FDI approvals plunge in HCMC
By Quoc Hung - The Saigon Times Daily
HCMC – The inflow of foreign direct investment (FDI) capital into HCMC in January-July is down a whopping 84% year-on-year to a mere US$1.03 billion, according to the city’s Department of Planning and Investment.
The city has approved 207 fresh and 62 existing FDI projects from 29 countries and territories such as Hong Kong, South Korea, Singapore, Malaysia, Taiwan, Japan, the UK, France and the U.S.
The picture of the city’s industrial parks and export processing zones this year is gloomy, with only seven new projects from China, Taiwan, South Korea, Japan and Belgium licensed there with combined capital of only US$11 million, just 30% of the figure recorded in the same period last year.
The HCMC Export Processing and Industrial Zones Authority (Hepza) said that if additional funds injected into operational projects were taken into account, the FDI commitments to the EPZs and IPs would amount to US$67.6 million, down from US$86.4 million a year ago.
Economic experts said the decline was to be expected in the tough economic times and while the city’s infrastructure was being upgraded.
Hepza blamed the situation on the global recession, volatile material prices and falling consumption.
Investors, particularly foreign ones, were reluctant to pour capital into projects in the current economic climate, Hepza said.
In addition, it said, the city’s drive to encourage eco-friendly and less labor-intensive projects in sectors such as animal feed and dried food production and textile and garment industries has had an impact on investment activity.
The city has 15 export processing and industrial zones that are almost fully occupied. However, the authority expects the zones would attract US$100 million in investment this year.
Meanwhile, the Saigon Hi-Tech Technology Park issued three FDI certificates with total capital of about US$87 million. One of them, Datalogic Scanning Group (DSG), will design and produce handheld and fixed barcode scanners and mobile computing equipment.
Authorities of Thu Thiem Urbanized Area and HCMC North-West Metropolitan Area have yet to grant a single license this year.
Along with services, industry, forestry and seafood, the city has seen increasing large-scale projects in high-tech, public health and education, according to the Department of Planning and Investment.
Exports of the FDI sector have reached US$2.65 billion and imports US$1.97 billion.
The city’s FDI sector registered a year-on-year growth rate of 7% in industrial production in the January-July period, behind the non-State sector which recorded 7.3% growth.
The city has around 3,370 FDI projects with total registered capital of US$27 billion.
By early 2009, over US$10 billion of FDI had been disbursed in the city, or nearly 40% of the total registered capital.
FDI 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, heard a recent meeting of city leaders.
Thanks to foreign investment, the city’s economy has been restructured toward manufacturing and services and its share of the GDP has increased substantially.
According to the Department of Planning and Investment, priority sectors for FDI include financial services, banking and environmentally-friendly manufacturing, new materials, energy, bio-technology, information technology, mechanical engineering, health care and education.