Danang Hi-Tech Park
Dinh Vu

Local Economy

Last updated: Friday, May 25, 2018


Constantly Promoting Dynamism, Creativity in FDI Attraction

Posted: Saturday, April 15, 2017

As one of the most dynamic economic centres in the country, in recent years, Ho Chi Minh City has always maintained its leading position in FDI capital attraction. This success is crystallised from a constant effort for higher quality of FDI inflows, creativity and breakthrough in public administration reform, and improvement of business and investment environment. The following conversation with Mr Su Ngoc Anh, Director of Department of Planning and Investment of Ho Chi Minh City, will partly illustrate how Ho Chi Minh City attracts foreign investors. Chau Nguyen reports.
Could you please introduce FDI attraction results of Ho Chi Minh City to date? Apart from the achievements, are there any concerns and lessons learned from FDI attraction?
The FDI attraction in Ho Chi Minh City showed positive signals in the first three months of 2017. As of March 15, 2017, the city drew US$550.29 million, up nearly 60 per cent from the same period of 2016. This remarkable outcome contributed to the city's overall FDI attraction. Since 1988, the city has licensed 6,782 FDI projects with a combined registered capital of US$41.58 billion. The city has been the biggest recipient of FDI capital in the country.
In addition to encouraging achievements over the past years, we are aware that Ho Chi Minh City still has a lot of potential to be tapped and a favourable environment for more FDI companies to do business. Therefore, local competent authorities are responsible for studying and proposing solutions to do better in the future. Firstly, in order to lure more FDI capital, infrastructure planning and development must go one step ahead. This is a lesson we learned after a period of positive FDI attraction. The master plan helps investors feel secure to make long-term investment and build facilities for long-term operation. At the same time, it also helps the city to protect the environment without harming human health and livelihoods. The second solution is strengthening administrative procedures, dealing with problems and shortcomings that frustrate investors in settling administrative procedures. The third solution is reinforcing the association of companies to bring into full play the strength of each type of domestic and foreign enterprises, creating the ripple effect of FDI projects on the city's overall business environment through business cooperation, investment cooperation and technology transfer between domestic and FDI enterprises.
Ho Chi Minh City’s today investment attraction outcome is attributed to the local public administration reforms, the improvement of investment climate and the willingness of local authorities to support investors at any time. Could you tell us more about this?
The city’s top position in FDI attraction has partly portrayed its efforts for better investment environment. Increased support for public administration reform, support for business development and siding with FDI enterprises is a top priority for all city leaders. At present, the Department of Planning and Investment has carried out many measures to better the investment and business environment and create favourable conditions for enterprises to operate in the city. Specifically, the department has simplified processes and forms and personnel with the aim of reducing 30 per cent of time required to complete investment registration procedures in comparison with the statutory time while still making sure that procedures and documents are resolved strictly and accurately. As for business registration procedures, the department has combined public administration reform together with three procedures: enterprise establishment registration, seal specimen notification and bank account notification into one time of application and answer, thus helping reduce the time needed to complete administrative procedure from nine working days to four, or a 55.5 per cent reduction of service time.
The department has also enhanced information technology application to settle investment administrative procedures online, with the first being the procedure of notifying capital contribution approval, share purchase and acquisition. After more than three months of deployment, 320 applications have been successfully received and processed online. As for business registration procedures, the department has arranged personnel to guide and directly process online business registration applications and implement home delivery services. So far, nearly 80,000 online business registration applications filed from home have been received and processed by the department.
In addition, the department has focused on promoting onsite investment by maintaining dialogue channels with investors where it can timely grasps their issues and solve them effectively. Specifically, we have coordinated with relevant departments to organise direct dialogues between investors and the City's People's Committee, conferences with consultants and other gatherings to exchange opinions of investors and enterprises in order to promptly introduce solutions to address existing problems and ensure the most favourable conditions for investors.
How have FDI flows performed in the city in recent years, particularly investment forms and industries?
In the 2011-2016 period, FDI inflows into the city shifted from partially foreign-owned joint venture to a wholly foreign-owned venture and focused on manufacturing and processing industries, real estate business, wholesaling and retailing, and automobile and motorcycle repairing. In 2016, the processing and manufacturing sector received the biggest FDI value of over US$438.95 million, accounting for 33.39 per cent of total registered FDI capital, followed by real estate business with US$367.5 million or 27.95 per cent; wholesaling and retailing, and automobile and motorcycle repairing with US$260.7 million or $ 19.83 per cent.
In practice, FDI capital plays a very important role, not only in supplementing development capital and creating jobs for workers but also facilitating sector restructuring towards modernity, raising the share of services in the city’s gross regional domestic product - GRDP (in 2016, the share of services increased to 54.8 per cent, the share of industry was 28.76 per cent, and the share of agriculture was 0.84 per cent), bringing in new technologies and developing human resources.
In 2016, the city licensed 852 FDI projects with US$3.46 billion, up 43.19 per cent in project. The number of FDI projects licensed in Ho Chi Minh City accounted for 31.3 per cent of the country’s total FDI projects in 2016 from 26.1 per cent in 2014. This showed that the investment environment in Ho Chi Minh City has been improved significantly and many foreign investors trust to do business in the city.
What about the city’s FDI attraction targets set for 2017 and to 2020? What are specific solutions the city will take to further improve its FDI attraction efficiency?
Based on the city’s actual FDI attraction results, FDI inflows are expected to pick up in 2017 due to breakthroughs in administrative procedure reform and better investment and business environment. Ho Chi Minh City expects to draw at least US$4 billion of FDI capital this year and US$10-12 billion in 2017-2020.
Ho Chi Minh City has long been known for its activeness and creativeness in creating innovative investment attraction policies. In recent years, the city has hosted many vibrant, active international cooperation events on all channels, from Party diplomacy, State diplomacy to people's diplomacy. Many economic, cultural and social achievements confirmed its position as one of the most dynamic economic centres of the country.
Being aware of this, the Department of Planning and Investment has sent many recommendations and solutions to the city’s leaders in a bid to make sure that Ho Chi Minh City will continue to lead the country in FDI attraction, further enhance the quality of the business investment environment, and focus on the quality of FDI capital. The city has focused on specific groups of solutions: Improving the quality of investment promotion; stepping up onsite investment promotion with operational projects, strongly improving the investment environment, sharpening the city’s competitive edge, raising the quality of investment promotion and attraction human resources; upgrading the operation of the Ho Chi Minh City’s Trade & Investment Promotion Centre (ITPC), strengthening the coordination mechanism between lead agencies in charge of FDI attraction (Hi-tech Park Management Board, Export Processing and Industrial Zones Authority, Thu Thiem New Urban Area Management Board, etc.) to review the list of possible investments and investment attraction solutions for priority areas and expand infrastructure to better serve investors.

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