Foreign direct investment (FDI) in Ho Chi Minh City has shown signs of decreasing.

Recently, foreign direct investment (FDI) in Ho Chi Minh City has shown signs of decreasing. According to statistics, in 2022, the total value of FDI will reach 4.33 billion USD, only equal to 60.29% in 2021. In the first four months of this year, FDI into the city is only about 780 million USD, down 23.4% compared to 2022.
In an interview with Sputnik today, Doctor of Economics and Finance Le Hoa shared the above figures showing that FDI in Ho Chi Minh City is not only slowing down as analysts estimate but has indeed fallen sharply. The core reasons are

• Limited land funds;
• Poor infrastructure (both hard and soft);
• The increasing dynamism of other localities in the country.

In the past, Ho Chi Minh City was very attractive to foreign investors because of its outstanding advantages in the field of investment attraction. However, now, the northern region of Vietnam is more attractive. And foreign investors are shifting capital to the North of Vietnam. Of course, Ho Chi Minh City is still among the top localities in attracting FDI, but billion-dollar projects are gradually finding other locations.

Facing big ambitions is not a small challenge.

Ho Chi Minh City is developing a project to attract FDI from 2023 to 2025 with a vision for 2030. Under this project, the city focuses on strategic investors, that is, investors who pour much money into the projects. The city is expected to attract more than 50 high-tech projects by 2025, with at least one big-name high-tech corporation, with a total investment of at least 3 billion USD. Those are big ambitions in terms of the ability to attract FDI.

Also read: Vietnam faces more challenges to attract FDI » Breaking News, Latest World News Updates - VietReader Viet Nam

Facing those big ambitions is no small challenge.

The first challenge is the land fund. We know that the Government has approved the land fund for developing industrial zones, which has stayed the same in recent years. According to Hepza Ho Chi Minh City - Management Board of Industrial - Export Processing Zones of Ho Chi Minh City, the city will have nearly 6,000 hectares of industrial land. However, there are 1,500 hectares of legal problems or problems with land clearance. In 2023, Hepza was only allocated 41 hectares of agricultural land for lease, and this land was not concentrated on a large scale but scattered. But strategic investors need large-scale and concentrated land.

The second challenge is the problem of the infrastructure system, first of all, transport infrastructure and service infrastructure. This system must be synchronous, commensurate with development needs and available city potential.

The third challenge concerns the city's investment information channels, that are difficult to access. In 2023, the Provincial Competitiveness Index (PCI) of Ho Chi Minh City dropped 13 places, falling to 27th place. This number also represents the current state of FDI attraction.

The next challenge is the sustainability factor (sustainability criteria are environment, society, and governance). The city faces intense competition to attract FDI from other localities and provinces in the country. According to VCCI, on the "Green Index" - the environmentally friendly index- Ho Chi Minh City ranks 49th out of 63 provinces and cities nationwide.
In addition, there are external challenges, such as the global downward trend of FDI, political, economic, and financial fluctuations, and the global minimum tax policy.

Strategic and synchronous solutions are needed.

In the current context, the city needs strategic and synchronous solutions. First of all, to improve the investment environment, make it transparent, clear, and easy to understand; improve technical infrastructure, traffic, and information; improve supply chains and regional linkages (transport infrastructure and inter-regional connectivity of Ho Chi Minh City are too slow, the northern provinces have developed much more dynamically in recent years) ). At the same time, it is also advisable to focus on attracting investment in areas that do not require land funds, such as e-commerce, software, financial centers, health systems, tourism, etc.

Also read: An important factor in attracting FDI » Breaking News, Latest World News Updates - VietReader Viet Nam