Central Vietnam province Khanh Hoa attracts modest FDI despite huge potential: official

Khanh Hoa province has not succeeded in tapping the huge potential it has despite advantageous policies and mechanisms initiated by the local government, local officials say.

The province’s foreign direct investment (FDI) attraction has been very modest with just four projects worth $12.19 million registered in 2023 and the first half of 2024.

Since 2023, the province has only seen four projects registering for increasing their investment capital by $45.51 million; apart from 18 submissions for capital contributions and purchases of shares totaling $24.62 million.

Chau Ngo Anh Nhan, director of the provincial Department of Planning and Investment, attributed the situation to limitations in the preparation, management and implementation of related planning schemes, noting that land use, construction and sectoral development plans have been asynchronous, inconsistent and overlapping.

“This has hindered the process of carrying out procedures for appraising and granting in-principle approvals and investment registration certificates to projects,” he said.

Nhan also acknowledged that under the impacts of the Covid-19 pandemic, the complicated political situation and the world economic recession, the number of foreign investors, especially large and experienced ones who want to carry out large-scale projects in the locality, has decreased sharply.

Instead, investors tended to register capital contributions, share purchases and capital contributions to companies that have been established in Vietnam in the fields of services, restaurant and catering services and management consultancy, he added.

Dinh Van Thieu, Vice Chairman of the provincial People's Committee, said the locality holds great potential to become an attractive destination for domestic and international investors, especially in services, tourism and marine economy.

However, the level of development has not been commensurate with the local potential and strengths. Notably, resources, especially land and minerals, have not been managed and used effectively, he noted.

"The investment and business environment and competitiveness have not improved much, thus limiting FDI flows into the province,” he admitted.

"5 readies" to lure investors

Nhan said the province has so far attracted 113 FDI projects with a total committed capital of $3.91 billion.

The largest foreign investors include Japan, Singapore and South Korea, focusing on industrial fields (energy, manufacturing, processing and shipbuilding support industries), tourism, services and trade.

Among the FDI projects that have made significant contributions to local socio-economic development is the Hyundai-Vietnam Shipyard in the Van Phong Economic Zone, with registered capital of more than $290.9 million. It is one of the largest shipbuilding factories in Vietnam and Southeast Asia, creating jobs for more than 5,000 workers.

Another one is the $2.58 billion Van Phong I BOT Thermal Power Plant of Van Phong Power Company Limited, which is 100% owned by Japan’s Sumitomo Corporation. The plant became operational in March 2024, supplying 8.5 billion kWh of electricity annually for the national grid, accounting for 3% of the nation’s total electricity output.

Vice Chairman Thieu cited experts as saying that Vietnam was seeing FDI attraction opportunities like in 2008, when Vietnam had just joined the World Trade Organization (WTO).

Factors such as the battle to control core technology, chip technology and future technology are opening up opportunities for Vietnam to attract high-tech FDI.

“Therefore, if well prepared, 2024 will mark the start of a new wave of FDI into Vietnam in general and in Khanh Hoa in particular," he stressed

To catch this FDI wave, he requested departments, agencies and localities to properly prepare platforms and ecosystems to roll out the red carpet for investors.

In particular, they must effectively implement the "5 readies” – ready planning schemes; ready essential infrastructure; ready investment premises; ready human resources; and ready support for investors in terms of procedures, he added.