Impetus for HCMC to Experience Fabulous Change

Overview of the local investment During the past 20 years, the city has had 3,141 projects which are still valid with a total investment capital of about US$25.6 billion. In 2008 only, foreign invested capital reaches US$8.456 billion, higher than the general capital sum between 2002 and 2007. Compared to 2007, the number of newly licensed projects increases by 9.27 percent, and the capital sum for these projects is up by 3.4 times. Investment projects mainly concentrate on service and industry sectors, among which service sector makes up 48.5 percent, industry sector, 36.3 percent, and other sectors make up the rest percent. Especially in recent years, the foreign investment trend on the city area focuses on such sectors as education and training, medicine and high technology with ever larger scale.

 

In terms of structure, the group of industry, construction and construction service makes 31.53 percent in comparison with total investment capital; realty business still ranks second with 27.95 percent; agriculture, forestry and fishery declines to 0.08 percent; and the remaining 40.48 percent is divided among other sectors. In terms of investment projects, 61.13 percent of which are under US$1 million; 29.67 percent of which are between US$1 and US$10 million; and 9.2 percent of which are over US$10 million. So far, Hong Kong has always been the area with highest investment capital (over US$3.4 billion), accounting for 19.7 percent of the capital flow into the city. South Korea and Singapore trail after with more than US$2.8 billion (16.3 percent) and US$1.98 (11.4 percent), respectively. However, as of 31 December 2008, Malaysia rises to the first position with the investment project of Berjaya international university town (registered capital of US$3.5 billion). Singapore rises to the second position with a US$1.207 billion project (Thu Thiem software park). Hong Kong now ranks the third. Such countries as South Korea, Taiwan, Japan, the U.K, France and the U.S are still among the list of nations with biggest investment into Ho Chi Minh City.

 

By the end of 2008, the city has got US$10.1 billion disbursed (39.62 percent of the total registered capital). The disbursement rate is quite high. However, there are still some projects which do not get implemented due to high cost of compensation for site clearance, unqualified human resource, and slow capital reclamation, etc.

 

The foreign investment source has made an important contribution beside the domestic investment source, becoming a driving force for economic growth and structure transition. Especially, since 2006, the wave of foreign investment has shifted to hi-tech sector, opening a lot of prospects for the city’s economic structure transition in the years to come.

 

Furthermore, foreign investment helps to raise export turnover. It can be seen that the export proportion of the foreign-invested sector in total export value of the city gradually goes up from 10.3 percent in 1995 to 26.7 percent in 2007. Currently, a large majority of products of the foreign-invested processing industry aims at export. Foreign-invested projects exert an influence on the development of technical infrastructure and social infrastructure on the city area, helping improve people’s living standards.

 

In terms of social aspect, foreign investment places a strong impact on the human resource. During the past years, foreign-invested projects play an active role in creating job for labourers within and out of the city area. The foreign-invested economic sector is always an appealing sector to the working force now, especially the young and highly skilled working force. The increase in income in foreign-invested enterprises also strongly affects the salary mechanism and working conditions in other working areas.

 

Dai Ngoc