Should Vietnam accept small foreign-invested projects?

Created 30 August 2018
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Foreign investors registered 527 projects from the beginning of the year to July 15, with total capital of $498 million, according to the HCMC Planning amp; Investment.

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HCMC is a n attractive destination point for foreign investors

Only 428 projects were registered in the same period last year, but the total capital was higher, at $743 million.

Analysts noted that more small and micro investment projects have appeared in HCMC. The five largest FDI projects in the first seven months of the year had average registered capital of $25-70 million. 

Meanwhile, some foreign investors registered projects capitalized at several thousands of dollars only.

J&P, a consultancy firm, for example, has registered capital of $3,000, Learntalk Vietnam from the Philippines $3,000, and Streamy from Ireland $2,600. The capital registered by the US invested Fairway is $2,500, and French Evocom even lower at $2,200.

The common characteristic of the micro businesses is that they are all science & technology firms.

Su Ngoc Anh, director of the HCMC Planning and Investment Department, said the agency cannot reject the registrations because current laws do not prohibit projects with small capital.

Meanwhile, HCMC’s Mayor Nguyen Thanh Phong expressed concern about small projects (less than $1 million), saying that modest capital will not push up local economic development.

Analysts noted that more small and micro investment projects have appeared in HCMC. The five largest FDI projects in the first seven months of the year had average registered capital of $25-70 million. 

Phong has requested the city’s agencies to find out if there are problems that prevent investors from coming to the city, and why the city cannot lure large projects.

Explaining this, Dinh The Hien from the Institution for Informatics and Business (IIB) said HCMC once had great advantages to lure FDI to the infrastructure sector, especially real estate projects which required huge capital. 

However, it is getting more difficult to seek real estate projects in the city because of the lack of ‘clean’ land.

He went on to say that many investors cannot find large land plots to set up factories, and therefore, have set up production bases in Binh Duong, Dong Nai, Ba Ria-Vung Tau and Long An provinces.

In recent years, HCMC has been trying to attract investment in hi-technology projects. However, there are not many such projects, except Intel, in the hi-tech park.

Do Nhat Hoang, director of the Foreign Investment Agency (FIA), thinks that it is too early to say that FDI in HCMC is on the decrease.

“It takes investors a long time, three to four years, to learn about investment opportunities and destination points. They (investors) may be considering opportunities and have not made a decision,” Hoang explained.

“So, it may happen that the FDI is low at this moment, but will soar next year,” he added.

However, Hoang noted that in general, manufacturers will not choose cities for industrial projects because the land fee is high.

 

Source: Kim Chi - Bridge

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