HCMC seeks to make FDI a better success story
By Quoc Hung - The Saigon Times Daily
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| HCMC vice chairman Nguyen Trung Tin confers certificates of merit on successful foreign investors during the conference on Saturday to review foreign direct investment into the city over the past 20 years - Photo: Le Toan |
HCMC – Foreign direct investment into HCMC over the past 20 years has helped transform the local economy, and now is the time to channel the cash flow into more efficient sectors, officials said at a review meeting here on Saturday.
Chairman of the city Le Hoang Quan said that the city would build on its success in FDI attraction by wooing foreign investors into hi-tech and urban development areas. Quan said developing metro routes would also be an area of priority.
According to the city’s report presented at the meeting, foreign investment 
will be attracted into urban projects in the new city Thu Thiem in District 2, Tay Bac new urban area in Cu Chi District, Can Gio ecological tourist area in Can Gio District, and Hiep Phuoc Port City.
Thai Van Re, director of the city’s Department of Planning and Investment, further cited areas of priority to include financial services, banking, high value-added and environment-friendly manufacturing sectors. He named the manufacturing of new materials and energy, bio-technology, information technology, mechanical engineering, health care and education.
The preferred destination
Since the first foreign-invested projects were licensed into the city 20 years ago, the southern economic hub has attracted upwards of US$25.6 billion committed in over 3,100 projects, making it the most favored land for foreign investors in the country.
In 2008 alone, FDI exceeded US$8 billion, higher than the accumulated FDI in the 2002-2007 period, according to the city’s report.
As a FDI breakdown, as much as 48.5% of projects have been licensed into the service sector, over 36% into manufacturing, while the remaining 15% were committed into agriculture, forestry and fisheries sectors as a whole.
Nguyen Trung Tin, vice chairman of the city, said that FDI in the city had recently tended to flow more into education-training, health care, and high-technology sectors.
As of the end of 2007, Hong Kong was the top investor in HCMC with more than US$3.4 billion in FDI, accounting for 19.7% of the total, followed by the South Korea with more than US$2.8 billion, and Singapore with US$1.98 billion.
However, the positions have changed last year when Malaysia with a project worth US$3.5 billion to develop the Berjaya International University Township jumped from the 10th place to the top rank, while Singapore took the second position thanks to a US$1.2 billion project by TA Associates International, Pte. Ltd. to develop Thu Thiem Software Park.
However, Hong Kong, South Korea, Taiwan, Japan, British Virgin Islands, the UK, France, and the U.S. are still in the list of top investors in the city.
Economic achievement
HCMC authorities asserted that foreign funds, technologies and know-how have served as a key driving force behind the city’s high economic growth over the years. The foreign-invested sector’s share in the city’s GDP has shot up from 11.1% in 1995 to 18.2% in 2007.
Nguyen Trung Tin also noted that foreign-invested projects had created jobs for hundreds of thousands of workers in the city and from other cities and provinces.
Foreign-invested projects have also fostered the development of both technical and social infrastructure of the city, helping improve the living standards of the people.
Thanks to foreign investment, the city’s economy has been restructured toward manufacturing and services, whose shares in the GDP has increased substantially. For example, the industrial-construction sector accounted for 45.6% in the city’s GDP in 2007 from 38.5% in 1995, while that of the agro-forestry and fisheries sector fell from 3.35% to 1.45%.
By early 2009, over US$10 billion of FDI had been disbursed in the city, or nearly 40% of the total registered capital.
Bottlenecks remaining to be cleared
In his address at the meeting, Deputy Prime Minister Hoang Trung Hai called for stronger efforts by the city to remove bottlenecks so as to make the investment environment more attractive to foreign investors.
The city needs to speed up infrastructure construction, accelerate administrative reform and develop the human resource, Hai said.
As the largest economic hub, he said, the city needs high-quality labor force and an adequate system of socio-technical infrastructure to meet foreign investors’ requirements.
Echoing on the ideas of Alain Cany, chairman of the European Chamber of Commerce (EuroCham) in Vietnam, at the ceremony that the city lacked infrastructure and complicated prescribed procedure.
The deputy prime minister urged the city to step up the administrative reform, and iron out hindrances or obstacles to make life easier for enterprises, and assist investors in executing their projects.
Thai Van Re of the city’s Department of Planning and Investment explained that some projects have failed to be implemented due to several reasons, including high costs of site clearance and compensation resulting from surging land prices in recent years.