Attracting FDI in Hai Phong: Opportunities and Challenges

In 2021, Hai Phong targets to attract foreign direct investment (FDI) capital between 2.5 - 3 billion USD, proactively promote and selectively attract investment in industrial and service projects using modern technology with high efficiency.

Hai Phong aims to attract investors to its industrial and economic zones focusing on three economic pillars, namely high-tech industry, seaport-logistic, tourism-trade; proactively attract selective and qualifying investment in line with the city’s orientation in economic structure; focus on attracting potential investors with advanced and environmentally friendly technology.

The current status of FDI attraction in Hai Phong

*The situation of new capital attraction and capital increase in 10 months of 2021:

In the first 10 months of 2021, the total new granted capital attraction and capital increases in the city reached $2,846.93 million. In which:

- Hai Phong's industrial and economic zones, (until October 14, 2021): 2.788,41 million USD (newly granted 25 FDI projects, registered investment capital of 303,59 million USD, increase the investment capital of 42 projects, investment capital increased by 2.484,82 triệu USD);

- Besides industrial parks and economic zones: 58.52 million USD (newly granted 19 projects, with investment capital of 43 million USD, adjusted to increase investment capital for 12 times of projects, with the investment capital of 15.52 million USD).

* Situation of capital attraction through the forms of capital contribution, share purchase, contributed capital:

In the first 10 months of 2021, there were 20 times of foreign investors investing in the form of capital contribution, share purchase, contributed capital with a registered capital of 8.86 million USD.

* Total foreign investment attraction:

Total foreign investment capital attraction in the first 10 months of 2021 reached 2,855.79 million USD, 2.04 times higher than the same period in 2020 (10M/2020 attracted 1,399.27 million USD: newly granted 66 investment projects with newly granted capital of 1,000.65 million USD; increased investment capital 23 times of projects with an additional investment capital of 345.87 million USD; 45 times of capital contribution, share purchase,contributed capitalwith the amount of registered capital is52.74 million USD), reaching 114.23% of the 2021 attraction plan (Expected to attract: 2,500 million USD).

- Outstanding projects: LG Display's investment increased by 1.4 billion USD, increasing the total investment capital in Hai Phong to 4.65 billion USD, becoming the largest investment capital project in the city. With this investment, the company increased production of plastic OLED screens from 9.6 -10 million products per month to 13-14 million products per month. It is expected that export revenue will increase by 6.5 billion USD per year; contributing about 25 million USD per year to the state budget, creating jobs for 10,000 workers.

Opportunity opened up

Central Government opens up the opportunity:

FTAs contribute to strengthen the trade relations between Vietnam and partners, remove trade barriers to participate in global production and supply chains, thereby creating more favorable conditions for Hai Phong. attracting FDI from partners.

Besides, the impact of FTAs ​​on economic institutions and the business environment of Vietnam. The implementation of FTA commitments requires the Vietnamese Government to further strengthen the review and perfect the legal system, develop new policies and mechanisms to create a favorable business and investment environment for the domestic and foreign enterprises, thereby enhancing and promoting the FDI attraction into Vietnam.

Increased strength

Hai Phong set a target to invest more 15 new industrial parks and 6,500 hectares of land fund by 2025, meeting the diverse needs of investors in the new period, in addition to 1 economic zone and 12 industrial parks, which are operating stably.

With the promotion of investment in industrial zone infrastructure development, by 2025, Hai Phong City is expected to attract 15-20 billion USD; export turnover can reach 25-30 billion USD; attract 300,000 employees. This is a great resource to promote the strong development of Hai Phong City's economy, building Hai Phong into a modern, smart and sustainable industrial city.

Leading the development trend

Hai Phong City People's Council has established two eco-industrial parks in the city, including Nam Cau Kien area. With a pioneering role in the field of infrastructure development investment, with the vision of building the first eco - industrial park model in Hai Phong, Nam Cau Kien industrial park has gradually completed the international standard infrastructure system and comprehensive service supply network, thereby accumulating Nam Cau Kien ecological value for the customers and partners.

As the first eco-industrial park invested by Vietnamese people, the overall development strategy of Nam Cau Kien Industrial Park is economic development associated with environmental protection. Therefore, since its establishment, the investors of Nam Cau Kien industrial park have actively implemented effective solutions in environmental management and protection.

Some challenges

Investment selection:

The process of attracting FDI has revealed many shortcomings and limitations such as capital still being allocated into labor-intensive fields and environmental pollution. In addition, the situation of transfer pricing and tax evasion still exists

Technology transfer, management experience and spillover from FDI enterprises to the whole industry and economy:

Some state enterprises are in a joint venture with FDI enterprises, they desire to increase their potential in terms of capital, technology, and new management mechanisms for development and the state enterprises to participate in enterprise management, thereby learn, except and receive transfer of technical key, advanced management experience, but up to now, most joint enterprises have become 100% foreign-owned enterprises, with closed operations and management processes.

Disease control:

Although the epidemic situation has complicated developments in many localities, the city has been highly focused, reacted quickly, took proactive measures in the prevention and control of the Covid-19 epidemic, but still has to facing the challenge of accomplishing the dual goals, both ensuring the epidemic prevention and ensuring the conditions for large enterprises and factories to operate stably and sustainably.

[1] Source: Department of Planning and Investment