The pull and push of Mekong Delta investment

10:22 | 31/01/2018 Investment

(VEN) - In recent years, the Mekong Delta economy has been growing well, while the region’s infrastructure, business environment and workforce quality have improved, making the region increasingly attractive to investors. However, the Mekong Delta needs to ease bottlenecks in regional connections and infrastructure development if it is to attract major investors and better investment quality.

the pull and push of mekong delta investment

Mekong Delta infrastructure is being developed comprehensively for investment attraction

Potential and advantages

The Mekong Delta has become Vietnam’s biggest agricultural production center, accounting for more than 90 percent of the country’s rice exports and reaching an annual seafood output of 3.5-4 million tonnes. The region is also a top fruit and vegetable exporter. These developments make it increasingly attractive to domestic and foreign investors.

Per capita gross domestic product (GDP) has reached an estimated US$2,700 per year, hitting US$3,500 in the region biggest city, Can Tho. Annual export revenues have amounted to US$13-15 billion. Rice, seafood and fruit are now the region’s biggest exports, yielding more than US$1 billion each.

There are almost 200 industrial parks, including 177 industrial zones in the region for small to medium-sized enterprises. More than 53,000 businesses operate in the region, spanning varied fields of farm produce and seafood processing, urban development, transportation, trade, services and tourism. They provide jobs for more than two million people.

According to Dr. Vo Hung Dung, Director of the Vietnam Chamber of Commerce and Industry (VCCI) in Can Tho, foreign direct investment (FDI) in the Mekong Delta has prospered since 2015 when it reached US$3.65 billion, representing nine percent of the country’s total. Increased investment has changed the appearance of some urban areas in the region. In the first 11 months of 2017, 8,300 enterprises totaling VND60.3 trillion in registered capital were established in the Mekong Delta, up 14.5 and 17.3 percent from the same time in 2016, respectively. During the same period, the region attracted an additional 121 FDI projects with a total registered capital of over US$2.06 billion, taking the total to 1,421 projects and more than US$20 billion. Long An Province topped regional provinces in terms of number of projects (84 projects), while Kien Giang Province took the lead in terms of registered capital (US$1.34 billion plus).

In late October 2017, Mekong Delta provinces issued a list of 78 projects needing investment, including 33 real estate and tourism projects needing total capital of nearly VND7.8 trillion, and 45 agricultural, industrial, processing, manufacturing, and logistics infrastructure projects needing total estimated capital of VND150 trillion.

Director of the Can Tho City Department of Industry and Trade, Nguyen Minh Toai, said administrative and legal institutional reform and market entrance cost reduction have increased enterprise trust and helped businesses save time and decrease costs.

Investment attraction

the pull and push of mekong delta investment

Deputy Prime Minister Trinh Dinh Dung (third from the left, first row) visited an agricultural exhibition as part of the APEC Food Security Week in Can Tho in August 2017

Mekong Delta provinces are well suited for development of agriculture (including agricultural services), biotechnology, mechanical engineering, food processing, wind power, solar power, textile and garment, and leather and footwear industries.

While FDI in the Mekong Delta has considerably improved compared to previous years, foreign investment in the regional agriculture remains modest due to inadequate infrastructure. FDI in the region is mainly found in provinces bordering Ho Chi Minh City and some coastal provinces including Long An, Tien Giang, Kien Giang, and Ca Mau.

In terms of investment, the Mekong Delta hasn’t been too attractive as its economic growth is not commensurate with the potential, economic restructuring and science and technology application remain tardy, and industrial park infrastructure is still inconsistent. Foreign investors need to be provided with more information about investment opportunities and policies in the region.

Economists say regional connectivity development should be a strategic solution to promote FDI and agricultural and rural development. A breakthrough in policy improvement is very important for FDI attraction. Regional connectivity programs for farm produce production and sales projects must be formulated, as well as policies on development of key products, processing industries and high-tech agriculture.

Plans for infrastructure development in the Mekong Delta are booming. The Trung Luong-My Thuan and My Thuan-Can Tho highways, Vam Cong and Cao Lanh bridges, and major transport routes will be developed or upgraded. A logistics center will be developed in the Mekong Delta to facilitate cargo transport and exchanges between the region and Ho Chi Minh City and foreign countries and territories. These efforts will help make the region more attractive to foreign investors.

Thanh Thanh