Representatives from Ho Chi Minh City and local businesses signed several MoUs with US enterprises on various projects in the southern economic hub within the framework of the Ho Chi Minh City Autumn Forum 2024, organized in New York in early November. These include the development of a 250 MW AI-integrated data center in the city, the establishment of a next-generation science library in the city, and enhanced investment cooperation between businesses from both sides in production and export activities.

Mr. Michael Fernandez, Senior Business Development Manager at Advanced Micro Devices, Inc. (AMD), spoke of the company’s interest in exploring AI applications and partnering with local businesses to advance AI integration in education. “AMD is committed to supporting the city’s digital transformation initiatives and fostering the adoption of modern technologies,” he said.

More players arriving

Shortly after, a delegation of over 40 German businesses visited southern Dong Nai province to explore investment opportunities in supporting industries, high-tech industries, renewable energy, infrastructure, logistics services, and environmental and waste treatment. According to Mr. Alexander Ziehe, Chairman of the German Business Association Vietnam (GBA), Dong Nai is an attractive destination for German investors due to its convenient connectivity to seaports and airports along with its developing infrastructure. “I have been very impressed with the open and professional environment that Dong Nai province is building for the foreign business community, including German enterprises,” he added.

Not only are investors from Germany and the US showing interest in Vietnam’s southern region but existing foreign enterprises are also planning to expand their investment and business activities. TT Capital from Japan has established a joint venture with two Japanese partners - Cosmos Initia and Kotetsu - to develop housing projects in southern Binh Duong province and neighboring areas. Meanwhile, Polytex Far Eastern from Taiwan (China) has announced plans to expand its investment in the province, raising its total capital to $1.54 billion.

Recent activities by foreign investors in the southern region not only contribute to its development but also underscore its significant potential. According to figures from the Ministry of Planning and Investment (MPI), localities in the southern key economic region, which includes Ho Chi Minh City and Binh Duong, Dong Nai, Ba Ria-Vung Tau, Binh Phuoc, Tay Ninh, and Long An provinces, remain among the top destinations for FDI in Vietnam. These localities have all solidified their reputation as dynamic hubs for economic growth and industrial development, making them highly appealing to international investors.

The country’s economic powerhouse, Ho Chi Minh City, ranked second nationwide in FDI attraction in the first ten months of this year, with total registered capital of $1.09 billion, or nearly 7.6 per cent of Vietnam’s total. Other key destinations include Ba Ria-Vung Tau, Binh Duong, and Dong Nai, which secured positions in the top 10 in FDI attraction, with $1.7 billion, $1.68 billion, and $1.58 billion, respectively, highlighting their growing appeal among foreign investors. Their strong performance also reflects the southern region’s strategic advantages, including well-developed infrastructure, proximity to major seaports and airports, and supportive investment policies.

MPI pointed out that among the five localities with the most industrial parks, which include Dong Nai, Binh Duong, Ho Chi Minh City, and Long An in the south, Dong Nai stands out as the leader, with 32 operational industrial parks and an occupancy rate exceeding 85 per cent, with some nearing full capacity. Thanks to its strategic location as an FDI hub, Dong Nai continues to attract robust interest from industrial real estate investors, particularly for green industrial parks tailored to the demands of the new wave of FDI.

FDI projects in southern provinces have undergone a positive shift, moving away from labor-intensive industries toward sectors such as advanced manufacturing, processing, and production, as well as energy projects, particularly renewable energy. Experts highlight that with their inherent advantages, proactive local governments, and a growing wave of investment in green industrial real estate, southern provinces are well-positioned to maintain their leadership in FDI attraction and post sustained growth in the years ahead.

Advantages on offer

One of the key advantages the southern region offers in attracting foreign investment is its strategic geographic location. For instance, Ho Chi Minh City’s position in Southeast Asia provides seamless connections to major regional and international markets. The city contributes significantly to national GDP and plays a leading role in driving economic development. These factors, coupled with its dynamic business environment, make the city a magnet for foreign investors exploring opportunities in a fast-growing market.

The region’s advantages in logistics further enhance its appeal among foreign investors. In addition to Tan Son Nhat International Airport, the first phase of Long Thanh International Airport in nearby Dong Nai province is set to be operational by 2026. This project is expected to drive growth not just in Dong Nai but across the entire southern key economic region.

With the completion of Long Thanh International Airport, southern provinces will have a fully integrated transportation network, including road, air, rail, and inland waterway routes, improving its ability to attract foreign investment. “Vietnam, particularly its southern region, offers numerous advantages for investors,” said Mr. Jake Siewert, CEO and Head of Global Public Policy and Political Risk at Warburg Pincus in the US. “The country has a skilled workforce trained at relatively lower cost compared to other nations. Its logistics infrastructure and connectivity for global trade are also quite strong, making it an attractive option for investors.”

The southern region also offers investors significant potential for development across various sectors. Commenting on the region’s potential in general and Long An province’s in particular, Mr. Christophe Bellanger, Vice President in charge of international affairs at the Paris - