HCM City's love affair with FDI to continue

Thursday, Jan 21, 2016 08:08

In 2015 HCM City continued to lead Viet Nam in attracting foreign directed investment with inflows of US$4.5 billion. FDI projects have improved the city's socio-economic infrastructure and created a new facade for it. Viet Nam News spoke with Le Thi Huynh Mai, deputy director of the city Planning and Investment Department, about plans to continue attracting FDI.

What will HCM City do to attract foreign direct investment in 2016?
Le Thi Huynh Mai

As you might know, FDI is accepted as one of the most important sources of funds for the city's economic growth. FDI not only enlarges development capital and creates jobs but also brings new technologies and develops human resources. FDI has played an important role in the city's development and HCM City is now known as the most attractive place for foreign investors.

The city considers FDI to play an important role in its development, and therefore always seeks to effectively attract FDI. In 2016-20 the city Party Committee decided that the city should develop its economy rapidly and sustainably, rejig its growth model to become a knowledge economy, achieve green growth, and improve development quality and competitiveness. Based on these goals, HCM City will attract FDI in knowledge and technology industries, supporting industries and bio-technology.

The city has built the second phase of the Sai Gon Hi-Tech Park in District 9 on an area of 600 hectares, two times larger than the first phase. This is an important foundation to attract hi-tech projects.

At the same time the People's Committee wants the city to attract and effectively use investments to develop infrastructure and promote public-private partnerships (PPP).

The Planning and Investment Department has submitted a list of PPP projects, mostly in infrastructure development, such as urban railway projects, environmental projects like wastewater and solid waste treatment, and clean-up of canals.

This year the department will seek more foreign investment in such projects.

As part of urban development and upgrade, the [planning-investment] department will step up co-operation with related agencies to submit plans to the city People's Committee for attracting more investment in the Thu Thiem new urban area, Hiep Phuoc Seaport urban area and shifting of Sai Gon Port.

We will also look for foreign investors who want to rebuild old apartments, upgrade old streets and build social housing.

How can HCM City take advantage of free trade agreements? How can the city attract more foreign investment, especially in supporting industries?

It is obvious that supporting industries have not developed as expected in the city. This has an adverse impact on economic growth.

Meanwhile, HCM City enjoys advantages as Viet Nam accedes to many free trade agreements with various partners and becomes a member of the ASEAN Economic Community. Therefore, HCM City must take the opportunity to increase foreign investment, particularly in supporting industries.

Early in November the Government issued a new decree on supporting industry, spelling out tax breaks, credit assistance, research and development subsidy, technology transfer, how to establish organisations and programmes to assist supporting industries. HCM City should adjust policies in accordance with the decree.

This year the city should focus on completing a master plan for supporting industry development in HCM City in 2015-2020.

Furthermore, the city should increase co-operation with various nations based on their strength in relevant fields for developing supported industries.

We have already got Japan as a strategic investor in supporting industries and we should expand the list to include others like Australia, South Korea, Taiwan, Thailand and the US.

Relevant authorities must pay greater attention to existing foreign companies working in supporting industries to resolve problems and draft proper policies to encourage them to expand production. This will help Viet Nam get new and modern technologies and management skills.

What limitations does HCM City's investment environment have and how can they be fixed?

Thanks to the deep integration of the Vietnamese economy, in 2015 foreign capital flowed strongly into HCM City — at $4.5 billion, an increase of 38 per cent from 2014.

However, infrastructure, human resources, labour productivity, and administrative procedures remain the weaknesses of the city's investment environment.

Besides, the lack of concern and knowledge among businesses and common people about free trade agreements, the Trans-Pacific Partnership and the ASEAN Economic Community means those advantages have not been exploited while competition from outside has become intense.

To improve the situation, the Department of Planning and Investment suggested that the city must focus on using IT in all administrative processes to ensure transparency and save time and costs for businesses; implementing public services; promoting investment; fostering the skills of government workers; and strengthening dissemination of information about free trade agreements and international integration. — VNS

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