Central Highlands growth needs firmer foundations

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Poor infrastructure, a weak human resource base and complicated procedures have kept investors at bay.

The Central Highlands region is rich in natural resources and has recorded impressive growth figures this decade, but glaring shortcomings threaten to undercut sustainable development.

The region's economic growth is high, but not really sustainable, as agricultural and forestry production still account for a huge proportion of the gross domestic product (GDP), said Deputy Minister of Planning and Investment Nguyen Bich Dat.

It also suffers from significant limitations in export and industry development and in forest protection, he said.

Its GDP growth has annually exceeded 10 percent since 2001, and there are times it has even doubled that of the country, but the region is still poor, and development has not yet matched potential, said vice head of the Central Highlands Steering Committee, Mai Van Nam.

CENTRAL HIGHLANDS
INVESTMENT PROMOTION FORUM

When: September 5, 2009.

Where: Buon Ma Thuot Town, Dak Lak Province.

The Central Highlands Steering Committee will hold the Central Highlands Investment Promotion Forum 2009 this Saturday in association with the Ministry of Planning and Investment and the five Central Highland provinces.

Some 500 delegates are booked to attend, including foreign business people, leaders of provinces in the "development triangle" of CambodiaLaos-Vietnam, and representatives of the World Bank, the Asian Development Bank and the Japan International Cooperation Agency.

With the theme "Central Highlands: Waking Potential," the forum's objectives are to provide potential investors with information on the region's investment climate and priority projects, and create conditions for the five provinces to promote investment and improve the spiritual and material lives of their people.

During the event, the Central Highlands provinces will announce over 120 projects in agriculture, industry, construction, education and healthcare for which investment is sought.

Foreign-invested projects in the region are a mere 1.4 percent of the nationwide total, according to the Ministry of Planning and Investment. Vietnam received foreign direct investment (FDI) of more than US$70 billion in 2008 and over $10 billion in the first 7 months of 2009, but very little of it flowed into the Central Highlands.

Do The Nhu, vice chairman of the Dak Nong People's Committee, said, "Our biggest obstacle in luring investment is poor transport infrastructure. Degraded roads cause many difficulties for transport from our province's center to remote communes, especially during the rainy season."

Procedures for investment in the region have been another discouraging factor for investors because they take a lot of time and slow down the progress of many projects, according to some businesses.

Labor shortage is another problem, with university graduates typically not returning to work in the region.

Do Ha Nam, general director of the import-export firm Intimex, which is involved in farm product processing in the region, said, "Many people of the Central Highlands undergo training, but they go to Ho Chi Minh City [to work after their graduation]. We want to invite them return here to work, but it is very difficult."

Intimex has to offer greater pay to entice people from HCMC to come to work in the Central Highlands, Nam said.

Other procedural problems affect the region's progress.

Nguyen Van An, chairman of Thai Hoa group said its coffee processing firm in the Central Highlands, which is ready to begin operations, has to wait until 2011 due to the delay in getting loan insurance.

Capital mobilization for projects is not very difficult, especially for big firms, but the region needs to have big banks to provide loan guarantees when they access capital sources, he said.

Preferential treatment

Nam of the Central Highlands Steering Committee said the region should help firms have a better understanding of its advantages and potential, encourage investment, especially in agricultural and forestry processing, and tourism development.

The region needs investments of VND35-40 trillion ($1.94-2.22 billion) by 2010, of which 35 percent is expected to come from the state budget, and the rest from other sources including FDI and official development assistance (ODA).

The Central Highlands recently released a list of 122 projects that need investors, mainly in the fields of infrastructure, processing, agriculture and tourism. The projects, which are in Dak Lak, Kon Tum, Gia Lai, Dak Nong and Lam Dong provinces, are worth over VND100 trillion ($5.56 billion) in total.

Nhu of Dak Nong said, "We will apply the best preferential policy of the state to investors in our province, and accelerate ground clearance for projects, which is the weakest stage in investment."

Dak Nong will also apply the one-door policy for investment procedures so projects get implemented faster. The aim is to accelerate infrastructure construction, so that roads linking communes with the province's center are open to traffic by 2010.

Tran Si Thanh, vice chairman of Dak Lak People's Committee, said, "We should be more professional in luring investment. But we will not accept all investment. We will consider their impacts on the environment."

The most concern of Dak Lak is the investment effectiveness, job generation from each project, and its contribution to the state budget, Thanh said.

Dak Lak is now calling for investment in 25 projects, mainly in producing organic vegetables, hybrid maize, animal husbandry, and coffee and rubber processing.

The Forum on Investment Promotion in the Central Highlands will be held on September 5 to introduce the region's potentials to investors.

KEY CENTRAL HIGHLANDS FACTS

  • The Central Highlands comprise the five provinces of Lam Dong, Dak Nong, Dak Lak, Gia Lai and Kon Tum, covering a total area of 54,700 square kilometers, equal to 16.5 percent of the country's land mass.

  • The region has a population of more than 5.1 million (2009) and is home to several ethnic minorities, including the Xe Dang, Ba Na, Gia Rai, E De, K'Ho, Ma and M'nong.

  • Located on a plateau of an average altitude of 500-600 meters, the region has more than two million hectares of basalt soil suitable for planting coffee, rubber, pepper and tea.

  • It has a total of 434,000 hectares of coffee plants, or 80 percent of the country's coffee area. More than 117,230 hectares of rubber plants produce an average of 93,600 tons of latex every year.

  • The region contains many primary forests that are protected in several national parks, including Cat Tien, Yok Don and Kon Ka Kinh. ^ Bauxite is the major mineral in the region, and several hydropower plants are in operation on the Se San, Serepok and Da Nhim rivers.

  • The Central Committee for the Central Highlands Issues last month reported the region has attracted a total investment of VND110 trillion (US$6.17 billion) since 2001, accounting for 4 percent of the national total.

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