Foreign Investment Attraction in Dong Nai: Successes and Shortcomings

2005 was the second consecutive year Dong Nai province exceeded its yearly targets for foreign investment attraction since the Asian monetary and financial crisis in 1997. The province granted licences to 112 new projects, valued at US$557 million in 2005. The province has 707 valid projects with a total registered capital of US$8.049 billion. So far, 470 projects have become operational and 92 projects are under construction with total of realised capital of US$4.4 billion, equal to 55 per cent of total registered capital. Total number of workers in foreign-invested enterprises has reached 223,000 people.

Most foreign-invested enterprises in Dong Nai province have gained good results in their production and business activities and many of them have become profitable and planned to expand activities. Recently, Dong Nai got an approval from the Government for building the Nhon Trach 6 industrial park (IP), bringing a total number of IPs in the province to 17.

 

Some IPs, such as Song May and Ho Nai in Trang Bom district have tended to attract more investors. The Tam Phuoc IP has filled all of its area while the Long Thanh IP in Long Thanh district has leased around 20 hectares despite its recent establishment. The Nhon Trach Textile and Garment IP have leased over 40 hectares of land. The Dinh Quan mountainous IP has signed a contract for leasing the land area for the first phase.

 

In general, investors have selected IPs in Dong Nai according to distance from the province’s centres or Ho Chi Minh City to IPs, but mainly in the IPs of Nhon Trach, Long Thanh, Amata, Song May and Ho Nai.

 

The province’s biggest issue is how to call for hi-tech or support industry projects to local IPs to save leased land, avoid any labour shortage, and improve the competitiveness of foreign-invested enterprises. 

 

Since 2005, a shortage of labour for IPs has occurred and it has become an urgent issue in 2006. Many companies have gone to rural areas in the north or south-western region to search for workers, but they failed to meet the demand of enterprises in IPs.

The Hwaseung Vina in the Nhon Trach 1 IP, which specialises in manufacturing shoes and footwear for Reebok, wanted to recruit between 1,000 and 2,000 workers but it could not. Other companies which have operated in Dong Nai province for a long time, such as Taekwang, Chang Shin, Pouchen, and Viet Vinh often face labour shortage.

 

Some textile, garment and footwear companies worry about a labour shortage for their approved projects. The project on manufacturing footwear and shoes of the Pousung Company in the Bau Xeo IP, Trang Bom district, with a total investment capital of US$190 million needs thousands of workers. When the project is operational, it may cause a new wave of labour within the IP and other IPs nearby.

 

This issue shows that the selection of projects of high quality, which do not break the labour balance, is very important. Hi-tech projects may help improve the quality of the labour force, thus partly helping to address social issues of labour immigration. Furthermore, developed support industries may help increase the strength of the local industrial sector, generating more jobs for small and medium-sized enterprises and saving money from importing materials.

 

The development of IPs in Dong Nai province, like many other south-eastern localities, has mushroomed. According to managers and enterprises in IPs, there should be norms for classifying IPs and these norms should be applied to new IPs, so IP infrastructure developing companies will have to observe certain standards from the beginning.

 

Among the existing IPs, how many IPs can be rated as meeting the ISO standard in infrastructure development for a sustainable development? The application of standards will help avoid the fact that IPs are developed with tens of plants and workshops but do not have waste treatment facilities, lighting systems and means of public transport. 

 

The formation of new IPs should take into account the development of technical infrastructure facilities to avoid any traffic jam during rush hours, which occur in the Song May, Ho Nai and Nhon Trach IPs. Also, security and order in IPs should be focused to secure the safety of investors and workers. So far, problems such as thieving and strikes have occurred in some IPs, worrying investors and workers.

 

In fact, foreign investment attraction in Dong Nai province has been evaluated to gain great success. However, from a point of view of competitive factors for an attractive environment with open and transparent procedures and a mode of green, clean and beautiful IPs with adequate labour force, policy makers and IP infrastructure developing companies in Dong Nai province should have careful calculations for future development. These are factors for investors or locality rating organisations to evaluate the local investment environment.