Poor infrastructure hinders Southern Key Economic Zone’s FDI attraction

The Southern Key Economic Zone needs specially tailored policies to attract large amounts of foreign direct investment and improve linkages between localities to ensure sustainable development, experts have said.

The zone comprises HCM City and the provinces of Binh Phuoc, Tay Ninh, Binh Duong, Dong Nai, Ba Ria-Vung Tau, Long An, and Tien Giang.

It attracts a lot of FDI, in fact half of the entire amount coming into the country.

It also accounts for 45 percent of the nation's GDP, 42 percent of the Government's revenues and more than 40 percent of exports.

But its technical and social infrastructure fall short of requirements, and this kept large FDI projects (of above 100 million USD) away last year, experts said.

There was only one such investment last year when Hong Kong's Techtronic Industries invested 650 million USD in a project in the Saigon Hi-tech Park in HCM City.

The company's chairman, Horst Julius Pudwill, unveiled plans to set up a plant and an R and D centre with the target of making Vietnam the new manufacturing base.

It plans to make products for exports and set up training schools to improve the quality of the Vietnamese engineers.

It hopes its investment will be a basis for companies in its supply chain to relocate to Vietnam.

The plant will manufacture hand-held power tools with integrated technology for designing and manufacturing control devices and electronic transformers.

It will hire more than 7,400 people, including 500 in research and development.

Binh Duong province, which saw FDI increase by 49 percent to 3 billion USD in the first 11 months of last year, however had only one large project, a 171 million USD plant built by Japan's NTT group.

Dr Du Phuoc Tan, head of the HCM City Institute for Development Studies' urban management and research division, said the zone needs huge sums of money every year to develop its road infrastructure, but does not get them from the Government.

The Ministry of Transport estimates that around 300 trillion VND (12.9 billion USD) is needed to develop the road infrastructure.

Tan said policies for financing traffic links between the city and provinces are inadequate.

A transport development plan for the region envisages building more new expressways such as between Bien Hoa in Dong Nai province and Vung Tau in Ba Ria-Vung Tau province, between HCM City and Binh Phuoc province's Chon Thanh district through Binh Duong province's Thu Dau Mot city, between Long An province's Ben Luc district and Dong Nai's Long Thanh district, and between HCM City and the Moc Bai international border gate in Tay Ninh province.

Many waterway transport projects are expected to be added to the plan.

With its leading role, HCM City has proposed many solutions to mobilise capital not only for itself but also the entire zone.

In 2010 it decided to establish the HCM City Financial Investment Company (HFIC).

The HFIC has attracted investment in major infrastructure projects in the city and provided credit worth 14 trillion VND for 131 infrastructure projects.

It has also effectively managed a large amount of funds from the city for power grid renovation, science and technology development, IT human resources development, and pollution reduction.

It has also given loans worth 2.064 trillion VND to social and political organisations.

Binh Duong province hopes to attract investment by creating a conducive business environment.

It has greatly improved road infrastructure to improve connectivity with HCM City and nearby provinces, developed concentrated industrial zones and attracted workers from other provinces and cities around the country.

Source: Vietnam News Agency