Flourishing, in the Field and in the Family
Creating the right terrain in Vietnam for businesses to grow
Peering in the sun above rows upon rows of green, leafy plants as high as his shoulder, Nguyen Thanh Hai is unusually calm.The 62-year-old Vietnamese man has spent more than 10 years plucking red chilis.
Growing and harvesting the red chilis by hand each year is labor-intensive, with no guarantee of a profitable return for his hard work.
Fortunately, a Vietnamese agricultural company called Ecofarm recently moved to his home of Dong Thap Province. The company offers innovative techniques to improve soil quality and lower costs, which has reduced the farmer’s stress.
“Since I partnered with Ecofarm two years ago on a farming model that it introduced, I am able to reduce the production cost by 20 to 30 percent, thanks to the use of organic fertilizers that the company provides,” Hai said.
The cost-savings provided a much-needed hedge against the fluctuating chili market, enabling him to earn as much as five times more than before. His earnings support his wife and two daughters, and are used to help raise and educate his two grandchildren now living with him.
‘A Truly Warm Welcome to Businesses’
Dong Thap Province ranked second among Vietnam’s 63 provinces in USAID’s Provincial Competitiveness Index (PCI). This ranking was influential to Ecofarm’s decision to move to the province, about 100 miles southwest of Ho Chi Minh City.
PCI is an annual provincial-level survey inspired by tools such as the World Bank’s Doing Business survey. It measures a provincial government’s support for operating and investing in businesses.
“PCI helps provinces know their status in the business environment ranking and what they should do to improve,” said Nguyen Van Duong, chairman of Dong Thap province.
“A high PCI ranking is an important factor that investors take into account when deciding to invest in a province.
Increased investment in a province will boost its economic development, generating jobs and improving people’s life.” — Nguyen Van Duong, chairman of Dong Thap province.
Ecofarm has made investments in many provinces in the Mekong Delta, and Dong Thap was the last province where Ecofarm has invested, starting two years ago.
“I was very impressed by the investment climate in Dong Thap and by the provincial leadership, who expressed their truly warm welcome to businesses,” said Nguyen Hong Quang, chairman of the Ecofarm model.
“We decided to make a big investment in Dong Thap because the investment climate here is suitable for the development of my company as the governments from provincial to district and commune levels are very decisive, responsive and committed,” Quang said.
From Resistance to Respect
USAID has helped to transform PCI’s reception in Vietnam among local governments leaders from resistance to widespread respect. In the past, local leaders created economic policies without consulting the private sector, making the economic environment very weak. Today, leaders embrace PCI as a tool to identify problems and implement strategies to improve economic governance.
PCI’s success in fostering a more business-friendly environment for the private sector has been institutionalized in Vietnam — the Vietnam Chamber of Commerce and Industry now runs PCI. Today, Vietnam is helping 11 countries around the world replicate the successful system.
All of this not only supports chili farmers and businesses like Ecofarm but also the broader U.S.-Vietnam relationship.
In supporting emerging economies, USAID generates new markets for American goods and services. In 2016, Vietnam was the United States’ 16th largest goods trading partner, and Vietnam’s second-largest trade partner, with $52.3 billion in total two-way goods trade. Imports of American goods into Vietnam are growing rapidly, increasing from a mere $747 million in 2006 to $7.67 billion in 2016, a ten-fold increase.
And as the business environment becomes easier for local firms, American businesses also stand to benefit.
In a parallel survey by PCI, foreign firms in Vietnam reported the business environment has improved for them, too. As this growing market continues to improve its business environment, the potential for American businesses grows, as well.
PCI helped companies such as Ecofarm discover Dong Thap Province’s entrepreneurial spirit, which directly benefited farmers like Hai. Now Hai can think of the future.
“With the profit I made by applying the farming model over the last two years, I have bought 1.2 hectares of farming land for VND600 million ($26,000) for my family’s economic development,” he said.
The improved farming methods and fertilizers Ecofarm provided to farmers in Dong Thap Province have increased not just profits, but more importantly peace of mind.
About the Author
Joseph Truong is the Outreach Team Lead for USAID’s Asia Bureau. Follow him at @JosephTTruong.
