Vietnam’s "top" investment destination suffers shortfall of foreign funds

By VGP, Dam Tuan   April 14, 2016 | 05:02 pm GMT+7

Da Nang might be dubbed "Vietnam's most livable city"with a strong reputation for investment friendliness, but it faces a paradox with just 0.2 percent of the nation’s FDI finding its way to the city last year.

The city's party chief, Nguyen Xuan Anh, voiced his concerns over the decline in FDI at a recent People's Committee meeting, given the country attracted $24 billion in 2015 but the most competitive city received only $44.3 million, ranking 33 out of 53 provinces and cities.

The head of Da Nang said: "Why are foreign investors not in interested in a city famous for its friendly investment environment and high competitiveness index? Are our investment policies not supportive or favorable?"

According to the People Committee’s, the first quarter of 2016 also witnessed a fall in FDI in terms of both project numbers and capital, and shows the signs of continuing to fall.

vietnams-top-investment-destination-suffers-shortfall-of-foreign-funds

FDI in Da Nang is falling despite the city's streamlined investment environment. Photo by VnExpress

In the first three months, Da Nang issued only nine new investment certificates worth $2.53 million, a decrease of $5.75 million compared to the same period last year.

Additional capital for existing FDI projects also tumbled in Q1 as just four added capital worth a total of $407,500, down $6.29 million compared to the same period last year.

The report also showed that one FDI project reduced its investment capital by a remarkable $14.36 million.

Standing Deputy Secretary Vo Cong Tri said that one of the reasons could be uncompetitive tax and rental fee preference policies. He added that Hoa Khanh Industrial Zone in Da Nang has average annual rental fees of $1 per square meter while the adjacent Dien Nam – Dien Ngoc Industrial Zone in Quang Nam is only $0.8 per square meter.

Tri added that another reason might be because Da Nang has not issued specific plans to entice investment to support workers, schools, healthcare or logistics, followed by a lack of transparency and prolonged investment license procedures.

Secretary Nguyen Xuan Anh called for an urgent review of Da Nang's investment environment and the completion of Q2 targets to improve human resources, open the Da Nang High Tech Park and revoke licenses from delayed FDI projects.

Da Nang is famous for topping the Provincial Competitiveness Index and Information and Communication Technology Index for the past three years.