Ho Chi Minh City. (Illustration photo)
In 2015, Emaar Properties from Dubai decided to co-develop a mammoth $1.42 billion urban area in Binh Quoi-Thanh Da of Ho Chi Minh City with domestic Bitexco Group. Despite having the requisite financial and technical capacity, Emaar Properties, however, had to withdraw from the project in 2017, after the compensation and land clearance was not completed in two years.
Also impacted by the sluggish compensation and land clearance, Hongkong Land, a company under Jardine Matheson Vietnam, in 2016 had to quit from a project on a golden land plot in the city centre.
Alain Cany, country chairman of Jardine Matheson Group, previously told VIR that despite the company’s tight co-operation with the city authorities, it was difficult to manage the delays caused by land clearance and compensation which also increased costs.
According to Nguyen Thanh Phong, Chairman of the Ho Chi Minh City People’s Committee, improving the investment environment and removing hurdles hitting investors like Emaar Properties and Hongkong Land is one of the most important issues for the city. “We have been pushing up administrative reforms and opened up favourable conditions for enterprises. As a result, more than 120 new enterprises are set up every day in the city,” Phong said at the investment promotion conference in the city last week.
However, he also admitted that local authorities have been struggling to keep up with their land clearance and compensation commitments.
According to Tran Vinh Tuyen, Deputy Chairman of the Ho Chi Minh City People’s Committee, the city authorities are improving land clearance and handover procedures, highlighting to VIR the in-principle commitment with the government to shorten the duration of these procedures from 420 to around 100 days.
“Many big investors have left because they could not wait out the 420 days for the processing of their projects, which brought a wide range of impacts, including investment diverting capital flows from the city and increasing the burden of bank loans,” Tuyen said.
Tuyen added that city leaders had mapped out transparent processes from the top to the grass-roots level to facilitate project implementation, especially by utilising technology.
Under this initiative, a special app is being set up to provide a detailed overview of each project and will be put into operation very soon, allowing public access to all information related to the projects, especially their progress and legal status, Tuyen said.
“This is a breakthrough in administration in Ho Chi Minh City. Via this app, all information will be transparent and accessible for all sides, especially investors who are looking for mergers and acquisitions deals,” Tuyen said.
The app would also push local authorities to publish and keep up with projects’ schedules.
“Transparency is very important because it reduces overlapping competences and irresponsibility by staff at local authorities, which make for today’s lumbering, burdensome bureaucracy,” he added.
In order to improve the investment environment, in 2018, the city set up three special management boards with the aim to better manage project implementation. These boards now manage transport projects, urban facilities, and civil and industrial projects.
According to Phong, during 2016-2020, Ho Chi Minh City needs investment of around $78 billion and the state budget can only meet 20 per cent of this.
The city is calling for investment for 210 projects with the total investment capital of VND1.18 quadrillion ($51.5 billion) in the fields of transportation, infrastructure, agriculture, trade and services, urban development, education, healthcare, sports, tourism, and entertainment (see the table below).
Transport on offers the most projects (85) with the total investment capital of VND923 trillion ($40.1 billion), including 55 projects in bridges and linking roads, seven waterway projects, eight urban railway projects, and 15 inner city road projects. In infrastructure improvement, the city is offering 36 projects with the total investment capital of VND108 trillion ($4.7 billion), including four car park projects, 28 projects on building technical infrastructure system, and four projects to prevent flood in the city.
The city offers nine trade and services projects, two agricultural projects, 29 urban development projects, 14 education projects, six healthcare projects, 15 sports and cultural projects, and 14 tourism and entertainment projects.
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Ho Chi Minh City is one of the fastest-growing cities in Vietnam, contributing 22 per cent of the country’s GDP, one third of the total industrial capacity, one-third of the total state budget, and one-fourth of the total export value of the whole country. As of the end of 2018, 101 countries and territories had investments in Ho Chi Minh City with a total of 8,112 projects, capitalised at nearly $45 billion. Last year alone, the city received $7.07 billion worth of foreign direct investment (FDI), up 7 per cent on-year, accounting for 22 per cent of the country’s total FDI figure. |
