HCM City: More FDI Opportunities

 

At the seminar, City officials introduced potential projects such the GSE & C Company’s Tan Son Nhat – Binh Loi ring road project worth US$318 million, and two other projects worth US$217 million. The city called on FDI investment in urban and industrial zones, including Thu Thiem urban area valued at over US$1 billion. 20 blocks in the city centre are planned for modern commercial centres and services matching a city of 10 million people. Communication and transport projects include a subway and three tramways: Saigon Cho Lon – Western bus terminal, tramways 2 and 3, capitalized at several billion US dollars and ready for investment. The city’s stock transaction centre will be upgraded to stock transaction department with modern equipment valued at US$15 million, connecting with stock centres in the region and allowing foreign investors to check stocks in Vietnam with others in ASEAN and the world over.

Besides calling for investment in infrastructure, Ho Chi Minh City has also expedited infrastructure development, accelerating planning, reforming land administration, customs formalities, taxation, and completing the “one-stop” mechanism to simplify formalities for local and foreign investors. Mr Re recommended the State finalize planning on industries, areas and products, and list FDI projects, to ensure close coordination between the central and local governments, to achieve the objective of US$10-15 billion of investment in 2007 and to boost socio-economic development in Ho Chi Minh City and in Vietnam in general.

 

At a recent meeting with the city officials, asked about hurdles to investments, entrepreneurs pointed out troublesome administrative formalities, slow planning, poor infrastructure and supporting industries, and a shortage of skilled labour. Those constraints have caused slow investment in the city, with only 77 projects and registered capital of US$169.4 million in the first quarter, while FDI investment increased sharply elsewhere in Vietnam.

According an NIDEC group representative, though administrative reform in HCMC has improved somewhat, performance is still slow, affecting the investment planning of economic groups. Many important investors have come to HCMC and left without answers on planning and feasible land compensation solutions for their projects. FDI investors require 200-250 hectares a year, but HCMC could not meet that demand. Land compensation in HCMC is 10-15 times higher than in Binh Duong and Long An, deterring investors. According to wholly foreign-owned CBRE property company, the high expenses of real estate and offices in HCMC reduce its ability to attract foreign investments. HCMC also lacks high standard human resources, especially in management, consultation and project evaluation. Business cooperation between local and foreign enterprises is inadequate. Many local enterprises have to important materials, while local FDI enterprises export the same materials to parent companies to be re-imported again to Vietnam. Although cheap labour is important for attracting FDI enterprises, there is no policy ensuring long-term commitment by enterprises in the city.