance with commitments, and periodic reporting. Proper compliance with this procedure safeguards investor rights and contributes to the development of modern, sustainable, and efficient agriculture.
2. Which enterprises are not eligible for Policies Encouraging Investment in Agriculture?
Although Policies Encouraging Investment in Agriculture offer numerous development opportunities, not all enterprises are eligible for incentives. Clearly identifying ineligible entities is essential to ensure transparency, fairness, and policy effectiveness, and to minimize legal risks for both investors and authorities.
Pursuant to Article 16 of the Law on Investment 2020, investment incentives apply only to projects in incentivized or encouraged sectors, such as high-tech agriculture, organic agriculture, production of high-quality plant and animal breeds, agricultural processing, and projects linked with cooperatives or rural economic organizations. Enterprises implementing projects outside these sectors are not eligible for incentives.
Enterprises failing to meet standards regarding scale, technology, or socio-economic efficiency are likewise ineligible. Under Clause 6, Article 15 of the Law on Investment 2020, incentives apply only where projects demonstrate actual effectiveness and comply with commitments on technology application, environmental protection, food safety, and sustainable development. Enterprises using obsolete technologies, causing environmental pollution, or failing to demonstrate socio-economic efficiency are excluded.
Furthermore, enterprises that fail to comply with investment legal procedures under Article 22 of the Law on Investment 2020 – such as failing to register investment, obtain an Investment Registration Certificate, or submit periodic progress and performance reports – are not eligible. In addition, pursuant to Articles 4 and 6 of Decree No. 57/2018/ND-CP, enterprises that misuse incentives, commit dossier fraud, or fail to fulfill financial obligations are excluded from incentive eligibility.
In summary, enterprises ineligible for Policies Encouraging Investment in Agriculture generally fall into one of the following categories: projects outside prioritized sectors, failure to meet technical and efficiency standards, or non-compliance with legal procedures. Clearly identifying such cases enables authorities to apply policies fairly and warns investors of potential legal risks arising from non-compliance.
3. Do Policies Encouraging Investment in Agriculture provide for international cooperation?
In the context of international integration, international cooperation in agriculture is regarded as a strategic development direction, facilitating access to advanced technologies, investment capital, and export markets. Viet Nam’s Policies Encouraging Investment in Agriculture also include provisions on international cooperation to promote effective, sustainable projects and enhance the value of agricultural products.
Pursuant to Articles 21, 22, and 23 of the Law on Investment 2020 on forms of investment and investment incentives for domestic and foreign investors, agricultural projects implemented by foreign organizations or enterprises, or joint ventures with domestic enterprises in high-tech agriculture, organic agriculture, production of high-quality plant and animal breeds, or agricultural processing, may be considered for incentive policies.
Moreover, under Decree No. 57/2018/ND-CP, competent state authorities may apply investment incentives, technical support, technology transfer, and tax exemptions or reductions to international cooperation projects that enhance production capacity, apply high technology, and expand agricultural exports. This reflects the State’s emphasis on attracting international resources to enhance the competitiveness of Viet Nam’s agriculture in the global market.
However, incentive application for international cooperation projects is subject to strict conditions. Projects must be lawfully registered, granted an Investment Registration Certificate under Article 22 of the Law on Investment 2020, comply with technical standards, food safety, and environmental protection regulations, and fulfill reporting obligations on project progress and performance. Foreign enterprises or joint projects failing to meet these conditions are not eligible for incentives.
Accordingly, Policies Encouraging Investment in Agriculture clearly provide for international cooperation, offering opportunities to access technology, capital, and markets, while requiring strict compliance with legal, technical, and environmental conditions. A thorough understanding of this legal framework enables investors to implement international cooperation effectively and contribute to the development of modern and sustainable agriculture in Viet Nam.
4. What risks should investors consider when participating in Policies Encouraging Investment in Agriculture?
Policies Encouraging Investment in Agriculture offer attractive opportunities; however, participation also entails various risks that investors must identify and mitigate. Understanding these risks from a legal perspective helps safeguard rights, limit disputes, and ensure effective project implementation.
Investors should consider legal risks related to eligibility conditions for incentives. Pursuant to Articles 15 and 16 of the Law on Investment 2020, incentives apply only to projects in prioritized sectors meeting standards on technology, scale, socio-economic efficiency, and environmental protection.
Financial and capital risks also exist. Although incentive policies may provide tax exemptions or reductions, preferential credit support, or land rent reductions, investors remain responsible for fulfilling remaining financial obligations and bearing additional costs incurred.
Technological and production efficiency risks are also significant. Modern agricultural projects, particularly high-tech agriculture, require advanced technologies, strict process management, and effective environmental protection measures.
Finally, risks related to cooperation and markets must not be overlooked. For projects involving cooperation with other enterprises or international partners, inconsistencies in management methods, capital utilization, technology application, or market access may result in disputes, project disruptions, and impacts on incentive entitlements and corporate reputation.
Accordingly, while Policies Encouraging Investment in Agriculture provide substantial benefits, investors must be mindful of legal, financial, technological, and cooperation-related risks.
5. What criteria are used to assess the effectiveness of Policies Encouraging Investment in Agriculture?
Policies Encouraging Investment in Agriculture aim to promote rural economic development, enhance product value, improve productivity, and apply advanced technologies. To ensure practical effectiveness, clear evaluation criteria based on legal grounds and sustainable development objectives are required.
First, economic efficiency is the foremost criterion. Pursuant to Article 15 of the Law on Investment 2020, incentivized projects must contribute to increased agricultural production value, high-quality products, and enhanced competitiveness of Vietnamese agricultural products domestically and internationally. This criterion may be measured through revenue, profit, return on investment, and added value.
Second, social efficiency is also essential. Incentivized agricultural projects under Decree No. 57/2018/ND-CP should create employment, increase rural incomes, improve community livelihoods, and promote cooperative and value chain development. Social efficiency also includes enhancing technical and managerial capacity of agricultural labor and supporting sustainable local development.
Third, environmental and technological criteria are critical. Pursuant to Article 42 of the Law on Investment 2020 on principles of investment project implementation, investors must comply with laws on planning, land, environment, construction, labor, fire prevention, and other relevant regulations. This criterion may be assessed through the level of high-tech application, productivity, waste reduction, and environmental impact mitigation.
In conclusion, assessing the effectiveness of Policies Encouraging Investment in Agriculture requires a comprehensive evaluation of economic, social, technological–environmental, and legal compliance criteria. Applying these criteria on a clear legal basis enables authorities and investors to adjust strategies, enhance investment effectiveness, and promote the development of modern, sustainable, and high value-added agriculture.
IV. Are You Seeking Legal Counsel to Effectively Support Advisory Services on Policies Encouraging Investment in Agriculture?
If you require legal advice on policies encouraging agricultural development in general or Policies Encouraging Investment in Agriculture in particular, please contact Ngoc Phu Law Company Limited for prompt and dedicated consultation. The above information is provided for reference purposes only. For detailed advice on specific cases, please contact NPLaw for immediate consultation.
