Foreign investment shifting to new locales in Vietnam

TN News

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Foreign direct investment has flowed into unlikely areas this year, focusing on areas outside the traditional hubs of Ho Chi Minh City and Hanoi, Vietnam's urban and industrial centers.

During the first seven months, the northern province of Thanh Hoa attracted the largest amount of foreign direct investment (FDI), equaling nearly a quarter of the total FDI in the country, largely thanks to a pledge of an additional $2.8 billion in an oil refinery by the Kuwait Petroleum International, Japanese firms IKC and MCI, and their local partner company.

The province jumped 22 slots from the same period last year.

The four other provinces with the most investment were Thai Nguyen, Hai Duong, and Bac Ninh in the north, and Binh Dinh in the central region. None of them made it to the top ten in 2012.

The top five accounted 67 percent the total investment of US$11.9 billion.

HCMC and Hanoi slid two and three slots to be ranked seventh and ninth. Together they attracted $417.41 million in total, down by more than a half from last year.

Despite the fact that the two largest cities are major sources of skilled labor, analysts said foreign investors are no longer keen on the localities due to expensive rents.

An improvement in infrastructure has helped make traveling from the cities to other areas easier, making labor willing to work far away from major cities where they live, they said.

Foreign companies operating in less-visited areas also get more support from local governments with site clearance, rents, and tax breaks.

Thai Nguyen, the province that attracted the second-largest amount of FDI, last month announced tax breaks for Korea's giant electronics Samsung.

A $2-billion factory will get tax exemptions for the first four years of operation and a 50 percent break for the next 12 years three of the companies upcoming projects will be offered infrastructure rentals subsidized by 50 percent.

During the first seven months, exports by the foreign sector surged 22 percent year-on-year to reach $48.2 billion. That represents two thirds of the country's total exports.

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