Danang ramps up tactics for influx of foreign investment

July 31, 2023 | 09:00
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Nations like Japan are making a mark in registered capital in the central city of Danang, with over $1 billion spent across more than 220 projects, and is the foundation for the city to lure in more effective funding in general.
Danang ramps up tactics for influx of foreign investment
Projects by Japanese groups such as Mikazuki have added tens of thousands of jobs to the local economy

On July 18, at the 12th session of Danang People’s Council, Tran Thi Thanh Tam, director of the city’s Department of Planning and Investment, said that the city’s low foreign investment number so far this year has been due to the small scale of ventures.

“Large corporations are carefully considering large investments in Vietnam in the face of the impact of the global minimum tax (GMT) policy and the government’s policy response,” Tam explained.

Danang established a separate unit under the municipal People’s Committee to help call for and promote larger investments. However, overseas funding in the first six months of the year reached only $10.6 million, or 46.3 per cent of the same period, much lower than the corresponding period in 2022.

“This number is not as expected. There are about $9.2 million of projects located outside industrial zones (IZs), so the projects are mainly small,” Tam acknowledged.

According to her, investor psychology has limited new moves and preserve capital, affected by the pandemic, the upcoming GMT, global investment decline, inflation, and the Ukraine war.

“For Danang, the city’s call for investment is mainly in industrial and high-tech parks. Meanwhile, the available land outside IZs is limited. So the ability to attract big foreign groups is very difficult,” admitted Tam.

Urgent planning required

In addition, Danang is aiming to become an environmental, smart, and high-tech industrial city, so calling for investment in IZs also requires a careful selection of technology as well as environmental impact assessments.

Tam also said that some regulations of the central government still lack consistency in land policy, determining land price when selecting investors, and legal frameworks on bidding. In particular, the city is in the process of zone planning, while its planning, land, and investment issues have not yet ensured readiness to encourage investors to implement projects immediately.

“For some projects, Danang has clean land, but the implementation procedure is quite long. If it is coastal land then it has to add procedures for approving investment policies, so the city has been slow to auction land use rights for a number of projects” she said.

According to Tam, currently, a number of large foreign investors are interested in projects in Danang such as Lien Chieu Port, infrastructure funding in Hoa Cam IZ phase 2, a number of commercial centre projects, and ventures in high-tech zones in electronics, medical equipment, and data centres.

“The Danang Investment Promotion Agency will focus on researching and hastening promotion in accordance with the needs of locality. At the same time, the city is urgently completing zone planning,” Tam explained.

Departments and sectors will review the progress of planning procedures, make land auction plans, and actively develop auction plans to be ready for investors. They will also actively coordinate with ministries and sectors to develop bidding processes and criteria for large projects that do not currently have regulations on specialised bidding, such as IZs and seaports.

Danang Management Board of High-Tech Parks and Industrial Zones is focused on effectively implementing a research project on promoting major investment in new IZs in the city.

In the last six months of the year, the city is actively deploying auction procedures for commercial projects expected to be completed in 2023, such as Hoa Xuan commercial and entertainment sports area, and commercial land to the southeast of the student dormitory.

“If it is a foreign investor who wins the auction, Danang will draw in about $200 million,” Tam added.

Danang ramps up tactics for influx of foreign investment

Creating a force

At the recent Danang-Japan Cooperation Connection Workshop, Vice Chairman of Danang People’s Committee Ho Ky Minh said that Danang has established official friendship and cooperation relations with the Japanese cities of Kawasaki, Sakai, Yokohama, and Kisarazu, in addition to cooperation relations along with 15 other cities and provinces.

“Economic cooperation between Danang and Japan has achieved positive results. Japan is currently the leading country in terms of registered foeign capital in Danang, accounting for 23.5 per cent of the number of projects and 26 per cent of foreign capital in the city,” Minh said.

According to him, Japanese investors focus on projects mainly in the fields of component manufacturing, equipment, processing, IT, education, healthcare, services, and tourism. Up to now, the activities of enterprises have created jobs for more than 40,000 workers.

In addition, Japan is identified as a key market of Danang tourism with stable growth. In 2019, the total number of Japanese visitors to the city reached more than 183,000, an increase of nearly 200 per cent as compared to 2015 with 92,000 visitors.

During a meeting with Japanese Ambassador to Vietnam Yamada Takio on the occasion of his recent visit and work in Danang, Nguyen Van Quang, Secretary of Danang Party Committee, declared that Danang is committed to creating all conditions for Japanese businesses and tourists to seek opportunities in the city. The city’s leaders have also issued preferential policies to support local businesses to expand cooperation relationships and investment promotion in the Japanese market.

Yakabe Yoshinori, consul general of Japan in Danang, said that new investment from Japan into Vietnam is becoming difficult in the northern provinces of Vietnam because of electricity problems. Meanwhile in the southern provinces of Vietnam, the problem of shortage of human resources is increasingly serious, and the price of land and factory rentals in IZs has increased.

“Thus, in Central Vietnam and in Danang, the rental price at IZs is still relatively low, ensuring human resources, so this area is receiving high attention from Japanese businesses. Central localities are considered a strong investment destination,” said Yoshinori.

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By Hoai Thanh

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