Promoting Investment into Central Highlands

10:57:27 PM | 31/5/2015

The Central Highlands, comprising Kon Tum, Gia Lai, Dak Lak, Dak Nong and Lam Dong provinces, is one of six major economic regions of Vietnam with enormous potential for rapid and sustainable economic development, where agriculture plays a key role. However, despite its potential and advantages, the region is still seeing difficulties in attracting investment for development.
To assess investment promotion results of the Second Investment Promotion Conference in 2013 and draw further investment capital into the region by introducing and promoting domestic and foreign potential, strengths and investment attraction policies and integrating investment promotion with social security activities, the Steering Committee for Central Highlands coordinated the State Bank of Vietnam (SBV), the Lam Dong Provincial People's Committee and other localities in the region to organise the Third Conference on Central Highlands Investment Promotion and Social Security in 2015 in Da Lat City, Lam Dong Province.
General Tran Dai Quang, Politburo Member, Public Security Minister and Head of the Steering Committee for the Central Highlands, said that despite rich potential and advantages, the Central Highlands has so far contributed only 4.5 percent to the country’s gross domestic product (GDP), much smaller than other parts of the nation, because the region still has a lot of difficulties and limitations in investment attraction. Investment capital structure is irrational, outweighed by State budget and underweighted by foreign direct investment (FDI), official development assistance (ODA) and domestic direct investment. Some key traffic projects slowed down or delayed; and investment attraction for major local product processing remains weak. FDI attraction is poor in the Central Highlands.
According to the State Bank of Vietnam (SBV), as of March 31, 2015, total outstanding credit in the Central Highlands reached VND152,427 billion, an increase of 4.78 percent over December 31, 2014, higher than the national average growth in the period (2.65 percent) and equal to 3.74 percent of the country’s total outstanding loans. In particular, outstanding credit in agriculture and rural development amounted VND72,971 billion, up 3.29 percent from the end of 2014 and equal to 47.87 percent of total the region’s outstanding loans. Outstanding coffee loan was VND32,526 billion, rising 8.37 percent over the end of 2014 and accounting for 78.58 percent of the country’s coffee loans.
Banks lent over VND25 trillion to more than 2,800 corporate customers as of the end of the first quarter. Other financing forms like debt restructuring and interest rate fixing for existing loans made up for more than VND4 trillion.
In 2015, commercial banks pledged to lend VND15 trillion to the Central Highlands, focusing on funding hydropower, thermal power, transportation and high-tech agricultural application.
Notably, among capital resources mobilised for development, ODA plays an important role in supporting socioeconomic infrastructure development and poverty alleviation in the Central Highlands. Total ODA pledged by donors in the past four years was US$409.9 million, primarily channelled into agriculture, rural development, poverty reduction, transportation, forestry and reforestation, education and training, and water supply.
On FDI attraction, in spite of difficult socioeconomic conditions, the Central Highlands has abundant natural resources to draw this source of capital. According to statistics, the Central Highlands had a total of 148 FDI projects valued at US$819 million as of the end of 2014. From 2011 to April 2015, the region licensed 38 FDI projects with a total registered capital of US$122 million, including 29 projects with US$74.9 million in Lam Dong province. The manufacturing and processing industry took the lead with 16 projects and US$54.4 million.
To attract domestic and international investment sources into the Central Highlands, the banking said central authorities need to coordinate with Central Highlands provinces to create clear business mechanism, and introduce effective policies to lure investment capital into the region, focusing on key fields with strong ripple effects in the region. Commercial banks focus and disburse preferential loans for key investment projects in agricultural and forest product processing fields to create development momentum for the Central Highlands and enhance its appeal as a dynamic economic region of the country.
On this occasion, eight banks, including LienvietPostBank, Vietcombank, Vietinbank, Agribank, BIDV, SHB, MB and Sacombank, signed investment contracts and cooperation agreements with 17 enterprises to fund 16 projects and pledged to lend VND15 trillion of medium and long-term loans for key fields like hydropower, transportation, agriculture and livestock husbandry in the region.
Quynh Anh