FDI down as HCM City becomes more choosy

Thursday, Sep 01, 2016 09:09

Some experts talk to Viet Nam News about the investment environment in HCM City and measures to aid investors in the city, in the context of declining foreign direct investment.

Tran Cong Khanh

Tran Cong Khanh, Office Manager, Hepza Management Board

In the first seven months of this year, the HCM City  Export Processing and Industrial Zones Authority (Hepza) has attracted nearly US$138 million. Of the figure, $42.6 million was investment in 11 new projects while the other $96 million was capital enhancement by 17 projects.

To attract investors, Hepza offers preferential policies in accordance with Vietnamese laws.

Hepza plans to focus on attracting investment in support industries to serve the city's key industries including high-tech, garment and textile and footwear.

We will also have upgraded infrastructure and earmark industrial land at industrial and processing parks to meet investors' demand.

Currently industrial zones in the city have more than 300ha of land, which are available to all tenants.

In addition, the Hiep Phuoc Industrial Zone is completing infrastructure, and will offer 200ha to companies in supporting industries.

Furthermore, there are some land lots that are suitable for small- and medium-sized enterprises.

The management has encouraged zone developers to build factories so that lessees can begin operations immediately after leasing land.

This has been done at some zones like the Viet Nam – Japan Technology and Industrial Zone, Tan Thuan Processing Zone, Tan Phu Trung Industrial Zone and Linh Chung Processing Zone. 

Nguyen Hoang Dung

Nguyen Hoang Dung, Research and Development Director at the HCM City Institute of Economics and Management.

Among the reasons for FDI in the city to reduce this year is the shift by the administration towards high-quality and less labour-intensive industries.

Many foreign investors knew the shift and so did not invest in the city, and some, failing to meet the city's investment requirement, have shifted to neighbouring provinces like Dong Nai, Binh Duong and Ba Ria-Vung Tau.

Secondly, when foreign investors consider investing in the city or elsewhere, they need land, clear mechanisms, and competitive costs.

The city has worked actively to improve its investment environment, but other neighbouring localities have made more breakthroughs in administrative mechanism. They also have more land compared to HCM City, while their land rental is also lower. Therefore, many foreign investors have shifted to provinces next to HCM City instead of concentrating here.

The city in particular and the country in general always look for short- and long-term measures to attract more investments.

I think the city should continue to improve the investment environment and streamline administrative procedures to make it easy and convenient for investors when they come to invest in the city.

The city should carefully study industries that are a priority for development and widely publish this information both in and outside the country to make it easier for foreign investors to make their investment decision.

Besides, the city needs to reform its civil apparatus, from leaders to government workers.

The city should focus on investment in the high-tech sector. The inner city area should focus on developing the hi-tech industry to produce high-grade components to supply to foreign investors so that when they invest in the city they do not need to import parts from other countries.

The outskirts should focus on developing hi-tech agriculture to supply food and foodstuffs to the city and other localities.

Some other sectors like education and training, and services such as finance, banking, healthcare, insurance and securities need to improve to be compatible with other countries in the ASEAN Economic Community and Trans-Pacific Partnership.

Universities and professional training schools should reform their training programmes to produce quality human resources to meet businesses' demand.

The services sector, including finance, banking, insurance and securities, should be restructured and reformed to bring it in line with international practices, especially under the new generation of free trade agreements.

I think the city's shift [towards high-quality and less labour-intensive industries] is in the right direction and, together with its efforts to improve its investment environment, will soon increase foreign investment.

Roy Ng, Country General Manager of Lenovo Viet Nam

Roy Ng, Country General Manager of Lenovo Viet Nam

Viet Nam's economy is developing at a good pace and the country is continuously striving to get more investors into the market, creating more jobs and building more infrastructure that support the development of the country. On the whole, Viet Nam has opened its doors to attract investors, which is a great advantage for Viet Nam as it has always been willing to attract more investors to create growth opportunities.

HCM City is one of the two largest cities in Viet Nam and it has a great investment environment for investors. I think there are clear and bright prospects for HCM City.

In any country, a foreign company will face certain subjective and objective challenges, from geographical conditions to socio-economic conditions. However, on the legal side, we have received great support from the legal framework and city officials.

We are also aware of our corporate responsibility towards our society, and in tandem with our aims to be the market leader in smart connected devices, cloud and infrastructure, we will continue to focus on youth development and be a good corporate partner addressing gaps in resources across Viet Nam. — VNS

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