Leveraging a host of factors such as fast growth and holding a large proportion in capital, foreign investment attraction is being considered a bright spot in the Haiphong’s socioeconomic development.
South Korean electronics giant LG has poured nearly $6 billion into Haiphong. Photo: Thanh Tan
During the 2015-2020 term, the northern port city of Haiphong lured in 218 foreign-invested projects with a total value of nearly $9 billion, up 1.5 times compared to the previous period, which stood at just $5.9 billion. It was almost double the committed domestic investment sum which amounted to VND106.3 trillion ($4.62 billion).
Despite the impacts of the current pandemic, foreign direct investment (FDI) volumes into Haiphong have still shown little interruption. By the end of July, the industrial zones (IZs) and economic zones (EZs) under the management of Haiphong Economic Zones Authority (HEZA) coaxed nearly $1.4 billion in total FDI value, accounting for 55.9 per cent of the plan for 2021. Taking into account $1.5 billion that South Korean electric giant LG Group plans to invest in the city by the end of this year, the total committed value exceeds the full-year target at $2.5 billion set at the beginning of 2021.
Today, Haiphong’s IZs and EZs are home to 418 foreign-invested projects worth $17.37 billion in the total capital value.
According to Le Trung Kien, director of HEZA, the FDI flow has not only risen sharply but has also recorded a marked improvement in quality. Still, many challenges are ahead in future growth when it comes to investment promotion and attraction. “To reach the target of attracting $12.5-15 billion in FDI during the 2020-2025 period, the challenge is to lure in major investors who can make contributions commensurate with the resources the city has invested,” said Kien.
Haiphong focuses on attracting projects using high, advanced, and environmentally-friendly technologies, producing items with high added value in the global production chain of major economic groups and multinational companies.
LG Group has landed four mega projects in the city with the total investment touching $5.05 billion. By the end of 2021, LG Display is expected to raise its capital by an additional $1.5 billion.
In addition, satellite and ancillary businesses of LG Group have also flocked to Haiphong. Meanwhile, Japan’s Bridgestone Group has poured in $1.2 billion, or Regina Miracle Hong Kong at $0.9 billion in the port city.
Haiphong-based foreign-invested enterprises (FIEs) raked in $52.5 billion in total revenue between 2015 and 2020. During the period, FIEs in the city contributed $43.8 billion in total export value and $43 billion in total import turnover, representing 79 and 77 per cent in the city’s total export and import value, respectively. Meanwhile, FIEs’ total industrial production value accounted for 67.1 per cent of the city’s total.
These FIEs had paid VND34 trillion ($1.48 billion) to state coffers; creating jobs for nearly 158,000 labourers by the end of 2020, an increase of 2.95 times compared to 2015 and with per capita average income in 2020 reaching VND10.5 million ($460).
Although city-based IZs and EZs have witnessed a sharp growth in foreign investment attraction over the last five years, analysis shows that the committed capital volume mainly targets a few well-known brands. Just three big players - LG, Bridgestone, and Regina Miracle Hong Kong - accounted for 82.2 per cent of the total capital volume. More than 200 remaining projects occupied only 17.8 per cent of the total capital, averaging $8.6 million per project.
The current workforce at city-based IZs is mainly unskilled with over 30 per cent of whom come from outside localities, at more than 50,000 people. It is proving hard to attract, train, and provide high-quality human resources to meet enterprises’ burgeoning demands, irrespective of growing competitive pressure.
Currently, many localities bordering Haiphong are speeding up the investment pace, completing IZ and EZ infrastructure in an asynchronous and modern direction, and researching and promulgating mechanisms and policies that are attractive to push up the development of IZ and EZ infrastructure in their locations. They are also developing diverse investment incentives to attract investors into building social facilities and social housing for workers in a bid to attract a high-quality workforce.
HEZA will soon work on revising the general planning for construction of Dinh Vu-Cat Hai EZ, ensuring it to be attuned with the city construction master plan until 2040 with a vision towards 2050.