Localities report downgrade in FDI attraction amid land shortages

Many localities report downgrade in FDI attraction as shortage of land fund (Illustration)

In early July, Dong Nai People’s Committee sought approval to develop three industrial parks (IPs) at Long Duc 3, Bau Can-Tan Hiep in Long Thanh district, and Xuan Que-Song Nhan in Cam My district to make itself more appealing to large-scaled enterprises.

Dong Nai has picked up small-scale projects worth only $623 million in the first half of 2023. The province licensed 33 newly registered projects worth $108 million and approved the investment expansion of 44 projects, with a total supplemented capital amount of over $514 million.

Every single project is small in scale and, despite doubled foreign investment in the first six months of this year compared to 2022, it is finding it hard to make available space for big names.

Last year Dong Nai attracted only $321 million, compared to $1.3 billion in 2021, $1.45 billion in 2020, and $2.3 billion in 2019.

The modesty in the scale of projects comes from the shortcoming of industrial land. Statistics published by Dong Nai Industrial Zones Management Authority show that the province currently has 31 IPs that have been put into operation, and the average occupancy rate is 86 per cent.

Pham Van Cuong, deputy head of the authority, said that the ​​available land for lease in IPs is minimal, not meeting the demand. Many foreign investors from South Korea, Japan, the EU, and India came to the province to learn and invest in large projects, but because the province does not have enough land for rent, businesses have to leave.

According to the planning approved by the government in February this year, Dong Nai has been allowed to add eight new IPs, covering 8,200 hectares, such as Cam My, Gia Kiem, Long Duc (phase 2), and also Long Duc (phase 3). However, according to Dong Nai authorities, these zones face trouble in investment procedures, changing the land usage purpose, auction, and bidding. Many problems will fester until solutions are forthcoming from ministries.

Meanwhile, other localities such as Haiphong, Thai Binh, Bac Giang, and Vinh Phuc flock to methodical investment promotion strategies, including organisation of large-scale investment promotion conferences in both their provinces and overseas, to attract multinational groups and projects worth hundreds of millions of dollars. Dong Nai is also decantering small-and medium-sized investors.

In late May, Dong Nai worked with EY Vietnam and Senshu Ikeda Bank to discuss programmes to support small- and medium-sized enterprises from Japan to invest in the province. These parties have plans to sign an MoU for this collaboration in November this year.

The central province of Thanh Hoa faces a similar situation. Based on the accumulated statistics, Thanh Hoa is still the leader in attracting foreign-invested capital in the central region, with the total accumulative capital of approximately $14.8 billion. However, in 2022, the province attracted only $97.5 million for the whole year, and $131 million in the first half of this year.

In 2022, many large groups such as Foxconn and Compal from Taiwan, WHA from Thailand, Ramky from India, and Millennium from the United States arrived in Thanh Hoa to conduct field surveys and study investment opportunities. But Compal selected Thai Binh as a project destination, while Foxconn is still expanding its operation in Bac Giang.

Meanwhile, its neighbouring province Nghe An, which was named in the top 10 localities in attracting foreign-invested capital for the first time in 2022, reported capital of nearly $1 billion last year. Between January and June, foreign investors have poured $613.8 million into Nghe An.

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