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FDI bottlenecks in Mekong DeltaAlthough the Mekong Delta was “a bright spot” in the initial stage of FDI attraction, it has now been in low profile with Can Tho city lagging behind Long An and Tien Giang provinces.

In 2010, Can Tho was placed 29th out of 63 provinces and cities in term of FDI attraction, accounting for US$641 million or just 0.4 percent of the country’s total figure –  too small to compete with Da Nang (US$2.97 billion) and Hai Phong (US$5.1 billion).

The 2012 Provincial Competitiveness Index (PCI) showed the city made certain prospects by jumping to the 14thfrom 38th position in 2011, but the capacity for connecting Can Tho to other provinces in the region and to major centres in the country is limited.

The reason, cited by Dr Tran Sinh, former director of the Southern Economic Research Centre is that foreign investors always place profits above everything and only prefer to invest in the most convenient place. Listed in order of priority are HCM City, Binh Duong, Long An and Tien Giang. In my opinion, Can Tho city should develop hi-tech to attract FDI.

A “golden” opportunity lost

While the south-eastern provinces and HCM City – the country’s largest economic hub, have increased their investment in upgrading transport infrastructure. Mekong Delta provinces and cities are just focused on improving the rural transport system instead of making it accessible by modern means of transport like containers.

Although the Mekong Delta region has Can Tho and Phu Quoc international airports and a system of sea ports, large cargo vessels still find it difficult to drop anchor. So, most of goods have been transported by road, leading to price hikes.

Even with many zoning plans afoot, the Mekong Delta lacks a concrete strategy for attracting FDI in the long term, not to mention unhealthy competition in certain localities.

In 2012, Vietnam attracted US$8.6 billion in FDI, more than half from Japan. In the seven months of this year, Japan continued topping the list of foreign investors, but only a few Japanese businesses are keen to invest in the Mekong Delta despite its great potential for commodity trading. Against this backdrop, it requires local authorities to upgrade transport infrastructure to attract FDI in the first place. Logistics costs in Vietnam make up 25 per cent of GDP, even higher in the Mekong delta while they are only 10 percent in Japan.

Yasuzumi Hirotaka, Executive Director of JETRO in HCM City, said that space rental in industrial parks in Dong Nai province, and HCM City now ranges from US$60-100 per square metre. The open questions is whether to provide preferential treatment for foreign investors or just simplify customs formalities and reduce labour and transport costs. He proposed developing industrial parks at a space rental price of US$30 per square metre.

Lack of dynamism and proper investment is a stumbling block to developments in the Mekong Delta, and it requires local authorities to make greater strides in tackling this issue.


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