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  Foreign Investment

Mekong Delta region strives to lure more foreign investors

The Mekong Delta Region attracted 161 foreign direct investment (FDI) projects, with total investment capital of US$1.317 billion. However, compared with other regions, the figure is quite low.

Subjective and objective obstacles

In 2003, the industrial production value of FDI enterprises in the Mekong Delta Region reached more than VND7,500 billion, 6.8 times higher than 1996 and 187 times higher than 1990. The leading provinces for luring FDI are Long An, Kien Giang and Can Tho. However, the figure only made up 13.8 percent of the total region’s industrial value. According to the Ministry of Planning and Investment, since 1988 the region has attracted 161 FDI projects with a combined capital of US$1.317 billion, accounting for three percent of the country’s total FDI capital.

From 1998-2003, six industrial zones in Long An, Tien Giang, Can Tho, Vinh Long, and Dong Thap attracted more than US$300 million in FDI, accounting for 20 percent of the total capital of domestic enterprises operating in the six zones.

In 2003, FDI capital in the region was US$88.7 million, US$29 million less than the previous year. Of the figure, Long An attracted US$80 million, Can Tho lured US$4.7 million, Tien Giang US$2.3 and while other provinces attracted the small remaining funds. In addition to low levels of foreign investment, domestic investment in the province is also not high.

It can be said that during the past years, the region’s growth mainly depended on domestic investment, and FDI flow in the region has not been a major factor in its growth on the region’s restructuring process.

This is due to many reasons, including infrastructure and citizens and labourers’ qualifications. Twelve provinces in the region do not have any international airport or seaport and the river ports that do exist are very small. Furthermore, Highway 1A from Ho Chi Minh City to Nam Can (the only major road linking Mekong Delta provinces) is one-way and now overloaded.

Regarding the economy, the region’s industry and services sectors are weak. The region lacks human resources and supporting industries, and mainly depends on agriculture. The prospects for aquaculture look promising, but the industry currently remains undeveloped. Therefore, although 12 provinces in the region have implemented many incentives to attract investors, they have not achieved results as expected.

Determine to improve

To overcome these difficulties, the region has devised a number of solutions, including increasing the proportion of industry and services in its economic structure, speeding up urbanisation, completing infrastructure such as water and electric supplies and telecommunications, improving administration reform, and strengthening investment and trade promotion.

The region not only follows the Government’s regulations on offering investment incentives, but is also further improving domestic and foreign investment incentive policies. For example, Long An province only charges minimum land lease rates and offers exemptions from fees for the first 7-15 years. Dong Thap province provides land tax exemptions for the first five projects in the first five years. It also gives financial support to enterprises moving to industrial zones.

In Soc Trang province, investors can negotiate land rates directly with local people. The province provides support for land acquisition and compensation and enterprises, which build houses, apartments or projects to serve local people, receive free land leases.

In Tien Giang province, if enterprises lease between 20,000-25,000sq.m, they enjoy a 10 percent land lease reduction while if they lease more than 50,000sq.m, they receive a 15 percent discount.

In addition, provinces in the region have paid great attention to developing supporting industries and investment intermediaries. They have also strengthened co-operation among provinces and developed co-operative strategies between the region and Ho Chi Minh City, southeast region, southern central region and other neighbouring provinces.

Currently, the region is implementing several big projects, such as the Cai Nui Seaport, Ca Mau Gas, Electric and Fertiliser Industrial Zone, Rach Mieu Bridge, Can Tho Bridge and building main highways. Vam Cong Bridge and the Ho Chi Minh City-Can Tho Highway will also be built in the near future. Important waterways from Ho Chi Minh City to Kien Giang and Ca Mau will be established. The railway line linking Ho Chi Minh City with My Tho will also be restored. Tra Noc Airport will be launched to serve civil services. Can Tho University will be improved to become a key national university. Each province will have vocational schools and each district will also have a vocational training centre.

Recently, construction of the University of Medicine and Pharmacy and University for Teacher Training was completed built in Can Tho and Dong Thap.

All these works aim to serve socio-economic development in order to help the Mekong Delta region fully tap its great potential as well as to restructure its economy toward industrialisation and modernisation.

VOV - (07/12/2004)

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