Since the Law on Foreign Direct Investment was enacted in 1987, Ho Chi Minh City has been a locality with strong attraction and has always led the country in terms of foreign direct investment (FDI) thanks to careful preparation of policies and infrastructure. The city's FDI attraction strategy has undergone a fundamental change in quality, shifting from labor-intensive to industrial, technology and innovation-intensive. The new context is posing challenges mixed with opportunities for Ho Chi Minh City to continue to be an attractive 'fertile land' for many 'eagles' to take off.
Japanese enterprises invest in production in Tan Thuan Export Processing Zone, Ho Chi Minh City. Photo: Danh Lam/VNA
Pioneering in "building nests" to attract "eagles"
Since the Law on Foreign Direct Investment was issued in 1987, Ho Chi Minh City marked a new chapter in the development of Ho Chi Minh City and the whole country, which is opening up, trading and strongly integrating with the world.
During this period, a series of large corporations in the world "kept an eye" on Ho Chi Minh City and quickly sought development opportunities in this "promised land". In 1996, Japan's Furukawa Electric Group chose Tan Thuan Export Processing Zone (District 7, Ho Chi Minh City) to build and put into operation the first component manufacturing factory in Vietnam.
Continuously developing in both quantity and quality, up to now, Furukawa Automotive Parts Vietnam Co., Ltd. has become an important pillar of the parent corporation's automobile business in Japan. The "fertile land" of Ho Chi Minh City has helped the enterprise realize its development goals focusing on quality, efficiency and sustainability, in line with the business criteria of the entire corporation.
"After nearly 30 years of development, the company has gradually diversified its products and expanded its production scale. Excellent human resources, favorable investment environment, and complete infrastructure are the factors that have helped us develop to this day", Mr. Hirobe Masao, General Director of the Company, shared.
Tan Thuan Export Processing Zone is one of the first export processing zones in Vietnam, a successful model in attracting FDI spreading to many localities across the country. The systematic design of infrastructure and experience in implementation, inviting investors of the management unit of the export processing zone at that time created a pioneering breakthrough for Ho Chi Minh City in receiving a series of enterprises to open factories. Following that, Linh Trung 1 and Linh Trung 2 export processing zones were established, taking full advantage of the experience of Tan Thuan export processing zone to attract investment.
Notably, FDI capital flows not only into the fields of production, consumption, food, machinery... but Ho Chi Minh City also attracts many banks, financial institutions, and foreign investment funds to participate in the market.
Deutsche Bank of Germany is an example. According to Mr. Huynh Buu Quang, General Director of Deutsche Bank in Vietnam, the bank has been present in Ho Chi Minh City for 33 years and hopes to continue to grow strongly.
“We have seen a lot of potential in the market, from which we have continuously developed financial products to serve the investment and development needs of FDI enterprises. At present, when Ho Chi Minh City is orienting to develop into an international financial center, the opportunities for Deutsche Bank are even greater,” Mr. Quang shared.
According to Professor, Dr. Nguyen Trong Hoai, Member of the Ho Chi Minh City Science Council, Ho Chi Minh City University of Economics, attracting FDI the earliest in the country was the initial success of Ho Chi Minh City, thanks to the industrial development policy aimed at foreign investors in the 90s. Thanks to that, foreign-invested enterprises in export processing zones and industrial parks have created a large number of jobs, not only for the city, but also for many provinces in the region, contributing significantly to the state budget revenue.
“The important thing is that FDI enterprises have created the ability to compete with domestic enterprises, thereby helping domestic enterprises grow and have the opportunity to start participating in global supply chains,” Professor Hoai emphasized.
Improving the “quality” of FDI capital flows
After Tan Thuan Export Processing Zone, the establishment of Ho Chi Minh City High-Tech Park (SHTP) in 2002 was considered a step forward for the city in inviting “eagles” to invest. This was also the time when FDI capital flows had a strong qualitative change, from being based on labor-intensive to industries that are intensive in industry, technology and innovation. Many “eagles” did not hesitate to open billion-dollar factories here, such as Nidec (Japan), Samsung (Korea) and Intel Corporation (USA).
