Industrial Hub Enjoys Its Top Spot

Its spectacular headway in attracting foreign investors is spurring on a province that aims to be Vietnam’s top investor destination

Leaders of Dong Nai Province neighboring HCM City are hailing its top ranking in attracting investment to its industrial parks. Figures from the Ministry of Planning and Investment show that the total foreign direct investment (FDI) capital in Dong Nai’s IPs is more than US$6.81 billion, whereas all the other IPs in Vietnam have attracted US$5.26 billion.

As a province it ranks third in FDI after HCM City (US$11.8 billion) and Hanoi (US$8.8 billion). On this basis, it has attracted 670 projects with total registered capital of US$7.8 billion from foreign investors from 29 countries and territories.

However, in industry and IPs, Dong Nai ranks first. Dong Nai is the most developed industrial hub in Vietnam. The province is now home to 17 IPs with a total area of 5,124 hectares, of which 58% has been occupied. The area of the IPs will be expanded to 10,700 hectares by 2010.

Dong Nai has quickly attracted attention by becoming the top locality in Vietnam in attracting foreign investment to IPs. Among the projects, 100% foreign-owned ones make up 84% (US$6 billion) of the total registered capital, joint-venture projects 10% (US$744 million) and locally-owned projects 6% (US$427 million).

Located in the center of the southeast of South Vietnam, Dong Nai is one of the strongest members of the Southern Key Economic Region grouping, seen as the economic locomotive of southern Vietnam.

An asset is its young workforce, with 70% of its population under 35. Its literacy rate is 92%. Its projects provide jobs for more than 213,000 people. The average salary for unskilled workers is US$35-70 a month, for skilled workers US$100-200 a month and for senior experts and managers US$500-800 a month.

The province is on National Highway No.1, the Trans-Asia Highway, the North-South Railway and the Dong Nai River, which is home to the ports of Thi Vai, Long Binh Tan, Go Dau A and Go Dau B. It is also near key transport and infrastructure projects planned for the future, such as the Long Thanh International Airport, which is designed to handle 100 million passengers and 5 million tons of cargo a year by 2010, and the HCM City-Bien Hoa-Vung Tau and HCM City-Long Thanh-Dau Giay expressways.

Power is supplied by the Phu My, Tri An, Thac Mo, Ham Thuan-Da Mi, and Thu Duc generation plants. Some industrial parks and big companies, such as Amata, Loteco and Formosa, also have their own power supply sources.

Dong Nai also has good services and recreation facilities for business people and expatriates. The province has two golf courses, housing for expatriates and a big supermarket, the Big C. Investors have easy access to high-quality healthcare and education services in HCM City, and can relax at resorts in Phan Thiet and Vung Tau.

Industrial hub

The main foreign investors in Dong Nai are Taiwan (US$2.2 billion), ASEAN countries (US$1.3 billion), South Korea (US$1 billion), Japan (US$1 billion), the European Union (US$601 million), and the U.K. (US$174 million).

The U.S. is the eighth-largest foreign investor, with 25 projects capitalized at US$199 million. However, the figure is much bigger, amounting to more than US$1 billion, if indirect investment by U.S. investors is counted. Most U.S.-invested projects are in the food, petrochemical, mechanical and pharmaceutical industries. These investors are Nike, Cargill, Exxon Mobil, Gannon, Monsanto, Baxter Healthcare and OPV Pharmaceutical.

More than 90% of FDI projects in Dong Nai are in industry, and the rest in agriculture, forestry, fisheries and services. A highlight is that projects in almost all fields have increased capital. Investors in some projects have raised capital several times, such as Fujitsu, Vedan, Formosa and Hwa Seung Vina.

They turn out products that are popular in the domestic and foreign markets, such as Nike, Reebok and Adidas sports shoes; Kao and DeBon cosmetics; Fujitsu computer chips; Sam Yang and Suzuki motorcycles; and hybrid corn seeds, breeder chickens, and livestock, poultry and fisheries feed by CP, Proconco, Cargill, Vedan, Ajinomoto and Happy Vina.

Each IP has its own wastewater treatment system, and service fees are not high. To create favorable conditions for foreign investment in IPs, the one-stop management procedure is applied by the Dong Nai Industrial Zone Authority. All administrative formalities for investment in its IPs conform to the ISO 9001:2000 standard.

Pro-active policy

Attracting most attention from investors is Dong Nai government’s pro-active investment policy. Procedures are streamlined to help investors save time and money, and the one-stop regime is applied in customs, investment licensing and construction. Its authorities can grant licenses in five to 15 days. For some simple projects, investors can even get licenses in just 24 hours.

There are attractive tax incentives, and investors can enjoy import tax and value- added tax exemption for equipment and machinery imported to develop their projects. The corporate income tax is 10%, 15% and 20% depending on project category. Investors are also offered tax exemption for two to four years after start-up and a tax reduction for two to nine years.

Between now and 2010, Dong Nai expects to attract US$3.5-4 billion in FDI to ensure new and existing IPs are fully occupied. Priority will be given to projects in export processing, clean industries, hi-tech industries, support industries, agro-product processing and IP development and services.

(Source: Saigontimesweekly)