Foreign investors interested as Quang Nam redoubles FDI attraction efforts

After an extremely sluggish start to the year, many large foreign firms have shown interest in investing in Quang Nam, Ho Quang Buu, Vice Chairman of the central province, tells The Investor.

Among the interested foreign investors are VidaXL Group from the Netherlands, Karcher from Germany, Hyosung Corporation from South Korea and Guoguang Electric (Vietnam) Co., Ltd from China.

Quang Nam attracted only one FDI project worth $1 million in the first seven months of the year. How did this happen?

There were many reasons, including the risks posed by increasingly complex, unpredictable geopolitical scenarios; impacts of the economic downturn caused by the Covid-19 pandemic; as well as inflationary pressures and tightened financial conditions that eroded business and investment confidence and caused global value chain disruptions. In this context, the shrinking of global FDI flows was inevitable.

When geopolitical tensions escalated, many major countries adopted strategies to shift production and capital back home or to close partners to preserve their supply chains.

Besides, a number of Southeast Asian countries have introduced fiercely competitive tax policies, specifically sharply reducing corporate income tax, reforming investment licensing procedures and offering attractive investment incentives.

The application of the global minimum tax initiated by the Organization for Economic Co-operation and Development (OECD) has greatly affected Vietnam’s FDI attraction.

While the general world situation has directly affected FDI inflows into Vietnam, Quang Nam has seen other roadblocks like difficulties in site clearance for industrial parks (IPs) due to a lack of land for resettlement. This has meant a paucity of space for investors to implement their projects. Difficulties in site clearance and resettlement have delayed many IP infrastructure projects, affecting the generation of a large clean land bank that some foreign investors have requested.

In addition, there are problems with investment procedures in IPs. The slow determination of IP land rents has led to delays in granting investment licenses for secondary projects.

Quang Nam has made great efforts to remove obstacles and call for investment, and many large FDI enterprises have expressed their wish to expand investment and production in the province. In the first half of 2023, the province held working sessions with a number of foreign investors who want to invest, including VidaXL Group from the Netherlands, Karcher from Germany, Hyosung Corporation from South Korea and Guoguang Electric (Vietnam) Co., Ltd from China. The province is appraising their projects for issuing investment licenses.

What are the solutions that the province has identified to implement in the coming time?

Quang Nam will enlist the support and assistance of domestic and international investment promotion organizations in introducing the province’s investment potential, environment and opportunities.

We will approach and introduce opportunities for direct investment to partners from countries with high technology, source technologies and leading supply chains, as well as those who’ve joined multilateral free trade agreements (FTAs) like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and the EU-Vietnam Free Trade Agreement (EVFTA). These include the U.S., the E.U., Japan, South Korea and Singapore.

In particular, Quang Nam will review difficulties and problems of FDI projects to identify timely solutions. We will also propose legal and policy amendments towards creating an open and favorable business and investment environment approaching international standards.

The province will also urge local administrations to work with IP developers on promoting site clearance and compensation to ensure present clean land that can attract foreign investors. In particular, it will propose that the government increases industrial land quotas that will attract interest in building new IPs.

Can you share some specifics on preparing the land fund for IP development?

Currently, the Ministry of Planning and Investment is appraising an application for the 115-hectare Chu Lai Truong Hai Industrial Park infrastructure project. The provincial Management Board of Economic Zones and Industrial Parks has been asked to prepare proposals for a number of new industrial parks, including Nam Thang Binh (499.43 hectares), North Thang Binh (239.32 hectares) and Phu Xuan (108 hectares).

We have also proposed the inclusion of several new IPs in Dai Loc, Que Son, Thang Binh and Tien Phuoc districts with a total area of about 5,238 hectares in the provincial master plan.

However, we are facing difficulties in preparing proposals for new IP investment projects due to limited industrial land quotas allocated by the government. We lack industrial land quotas for the establishment of new IPs that are already in the master plan.

What are the main areas that Quang Nam is focusing on in calling for investment?

In the immediate future, Quang Nam will submit the provincial Master Plan for the 2021-2030 period with vision until 2050 for approval to make spatial arrangements, creating opportunities for rapid and sustainable development.

We will focus on developing sustainable and environmentally friendly industrial production areas alongside urban areas with safe and healthy living conditions.

Specialized industrial production areas such as supporting industry clusters for the automobile, electricity, electronics and aviation sectors will be formed.

In the coming time, the province will give priority to attracting investment in accordance with the fourth industrial revolution – the sectors of information and communication technology (ICT), digital technology, nanotechnology, biological industry, new materials, pharmaceuticals products, biology, high-tech agriculture, environmental technology and clean energy.

The province will not accept projects using outdated energy-consuming technology that also pollute the environment.

Quang Nam will also study a mechanism for using FDI for research, application, innovation, start-up promotion and technology transfer.

According to the provincial People's Committee, in the first seven months of 2023, Quang Nam licensed only one new FDI project worth $1 million, approved adjustments to three projects, and terminated one project. So far, the province has attracted 194 FDI projects with a total registered capital of $6.06 billion, mostly focused on the processing and manufacturing industries.