FIEs in city still expand in gloomy outlook
By Quoc Hung - The Saigon Times Daily
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| Workers do their jobs at a production line at Japan-invested Nidec company. The fi rm is considering investment expansion in HCMC - Photo: Quoc Hung |
HCMC – Operational foreign-invested enterprises in HCMC are still expanding operation in the face of the gloomy outlook, as many of them have registered to increase their foreign direct investment (FDI) capital. Meanwhile, the amount of fresh FDI projects is plunging.
Recent statistics unveiled by the HCMC Department of Planning and Investment indicated that 50 FDI projects operating in the city have registered to spur their capital with a combined value of over US$495 million in the first six months, up 127% year-on-year. The figure nearly doubles that of newly-registered FDI projects in the same period.
This is a rare phenomenon in attracting FDI capital into HCMC so far and local analysts said the fact that FDI enterprises increase investment fund in HCMC showed their confidence in the local market. This also indicates that these firms are doing good business despite the current economic woes, they said.
According to the planning and investment department, existing project owners spurred investment capital to boost production and to expand business activities.
Prominent foreign-invested enterprises expanding investment in HCMC in the year’s first half include Singapore-based Vietnam Brewery Limited (VBL) with US$68.1 million, South Korea’s Lotte Vietnam with US$25 million, Singapore’s BMS Vietnam with US$11.8 million and Japan’s Sankyu Logistics Vietnam with US$9.5 million. A number of other foreign companies are also considering to scale up their investment in HCMC, including Japan’s Nidec company.
In the mean time, there had been a sharp fall in fresh FDI projects in the city in January-June. The whole city only lured about US$248 million worth of total investment funds from new FDI projects in the year to date, shrinking up to some 85% from the year-ago period.
Local relevant authorities attributed the slowing FDI inflow to the on-going global and local economic uncertainties. Besides, they noticed that economic restructuring policies the city had conducted over the past time are also the reasons behind the situation.
In fact, the city’s government is focusing on developing industries with high-value technology and services instead of labor-intensive sectors as in previous years. On the other hand, the number of realty schemes which had attracted considerable capital amounts of foreign investors in previous years is also tumbling given poor housing demands at home.
Similarly, new investment into technology development areas has been choked off as supporting sectors and high-quality laborers still remain a headache for foreign investors.
Regardless of this, the department asserted FDI capital flow is following the city’s orientation in gradually raising the ratio of the service sector which accounted for more than 50% of total FDI capital over the first six months. As such, HCMC is still affirming its leading position in economic development in the country’s south.