In 2010, Intel Corporation officially put into operation a $1 billion chip assembly and testing factory in SHTP, marking Ho Chi Minh City's presence on the map of attractive destinations for global investment capital. Intel's stable operations and continuous development in recent times are the "sweet fruit" of the city's efforts in designing many attractive policies on the investment environment and infrastructure, creating maximum convenience for businesses.
According to Mr. Kenneth Tse, Vice President and General Director of Intel Vietnam factory, when investing in Ho Chi Minh City, investors can enjoy the most modern and comprehensive infrastructure system in Vietnam, including transportation and telecommunications systems. Along with open and supportive investment regulations and policies, the city is also aiming to increase the number of qualified personnel working in fields such as high-tech industry, information technology and other services.
Intel's factory in Vietnam will reach the milestone of 4 billion products shipped in April, a milestone affirming the role of Intel's assembly and testing factory in Vietnam ina mark affirming the role of Intel's assembly and testing factory in Vietnam in the global operation chain, as well as Vietnam's position on the world technology map. Intel also committed to accompanying the development of the semiconductor supply chain ecosystem in Vietnam, one of the potential fields that promises to explode in the future. The "take-off" of the "eagles" shows that Ho Chi Minh City's development strategy and investor selection are increasingly sharp and integrated, creating attraction for global "giants".
According to Mr. Michael Wekezer, Member of the Board of Directors of the Association of German Enterprises in Vietnam, German enterprises have a strong presence in many fields in Ho Chi Minh City as well as Vietnam such as: manufacturing, high technology, logistics, distribution and services.
“Ho Chi Minh City is attractive to many German businesses because it is a strategic economic center, has a young, skilled workforce, a friendly business environment, and benefits from new-generation free trade agreements. We see many development opportunities in the fields of high technology, IT outsourcing, software development and other advanced industries,” said Mr. Michael Wekezer.
Assessing this investment trend, Professor, Dr. Nguyen Trong Hoai said that in the past 10 years, when digital transformation and green transformation became new growth pillars, the city's FDI flows were directed towards large technology corporations, including semiconductors and many other industries. This is an important foundation for Ho Chi Minh City to develop into an international megacity
“These FDIs will help Ho Chi Minh City increase production value, create links in supporting industry development to help Vietnamese enterprises participate more deeply in the global supply chain as well as attract technological talents around the world to serve the development purposes of the City”, Professor, Dr. Hoai emphasized.
Looking back at the entire process of attracting FDI in Ho Chi Minh City, Dr. Huynh Phuoc Nghia, economic expert, lecturer at Ho Chi Minh City University of Economics, also said that it can be seen that the city's attractiveness to new generation capital flows is growing. In that context, the improvement of institutions, urban infrastructure, logistics, etc. is a support for investors to confidently choose.
However, the slowdown in the trend of attracting investment into the city also poses a new challenge for Ho Chi Minh City in attracting high-quality FDI capital flows. According to Dr. Huynh Phuoc Nghia, Ho Chi Minh City needs to redesign a new set of policies to attract FDI, including incentive frameworks, tax policies... which must be really sharp and have competitive advantages to attract global technology "giants".
"This set of policies does not only come from the state framework but can be related to incentives for many things, many industries that are specific to the City and must be different and more unique than current policies", Dr. Nghia analyzed.
Currently, Ho Chi Minh City is having a project to convert existing export processing zones and industrial parks into high-tech, ecological models... to help businesses upgrade technology. Experts say that accelerating this process will create an ecosystem combining active FDI with new investors, opening a new stage in attracting as well as helping "eagles" take off. Together with the superior institution of Resolution 98 and the new space of Ho Chi Minh City, an ecosystem combining industry and technology will be created - a large development space that promises to explode FDI investment in expected fields such as semiconductor technology, information technology, biotechnology, innovation... will create a new growth momentum for Ho Chi Minh City in the coming time.
Huong Giang
Follow Bao Moi