China increases investment in Vietnam

11:06 | 21/02/2014 Economy

(VEN) - Some market research companies said Chinese investors were showing greater interest in Vietnam’s real estate and textile and garment markets. The latter was expected to provide more export benefits when the Trans Pacific Partnership Agreement (TPP) is agreed.

Da Nang, the center of real estate market

Together with investors from the Republic of Korea, Singapore and Japan, some Chinese investors are pouring investment in real estate market in Vietnam’s central region. According to a report from CBRE Vietnam, Hong Kong and Chinese have intended to invest in relax, convalescence and entertainment projects. Contrary to real estate markets in other regions in Hanoi or Ho Chi Minh City, that in Da Nang has showed “warmer” signals, mainly in categories of cheap plots of land or coastal areas for tourism purposes.

If in 2011, a 100 m2 plot of land having a 5.5 road in a resettlement area in the south of Cam Le Bridge was offered at VND700 million, now it has slumped to VND450 million. Meanwhile, in Nam Viet A Urban Area and Hoa Xuan Ecological Area, transaction prices have dropped to VND6-7 million a sq.m from VND9-10.5 million a sq.m in previous years. Many investors estimated that the real estate prices in Da Nang have decreased by 35-45 percent compared with more than two years ago.

New destinations in Binh Duong

If the TPP is signed, goods of Vietnamese export businesses will enjoy lower tax rates, only halves or even zero percent compared with the 17.5 percent rate imposed by the US on Vietnamese textile and garment products. This is a big advantage for Vietnam as the Chinese garment products are taxed at 37 percent in the US. Until now, over 250 foreign investors, mainly the Chinese have submitted applications for investment in weaving and drying industries in Binh Duong Province. If these enterprises have investment certificates to operate in the province, they will make impacts on material sources and prices in the market and affect the competitiveness of Vietnamese textile and garment products.

Vice Chairwoman of Vietnam Textile and Apparel Association Phan Le Diem Trang was concerned about weak support industry for the textile and garment industry. She said to benefit from the TPP, many works need to be done from competitiveness to material resources and cooperation among related sectors.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, by the end of 2013, China had undertaken 977 investment projects in Vietnam with total registered capital of US$6.991 billion. If Taiwan and Hong Kong are included, the figure amounted to US$47.499 billion, surpassing Japan - Vietnam’s largest partner in terms of registered capital with US$34.583 billion./.

By Le Khoi