HCM City FDI Attraction Leads Nation

According to the Foreign Investment Department, Vietnam attracted US$15.03 billion in foreign direct investment (FDI) in the first 11 months this year, exceeding the year’s set target of US$13 billion. Ho Chi Minh City now tops the country in attracting FDI, with US$1.984 billion, which is attributed to the city’s efforts in implementing administrative reform and also thanks to the country’s WTO entry.

 

 

Between January and November this year, Ho Chi Minh City licensed 401 new FDI projects valued at US$1.698 billion and allowed 125 existing projects to raise their capital by US$286 million. The city is now home to 2,410 valid FDI projects worth a total investment capital of US$13.96 billion. Of the sum, the industrial sector accounts for 120 projects capitalized at US$263.8 million, or 32.7 per cent of the city’s project number and 19 per cent of capital value. According to the municipal Planning and Investment Department, many projects are waiting for approval from city authorities. The city’s FDI this year is expected to be higher than in 2006, around US$2.5 billion. South Korea posted first position among 33 countries and territories making direct investment in the city with projects worth US$815.3 million (34.9 per cent of the city’s project number and 58.8 per cent of capital value). It was followed by Japan with 41 projects worth US$24.7 million, and Singapore with 38 projects worth US$297.6 million. Following were Taiwan (China) with 28 projects valued at US$40.7 million, the US with 20 projects valued at US$11.7 million, the British Virgin Islands with 16 projects worth US$158.9 million and Hong Kong with 14 projects worth US$3 million.

 

The city has lured more hi-tech FDI projects, showing a change in its FDI structure. The US’s Intel Group is building a US$1 billion microchip assembly and testing plant at the city-based Saigon Hi-tech Park (SHTP). The 46-hectare plant has attracted many satellite investors. Since early this year, the SHTP has licensed eight FDI projects capitalized at US$180 million in the areas of gas production, precise engineering, biotechnology, nanotechnology and services from investors in South Korea, Singapore, the US and France. After five years of operation, the SHTP has lured 27 domestic and foreign-invested projects valued at more than US$1.438 billion, including 14 FDI projects. The head of the park’s management board Nguyen Dinh Mai said, “Many investors want to pour money into the park to provide services for Intel’s operations, GES is a typical example.” Currently, around 40 projects, together reaching over US$700 million, are waiting for approval from local authorities for land. Ho Chi Minh City has also paid attention to site clearance, to have more than 913 hectares available for investors and building supporting infrastructure at the park by 2010.

 

 

Ho Chi Minh City has made remarkable efforts in administrative reform, setting up a one-door mechanism between the three local agencies of the Planning and Investment Department, Tax Department and Police force, for business registration, investment certificates, tax code registration and stamping. This mechanism shortens required time and reduces inconveniences for investors and enterprises. The licensing process has also been simplified, especially for foreign-owned projects, creating more favourable conditions for investors.

 

In addition, the city’s Trade Promotion Centre has joined hands with the Tax Department, the Customs Department and other concerned agencies to hold monthly meetings with businesses to help answer investors’ questions. For foreign investors, leaders of the municipal People’s Committee and several other local agencies had a dialogue with the European Chamber of Commerce (Eurocham) and representatives from 100 foreign companies operating in the southern city. At the gathering, investors focused on measures for infrastructure development, particularly traffic works, qualified human resource training and hostel construction for workers.

 

The country’s WTO membership is one of the driving forces for Ho Chi Minh City’s economic development, economists said. To improve the investment environment, local authorities have removed and revised over 200 administrative procedures, as well as various legal documents. The vice head of the Ho Chi Minh Economics Institute said this creates a more favourable investment environment for both local and foreign investors. 

Local authorities have recognised that the weak infrastructure system has not only badly affected the city’s socio-economic development but also investment flow. To ease traffic jams, the city will apply temporary measures such as dividing roads and arranging different hours for means of transport on roads. The city needs around US$22 billion to implement key traffic projects under its plan until 2020 to build six metro routes, three monorails, four elevated roads, bridges and ring roads, move ports to the outskirts and build Long Thanh Airport in Dong Nai province to meet the increasing travel and cargo transport demand. Regarding the shortage of parking, president cum general director of the Hong Kong & Shanghai Banking Corp. (HSBC) Vietnam said many clients avoid transactions with the bank because of this problem. Ho Chi Minh City plans to build eight parking facilities by 2013 at the city centre to deal with the situation. Another intractable problem for the city is the power supply, which has not met the consumption demand of local people and enterprises. The city is forecast to lack around 1,000 MW of electricity out of the total 16 billion KW needed for the city in 2008, 3 billion KW higher than the expected level this year. 

Besides, to improve the investment climate in Ho Chi Minh City, the city has also paid much attention to human resources development. In the coming time, the city will concentrate on qualified and skilled labourer training, enhance training cooperation with local and foreign schools, as well as boost education socialization to meet the city’s socio-economic development. Enterprises in the city have no restrictions in labour recruitment in case they need qualified labourers. Accordingly, they are entitled to employ foreign labourers in service and hi-tech sectors, senior experts and skilled workers.