Experts Urge Investment Mechanism for Mekong Delta

 

These were made at a conference held by the Southwest Steering Committee and the Central Institute for Economic Management (CIEM) and Germany’s Friedrich Ebert Stiftung Institute in Can Tho city on August 26. The event was aimed to discuss the establishment of mechanism and policies to boost investments into Mekong Delta.

At the conferences, Le Viet Thai from the CIEM presented a project named “Building a special mechanism to boost investments into the Mekong Delta region”. The project was conducted based on surveys on the regional investments attraction.

 

The Mekong Delta is Vietnam’s key economic region for its advantages to develop agricultural and fishery sectors with export revenues of billions of USD annually. Many projects to build industrial parks (IPs) and complexes are being carried out here such as Ca Mau gas-power-fertilizer complex, Tra Noc 1, Tra Noc 2, Hung Phu 1 and Hung Phu 2 industrial parks in Can Tho city, Khanh An IP in Ca Mau province; Binh Hoa and Vam Cong in An Giang province; Thanh Loc and Thuan Yen in Kien Giang province. During the 2001-2005 period, the region gained an average economic growth rate of 7.7 per cent/year and the figure was estimated at 7.5 per cent per annum between 2006 and 2010. However, it is still facing difficulties on the track of economic development, and its potentials have not yet been fully tapped.

 

Weak infrastructure is among these barriers, particularly road and seaport systems which still fail to meet the regional increasing development demand. Important national highway routes of the western region such as 91, 80 and 54 are now in bad condition, resulting in frequent traffic jams. The two main waterway transport routes on Tien and Hau River cannot serve big ships. Meanwhile, seaports still need upgrading. All exports from the region must be transported to transhipment ports in the South East, wasting time and money for businesses.

 

Besides infrastructure weaknesses, the lack of qualified labourers also hinders localities to lure in investments. Meanwhile, only 27 per cent of regional labourers finish secondary schools education compared to the country’s average rate of 54 per cent. Additionally, local workers’ awareness of labour discipline discourages firms which want to invest in Mekong Delta. This is among vital reasons to explain why the rate of the regional under-employment is highest nationwide and its unemployment rate stands the second, just behind the South East.

 

Limited supporting services for enterprises are attributed to weaken the attractiveness of the local investment environment. A survey by the Vietnam Competitiveness Initiatives Project (VNCI) showed that all Mekong Delta localities, except for Can Tho City, are ranked among 20 cities and provinces at the bottom in terms of these services. The region has focused on holding exhibitions and festivals on investment promotion; however, their effectiveness remains modest.

 

The regional mechanism to draw investments is still unattractive to companies, hindering its global integration. Therefore, Mekong Delta has not yet become an appealing destination for investors. To improve the situation, the Vietnamese government has issued many special mechanisms and policies for the regional development; but these are still on paper due to the shortage of funds.

At the above conference, many experts said the central support via a special mechanism is a decisive factor to boost investments into the Mekong Delta. According to the Ministry of Planning and Investment, the region must not license projects which have bad impacts on environment. The licensing should be based on interests of neighbouring localities and ensure equality among investors of different economics sectors. The Southwest Steering Committee will concentrate on five projects to improve the regional investment environment in the coming time, comprising cooperation for rice production and consumption; fishery development (shrimp and pangasius fish); raising capacity of fruit growing and consumption; training rural labourers and regional cooperation with the participation of the state, farmers, enterprises and scientists. Chairman of Bac Lieu province People’s Committee Nguyen Thanh Be has proposed the government to revise rice export policy to tackle the so-called problem “racing for achievements”. With the current prices, rice export does not bring as much as profit for farmers as domestic consumption. The management of rice export should be reformed to bring more benefits for the state, farmers, enterprises and scientists.

 

Nguyen Thanh Son, Vice Chairman of Can Tho City People’s Committee, said it is necessary to enhance cooperation among localities to speed up the regional economic growth rate. The region should also join hands with other cities and provinces nationwide. Mekong Delta needs to pay more attention to infrastructure development and human resource training for a better investment climate. Vice Chairman of Hau Giang province People’s Committee Tran Thanh Lap said the occupancy rate of regional IPs and industrial complexes are very low, urging concerned agencies to tighten control over IP development planning. IPs and industrial complexes should firstly prioritize projects attached to key products of the region. The planning of IPs and industrial complexes should be based on each locality’s competitive advantages, avoiding the massive but ineffective investment inflow. Localities should not base on their advantages in cheap and abundant labour force, land and natural resources in luring in investors, but always try to improve their business environment. In the tendency of the current globalisation, these advantages are often easy to move to other areas or territories.

 

Lap added that the biggest barrier for the regional economic development is administrative border line among localities. This has created a fierce competition among them, causing a waste in potential and weakening the regional internal strength. Thus, a comprehensive cooperation policy should be applied for its long term development.

 

Vice Chairman of Soc Trang province Tran Thanh Nghiep said that Mekong Delta cities and provinces should fully tap their potential and improve investment environment, while calling for capital from both domestic and foreign sources.

Many officials proposed removing a land restriction policy in order to expand agricultural production to a larger scale along with industrialisation and modernisation. The development of a multi-purpose irrigation system is also urged to ensure the regional cooperation.

 

Deputy Head of the CIEM Tran Xuan Lich said, after the gathering, the Ministry of Planning and Investment will seek approval from the Ministry of Industry and Trade, the Southeast Steering Committee and People’s Committees of 13 regional localities for finalising the project named “Building a special mechanism to boost investments into the Mekong Delta region” before submitting it to the prime minister this month.