According to the ministry, the scale of agricultural enterprises had not matched the potential of an agricultural country like Viet Nam, which has more than 70 per cent of its population living in rural areas.

The General Statistics Office reported that there were about 132,352 enterprises nationwide at the end of 2005, only 2,430 of which were developing production and business in rural areas.

There are currently about 1,100 agricultural and forestry enterprises, accounting for nearly 1 per cent of the total number of enterprises in the country. About 60 per cent of those enterprises have capital under VND10 billion ($625,000) each – too low compared with equivalent enterprises around the world.

The deputy head of the ministry’s Enterprise Renovation Committee, Tran The Xuong, said the processing and storage facilities of most small- and medium-sized agricultural and forestry enterprises remained unsophisticated, still using old technologies and little automation.

Deputy Minister of Agriculture and Rural Development Diep Kinh Tan said the Government had encouraged enterprises to invest in agriculture, forestry and fisheries in rural areas.

Under the Government’s guidance, the ministry has been building a preferential policy to lure investment in rural areas where it is estimated that there is only one agricultural enterprise for every 57,000 people.

"Agricultural enterprises in rural areas are faced with many difficulties. The country’s enterprises’ average growth rate was 25-26 per cent per year in the last 10 years, but the speed of agricultural and forestry enterprises was estimated at just 2 per cent per year," said Tan.

Tan said the growth rate was low because investment in this field was both riskier and less profitable than other business areas.

He said if the Government approved the ministry’s preferential policy, it would encourage more enterprises to pour investment into agriculture in rural areas.