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Domestic capital outstrips foreign direct investment in IZs
Industrial zones (IZs) and export processing zones (EPZs) in HCM City are experiencing and imposing reverse tendency: Domestic investment capital is outstripping foreign direct investment (FDI).
According to HCM City Management Board of IZs and EPZs (Hepza), though FDI capital flow into Vietnam has grown considerably in comparison with the same period of 2009, the FDI flow into IZs and EPZs is lower than investment capital from domestic sources.
Hepza reported that FDI capital has only reached $136.3 million so far this year, with 13 projects receiving new investment licenses and 14 operational projects expanding their business scopes. Meanwhile, domestic capital flowing to IZs and EPZs was higher, at approximately $297 million.
In the first seven months of 2010 alone, 35 domestic-invested projects were granted investment licenses capitalized at $235 million. Besides, 19 other operational projects have increased their investment capital by $62 million. As such, the domestic capital flowing into IZs and EPZs has increased by two-fold over foreign capital in the first seven months.
It is estimated that $2.1 billion worth of investment capital has entered IZs and EPZs in HCM City over the last five years. Of this amount, $1.321 billion came from domestic sources.
Explaining the increase in domestic investment capital, Nguyen Tan Phuoc, Deputy Head of Hepza, observed that the global economic crisis led to a sharp fall in FDI flow. Besides, in recent years, projects that use many labourers and may cause environment pollution have not been encouraged by city authorities. HCM City now prioritises high technology, clean projects that are friendly to the environment. Meanwhile, domestic investors prove to be very agile: they took full advantage of the crisis period to make heavier investment and expand projects in IZs and EPZs.
To date, in HCM City IZs and EPZs, nearly 1200 projects have been licensed and implemented, including 710 domestic-invested projects and 447 FDI projects. Seven new IZs have been established in HCM City and Hepza has set a goal to explore at least 50 percent of the IZ area. It hopes total investment capital for the IZs will reach two billion dollars, half from FDI projects.
Phuoc suggested that recent IZ investment projects in HCM City are on the right track. Most of the 13 licensed FDI projects are in electronics, mechanical, household appliances production projects, all encouraged investment fields.
Hepza pointed out that the biggest barriers to attracting FDI capital are poor infrastructure outside the IZs and a weak transport system. Besides, land leasing feed are high and investors have been burdened with complicated procedures. Electricity shortages are also cited as one of the most important reasons that foreign investors hesitate to invest.
Now investors have called on management agencies to settle existing problems and improve tax incentives for new investment projects plus expansion projects.
vietnamnet, NLD
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