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FDI firms want barriers removed

November 8, 2014

– DA NANG — Barriers to increased foreign direct investment (FDI) were discussed at a dialogue between this central city’s leadership and FDI enterprises on November 7, 2014.

The dialogue was an opportunity for FDI enterprises and city authorities to share experiences and opinions on how to dismantle obstructions in investment policy and reform administrative procedures and other requirements that limit funding from investors.

“We have seen a big contribution from FDI enterprises to the city’s growth in past years. FDI businesses contributed US$70 million, equivalent to 21 per cent of the city budget, so far this year,” stressed Van Huu Chien, the city people’s committee chairman.

“FDI enterprises produced a total industrial production value of $536 million, of which $293 million were exports, creating 43,000 jobs with an average monthly salary of VND3.3 million ($157),” Chien said.

The chairman added that city authorities hosted the dialogue to get the opinions and concerns of investors regarding investments made during the economic downturn of previous years.

More than 50 of 78 survey opinions of FDI businesses in this central city asked the authorities to provide more favourable conditions for boosting the development of future investment projects.

At a meeting with FDI enterprises last year, city authorities admitted the existing of barriers to FDI such as poor support industries and materials, a poorly-trained labour force, high transport fees and limited land location for industrial parks, as well as complicated procedures for customs and taxes and an ineffective East-West Economic Corridor.

The city plans to formulate a strategy to renew foreign investment by designating 2014 and 15 as the Years of Enterprises.

According to its report, Da Nang has granted licences to 22 FDI projects worth $153 million, of which 14 projects increased investment capital, in the first 10 months of the year.

Shinichi Iwama, chairman of the Japanese Enterprise Association and concurrent president of Daiwa Viet Nam, complained that the city has yet to develop more bus routes connecting it to industrial zones, and land needed for developing apartments in the park for workers remained unavailable.

“We have seen many lots left underdeveloped in the Hoa Khanh Industrial Zone (IZ) while many Japanese companies wish to have more land to expand production lines and workshops,” Iwama said.

“Many small and medium enterprises from Japan want to invest in IZs, but they could not apply for land because of low capital investment. I think the city should ease the requirements to attract more medium and small investors from Japan to flock to the IZs,” he added.

Shinichi observed that the city could locate lands outside IZs or industrial complexes for small and medium enterprises.

Le Canh Duong, general secretary of the FDI Da Nang Club, revealed that the city has so far attracted 304 FDI projects worth $3.37 billion. Singapore ranked first with $721 million, followed by South Korea, the British Virgin Islands, Japan and the United States.

“As many as 65 per cent of investment projects in the city were in services while industrial production and tourist real estate made up nearly 35 per cent, and the remaining were in seafood products,” Duong said.

Duong, also deputy director of the city’s investment promotion centre, noted that investors still asked for more improvements in infrastructure, port and waste water treatment systems in industrial zones, as well as on-site trade and investment promotion and preferential policies for land rental rates.

Huynh Tan Vinh, general manager of Furama Resort, complained that ratification of the master plan for construction remained slow and limited by regulations.

“Ha Noi and HCM City allow a rate of 20 to 25 per cent for density of buildings in a project, but Da Nang just fixes the rate at under 18 per cent. It requires us to adjust our projects for approval,” Vinh said.

Some Japanese businesses working in industrial processing zones said the city should follow the example set by HCM City and Bac Ninh Province and allow them to sell at least 20 per cent of production volume in the domestic market.