Domestic investment in city outpaces FDI, says Hepza

CA - Domestic investment into industrial parks and export processing zones in HCMC for the first time outpaced foreign direct investment in the year to date, at US$235 million compared to foreign funds of US$49.2 million, said the zones watchdog.

The HCMC Export Processing and Industrial Zones Authority (Hepza) told the Daily that 35 local investors were issued investment certificates with combined capital of more than US$235 million. If additional fund for operational project is included, local investment into these zones mounts to nearly US$297 million.

Meanwhile, foreign direct investment (FDI) approvals at the city's industrial parks and export processing zones in the past seven months were worth only US$49.2 million pledged in 13 FDI projects. Injected funds included, the total foreign fund into these zones in the January-July period was slightly over US$136 million.

Hepza attributed the FDI drop to the global economic downturn, and the lack of infrastructure and land at the zones as well as less attractive incentives for new investment projects in the city.

Besides, a move by Hepza to confine foreign investment to eco-friendly and hi-tech sectors while limiting projects in animal feed, dried food production and textile and garments areas also has an impact on the FDI inflow, said Nguyen Tan Phuoc, deputy director of Hepza.

Meanwhile, domestic enterprises aware that technologies are cheaper due to the global crisis have recently managed to expand operation and improve technology to be more competitive, Phuoc said.

"The global economic slump was providing an opportunity for local enterprises to make investments at reduced costs as equipment and machinery suppliers worldwide were cutting prices," Phuoc told the Daily.

"Domestic enterprises have taken use of the global economic crisis to expand business, so to say," he added.

No comparative figures on the January-July cash flow, including both domestic investment and FDI, are given, but figures of the year's first half showed FDI still increased substantially.

In January-June, FDI totaled more than US$94 million in the city's EPZs and IPs, a staggering increase of 91% year on year. Meanwhile, local investment in the year's first half leapt by 239% year-on-year to US$225.4 million, according to Hepza.

Phuoc of Hepza remarked that operational foreign-invested enterprises have boosted their capital in the IPs and EPZs this year, with total additional capital of more than US$87 million, doubling that of fresh investment pledges.

"That is a good signal for Vietnam's investment environment," he said, explaining that foreign investors see the investment environment improving, so many of them have expanded operations.

Hezpa expects to attract domestic and foreign investment approvals into its IPs and EPZs this year at more than US$680 million.