HCM City Economy Seeing Impressive Growths

The first noteworthy achievement was the foreign investment attraction. Like the whole country, the foreign investment attraction of Ho Chi Minh City was spectacular as it housed a lot of big projects in the fields of information technology, finance, banking, assets trading and housing. The foreign direct investment (FDI) capital in 2006, breaking all records since 1988, resulted from the arrivals of many big projects such as Intel Corp.’s US$1 billion project in Saigon Hi-tech Park and US$249 million container terminal by other foreign firms. Besides, most projects were invested in processing industry, assets trading, consulting services, warehousing, finance and banking. South Korea had the most investment projects, followed by Japan, Singapore, the US and Taiwan. Hong Kong was the largest single investor in Ho Chi Minh City (as the Intel project came from Hong Kong).

 

Apart from new projects, 117 existing projects increased a combined amount of US$713.2 million. The industrial production value made by foreign-invested projects was VND110,274 billion (US$6.89 billion) in 2006, up 20.9 per cent on last year - the highest rate by a single sector in the city. The foreign-led beverage, garment, textile, chemical and mechanical fields always produced higher growth rates than domestic units.

 

Hence, the total foreign direct investment capital was US$2.234 billion in 2006, far surpassing the US$963 million amount in 2005.

 

	Projects licensed in 2006		Valid until December 10, 2006
	Volume	Value (Mln USD)	Volume	Value (Mln USD)
Grand total	251	1,520.5	2,136	14,016.3
Investment mode
Joint venture	58	668.5	487	5,951.9
Wholly foreign-invested	190	837.9	1596	6,978.6
Business cooperation contracts (BCC)	3	14.1	53	1,085.8
Fields
Agriculture, forestry and fisheries	-	-	11	51.3
Industry, construction	118	722.6	1,298	6,894.9
Service	133	797.9	827	7,070.1

The value-added service area accounted for 50.7 per cent of GDP in 2006 (compared with 49.7 per cent in 2004 and 50.2 per cent in 2005), representing an on-year increase of 13.7 per cent (higher than the growths of 11.3 per cent in 2004 and 12.8 per cent in 2005). Many producers and distributors were establishing their sales chains, polishing trademarks and applying modern business methods. The product quality was more ensured and more convenient to consumers.

 

The total service and retail revenues grew 22.5 per cent in 2005, the record high. Consulting, forwarding, telecom, shipping and tourism had quite high growth rates.

 

Export: The total export revenues of the city were some US$13.6948 billion, up 12.5 per cent (compared with 23.7 per cent growth in 2005). Major exports were rice, aquatic products, dairy products, apparel and footwear.

The financial and banking sector was more active than ever as more and more foreign investors jumped into this field and invested in upgrading the banking sector in the city. The ATM (automated teller machine) service was booming and the payment system was being expanded. Ho Chi Minh City had 8,306 points of sales (POS). The foreign exchange service saw on year growth rates of 43.9 per cent in purchasing and 47.4 per cent in selling. The overseas remittance service increased by 9.1 per cent on year. In addition, banks also set up debt trading, overseas remittance, securities and insurance companies.

 

From the beginning of 2006 to December 15, 69 stocks and 386 types of bonds were listed on the Ho Chi Minh City Securities Trading Centre with a total of 1.2 billion shares and a listing value of VND12,394 billion (US$774.63 million). The number of listed stocks was on the sharp rise since then and the concern of investors was also deeper.

 

More and more foreign professional investment institutions penetrated into the Vietnamese market very quickly in larger sizes. This is a good chance for the securities market to keep strong growth in the coming future.

 

Gross domestic product (GDP): up 12.2 per cent to VND196,046 billion (actual value)

Value-added (VA) in service: up 13.7 per cent

Value-added in industry and construction: only up 10.8 per cent,

Foreign direct investment sector: up 12.9 per cent, accounting 20.9 per cent of GDP

Export revenues: only up 12.5 per cent, excluding crude oil up 13.5 per cent

Development investment: up 16.8 per cent to VND66,978 billion

Local State Budget collection: VND68,954 billion, up 16.2 per cent