HANOI: Five years ago, Hoang Anh Gia Lai, a big real estate developer, decided to leave the market which was in hibernation and become involved in agriculture projects.
With huge investment capital of VND18 trillion, Hoang Anh Gia Lai, which developed high-rise buildings and hydropower plants, has been growing sugarcane, rubber and breeding cows. It now has 90,000 milk cows.
HAGL Agrico, a subsidiary of Hoang Anh Gia Lai Group, has been set up with chartered capital of VND7.081 trillion, which is now one of the companies which have the highest capitalization value on the stock market.
Analysts commented that the establishment of a company specializing in agricultural production shows Hoang Anh Gia Lai’s focus on agriculture.
Vingroup, well known for its high-end real estate projects and retail chains, has also jumped into the agriculture sector with the statement that it will inject VND2 trillion in projects and remap the market of clean vegetables.
Vingroup will cover all the phases of agricultural production, from cultivation, harvesting, transport to distribution. Its farm produce will be distributed through its Vinmart and Vinmart+ chains.
Vingroup’s president Pham Nhat Vuong stated at a recent shareholders’ meeting that after five to 10 years, the group’s profit from the real estate sector will account for less than 50 percent of the total profit, while the remaining will come from other business fields.
Commenting about the moves by Vingroup, Hoang Anh Gia Lai and Hoa Phat Group, a steel manufacturer, Vo Tri Thanh from the Central Institute of Economic Management (CIEM) said “they are betting on agriculture with high enthusiasm and big money”.
An expert commented that only big companies with powerful financial capability can invest in agriculture, because it is now an era of high-technology agriculture and large-scale projects which require huge investment capital.
However, other factors are necessary to ensure success. Hung Vuong Seafood Company, in an attempt to expand its ‘seafood processing empire’, has bought a series of companies in the field, including Viet Thang, An Giang, Sao Ta and Ben Tre. The large-scale production helped increase its revenue from VND4.7 trillion in 2010 to VND15 trillion in 2014.
However, the business performance of the group has seen a decline. The second quarter business report showed that the revenue drop and production cost increase have led to a sharp fall in Hung Vuong’s profit. Its post-tax profit dramatically decreased by 71.6 percent in comparison with the same period last year to VND26 billion.
