Although it only increased by 5.4 percent over the same period last year, not as impressive as Binh Duong, which grew 48.8 percent, 1.6 times higher than the plan, it is noteworthy that the number of valid FDI projects in HCMC is 11,273 projects, with registered capital of $55.84 billion, leading the country in the number of valid projects. The remaining provinces, such as Dong Nai, Ba Ria - Vung Tau, Tay Ninh, and Binh Phuoc, saw more modest FDI attraction, but they posted growth compared to the previous year.
In 2023, the world economy is not expected to be very bright. At the World Economic Forum - Davos on January 17, Kristalina Georgieva, Managing Director of the International Monetary Fund, said that the world economy would continue to decelerate to 2.7 percent in 2023 (it was 3.2 percent in 2022) before recovering in 2024.
According to Georgieva, the three major challenges for the world economy are the tense Russia-Ukraine conflict, the living cost crisis, and the highest-ever interest rates in decades.
Meanwhile, domestically, the Southeast region also has to face many huge obstacles. The first is that the land fund for industrial development is shrinking significantly. HCMC is expected to have only 46ha of "clean" land for investors to lease in 2023. This land area is scattered in many districts, so the city cannot receive large investors. Some industrial parks, such as Hiep Phuoc or Northwest Cu Chi, have hundreds of hectares of land. However, they have not yet signed land lease contracts with the State.
Dong Nai is also facing similar difficulties in terms of land funds. Local industrial zones have almost been filled up. Meanwhile, five new industrial zones, with an area of over 7,100ha, have not been built yet. Binh Duong, Binh Phuoc, Tay Ninh, and Ba Ria - Vung Tau provinces have more advantages in terms of the land fund with many large industrial zones, but these industrial parks are located very far from seaports and airports, and the traffic infrastructure systems have not been synchronously invested. HCMC Ring Road No.3, Bien Hoa - Vung Tau Expressway, and some national highways are expected to be completed and put into operation by 2025, partially solving the challenge of regional infrastructure connectivity.
Besides, investment procedure is still a factor that makes businesses discouraged easily. In HCMC, until October 2022, the one-stop shop mechanism in industrial zones was re-established. The HCMC Export Processing and Industrial Zones Authority (Hepza) was authorized to appraise, approve, grant, and change environmental permits for investment projects.
This is a move to help relieve some of the frustration of businesses. However, enterprises said it is necessary to license the one-stop-shop mechanism at industrial parks for all procedures, not just environmental permitting. Another factor that needs attention is labor.
Many FDI enterprises said they could not recruit workers to meet production needs, even unskilled workers. Besides the fact that many provinces and cities have increased land rents, social insurance contributions for foreign workers have increased from 2022. Therefore, FDI enterprises will have to consider more before investing.
