Growth quality concerns over disproportionate investment in Saigon real estate

A recent report on the socio-economic situation of Ho Chi Minh City in the first 4 months of 2019 says real estate accounted for 32.7 percent of all domestic investment into the city, the highest proportion, followed by the sale and maintenance of motor vehicles, at 17 percent.

Investments in processing and manufacturing were so negligible that they did not merit mention in the list.

Real estate also made up the lion's share of foreign investment registered for the city in the four months, at 46.8 percent, while the tally for the processing and manufacturing sector was only 6.7 percent.

Nguyen Thanh Phong, Chairman of HCM City People's Committee, has expressed concern that capital was being overwhelmingly directed at real estate instead of production, threatening the quality and sustainability of growth.

"In order to promote sustainable growth, resources should be focused on developing processing and manufacturing. Even at the recent HCMC Investment Conference, there was no talk on manufacturing projects, it was all about real estate, and real estate ..." he observed.

Phong said the city’s processing and manufacturing industry still has a lot of potential. For instance, the food industry is still in its infancy, while the city is geographically connected to major agricultural regions like southeastern Vietnam and the Mekong Delta.

He has assigned the municipal Department of Planning and Investment to coordinate with the Department of Industry and Trade to actively seek investors for these sectors.

"We can’t sit and wait for them to invest in the right areas," Phong said.

HCMC recorded nearly VND271 trillion ($11.61 billion) in total domestic investment in the first four months of 2019, down 3.9 percent over the same period last year.

Of this, VND211.7 trillion ($9.07 billion) were capital registered for 13,094 newly incorporated enterprises, and VND59.3 trillion ($2.54 billion) was capital supplements in existing ones.