Hanoi remains off-putting to investors

Noi Bai Industrial Zone illustration photo - source internet

Latest figures from the Hanoi Industrial and Export Processing Zones Management Authority (HIZA) showed that the total investment capital from both domestic and foreign businesses to the city’s industrial zones (IZs) over the first nine months of this year came to approximately $70 million, equal to 42 per cent of that achieved in the same period last year and a mere 30 per cent of the year’s projection.

New projects were mostly small in size. Foreign direct investment projects during the period numbered only 12, valued at around $9 million in the total committed capital.

Existing FDI projects seeking capital addition have also remained modest. Only two projects asked for a fresh capital injection of more than $10 million each.

“These modest figures were chiefly because the cost of infrastructure transfer and land lease rate at Hanoi-based IPs is from 1.5 to 2 times higher than in the surrounding areas,” said HIZA head Pham Khac Tuan.

Tuan also said that the perplexity in implementing the 2014 Law on Investment, which came into force this July, had adversely impacted Hanoi’s efforts to charm investors.

In this situation, HIZA has decided on curtailing the capital attraction target to just $120 million for the year.

Aside from the new target, Hanoi has introduced an investment wish-list consisting of 11 projects focusing on high technology, biotechnology, supporting industries, healthcare, tourism, new energy and material development, as well as infrastructure.

“Hanoi commits to significantly ameliorate its investment climate in the upcoming times to appeal to investors. We have set concrete targets, such as those related to simplifying administrative procedures, reducing time for customs clearance and business registration,” said Nguyen Gia Phuong, director of the Hanoi Tourism, Trade and Investment Promotion Agency.

“I believe the changes reflected by procedure simplification, wide exposure of information on planning and socioeconomic development at the capital Hanoi will contribute towards bettering the city image in the eyes of domestic and foreign businesses,” Phuong stressed.

According to Dau Anh Tuan, head of the Legal Department under the Vietnam Chamber of Commerce and Industry, it is not easy for Hanoi to woo hi-tech projects because “hi-tech investors often want to land projects at places where the local government is appreciated for quality governance.”

A recent survey by the Japan External Trade Organization shows that up to 65 per cent of respondents chose Hanoi to invest due to factors related to business opportunities, 39 per cent due to market scope whereas only 3 per cent settled down in Hanoi due to factors related to quality management.