Hanoi improves investment environment to attract FDI

Vietnam’s N&G Group and SEIN I&D from the Republic of Korea (RoK) signed a deal in late June to build a Vietnam-RoK Techno Park Complex at the Hanoi Southern Supporting Industrial Park.

The two sides and other partners will invest in building infrastructure and specialised works dedicated to invention, production and application of micro-chip products according to global high-tech standards.

Leading the nation in FDI attraction

The Vietnam-RoK Techno Park Complex has a total area of 200ha, including space for production, research and development, logistics, housing and others.

Chairman of the N&G Group Nguyen Hoang said that the building of the complex ,which meets international standards, will attract investment and research projects on high-tech products, especially semi-conductor chip manufacturing. RoK investors also expect to build other manufacturing complexes in other localities, thereby, promoting investment cooperation between Vietnam and RoK.

Hanoi is also a familiar destination for a large number of Japanese investors. After the success of the two projects of Aeon Long Bien and Aeon Ha Dong with investment of about 200 million USD per project, Japanese retailer Aeon is urgently implementing more projects in Hanoi. Aeon Mall Vietnam aims to have additional four commercial centres in Hanoi by 2026 and more by 2030. These projects have all been approved by Japanese Aeon.

General Director of Aeon Mall Vietnam Nakagawa Tetsuyuki said: “We have fully prepared the capital, personnel, and equipment to commence the construction of an Aeon Mall in Hoang Mai district right after final procedures are completed.”

According to the Hanoi Department of Planning and Investment, Hanoi has always been an attractive destination for foreign investors. The city has so far attracted about 62.27 billion USD of FDI, ranking second among localities nationwide. Hanoi also led the country in FDI attraction in 2018 and 2019 with total registered capital of 7.5 billion USD and 8.67 billion USD respectively.

Many large projects were licensed, such as the smart city urban area project with an investment of 4.1 billion USD, two projects run by Nidec Corporation at Hoa Lac Hi-Tech Park with a total investment of 400 million USD, the Xuan Son waste treatment plant project worth 90 million USD, and the R&D Centre project by Samsung worth 210 million USD, amongst others.

The FDI inflow into Hanoi fell sharply only in the 2021-2022 period due to impact of the COVID-19 pandemic.

FDI inflow into Vietnam is expected to thrive in 2023 thanks to attractive investment policies and the reopening of the economy after the pandemic. Hanoi returned to its position as the leading FDI recipient in the first six months of this year with 2.26 billion USD of FDI, more than tripling the value during the same period in 2022.

During the first half of 2023, the city saw 196 new projects with a total registered capital of 75.33 million USD and 89 projects expanding their capital with total supplemented capital of 209 million USD.

Investors from Japan, Singapore, the Republic of Korea, the US, and the EU continue to conduct large projects in Hanoi, focusing on the areas of real estate, manufacturing, construction, amusement services, accommodation and food services, health and education.

Overcoming inadequacies

Hanoi’s investment and business environment still reveals inadequacies that need to be addressed to effectively attract more FDI capital.

Regarding planning, Hanoi changed its administrative boundaries in 2008 and is currently adjusting several planning policies, leading to delays in the implementation of a number of projects.

In addition, legal regulations on investment, land, construction, and real estate remain overlapped and inconsistent, resulting in protracted preparation for the implementation of projects.

CEO of Sumitomo Corporation Asia and Oceania Group Keigo Shiomi said that the Group received the investment certificate for the smart city project in June 2018 and registered to adjust the project planning in May 2019. The investor has recently received a decision to locally adjust the detailed planning of 1/500 in Dong Anh district after more than four years. This is an important step towards accelerating the progress of this giant project.

Regarding land, Hanoi has a limited land fund with a land rental price 1.5 - 2 times higher than that of neighbouring localities, failing to create a competitive advantage. Meanwhile, there are few factory facilities that meet the conditions for new investment activities and production expansion.

Acting Director of Hanoi Department of Industry and Trade Tran Thi Phuong Lan said that most of the concentrated industrial parks in the area have been filled while newly approved industrial parks are in the process of land clearance and infrastructure construction.

General Director of Aeon Mall Vietnam Nakagawa Tetsuyuki also shared that the implementation of commercial centre projects requires a large land fund, so enterprises expect to continue receiving information about business premises from city authorities.

According to data from the Hanoi Department of Planning and Investment, FDI mainly focuses on the fields of real estate and construction (accounting for 38.7%), processing and manufacturing (31.1%), and other sectors (30.2%) while FDI in high technology and supporting industry remains limited.

Hanoi will continue improving the business and investment environment in a more effective and substantive manner in order to gradually overcome these limitations. Chairman of the Hanoi People’s Committee Tran Sy Thanh emphasised that city authorities will always accompany and stand side by side with investors as well as solving problems during the implementation of projects.

The city will accelerate progress and improve and adjust capital planning with a vision to 2050 to submit to the Government and National Assembly for approval in October 2023 in addition to completing the Capital Law to promote its potential and advantages.

Hanoi will also establish more industrial zones and clusters to attract FDI while perfecting the infrastructure of industrial zones to meet actual needs. The city is also preparing conditions to receive and manage the Hoa Lac Hi-Tech Park.

With large-scale, complicated and prolonged projects, the city will propose the Government set up an inter-ministerial working group to tackle any problems arising.