Foreign direct investment (FDI) capital poured into industrial zones (IZs) has rapidly increased recently, bringing large profits for infrastructure development companies.
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Foreign direct investment (FDI) capital poured into industrial zones (IZs) has rapidly increased recently, bringing large profits for infrastructure development companies.
According to the Management Board of HCM City Export Processing and Industrial Zone Authority (Hepza), from the beginning of this year, export processing and IZs have received a large volume of FDI capital. Of the total 128 million USD poured into export processing and IZs in the first two months, FDIs accounted for 80 million USD and the remainder came from domestic companies.
Hepza also reported that the huge influx of FDI capital allowed the ratio of filled land in export processing and IZs in the city to reach 80 percent.
The neighboring Binh Duong and Dong Nai provinces have also seen an increase in FDI. In the first three months of this year, Binh Duong Province granted licences to 28 FDI projects, with a total investment capital of over 680 million USD. After registering to add more capital, investors have actively expanded plans to build new factories in the Song Than 1, Song Than 2 and Nam Tan Uyen IZs.
By March 18, Dong Nai province’s registered investment capital and newly added capital for FDI projects reached some 488 million USD, or a year-on-year increase of 311 percent. Foreign investors have not only focused on developing industrial parks in Bien Hoa City but have also expanded land lease agreements and have invested in many factories and warehouses in new IZs such as Long Duc, Long Thanh and Bau Xeo.
Local experts attributed the increase in investment in IZs since October last year to the official conclusion of trade agreements such as the Trans-Pacific Partnership (TPP). Many investors from England, Japan, the Republic of Korea and Thailand have started investing in IZs.
In HCM City alone, investors have an ambitious plan to develop a Silicon Valley-style high-tech zone in District 9, with total investment capital of 1.5 billion USD.
By the end of 2016, the business results of five listed infrastructure development companies all showed a profit.
Accordingly, Long Hau JSC in the southern Long An province reported its revenue rose 10.67 billion VND (476,339 USD). Of this figure, revenue from land leases accounted for 6.69 billion VND. The company’s after-tax profits reached 20.33 billion VND, or a 20-fold increase over the same period last year.
Sonadezi Long Thanh in Dong Nai province reported its total revenue of 46.23 billion USD in the first half of this year. Of this figure, revenue from land leases in IZs accounted for 18.54 billion USD.
In the northern provinces, Vinh Phuc Infrastructure Development Company reported revenue of 33 billion USD in the first quarter of this year, or a 3.7-fold increase over the same timeframe last year.
The Thoi Bao Ngan Hang (Banking Times) reported that all businesses are now involved in infrastructure development in IZs, with four businesses expecting strong growth in profits this year. They are Tan Tao, Long Hau, Kinh Bac and Vinh Phuc.
With these high profit targets for this year, industry insiders have predicted that fierce competition between these companies will prompt them to offer new incentives to attract FDI enterprises.
Instead of concentrating on land leases only, as in previous years, they will take advantage of spending their own money to build warehouses, offices, retail space, serviced apartments and high-rise apartments.
Hepza reports that this tendency will see major growth in the next 1 or 2 years as the TPP officially comes into effect.
(Source: VNA)
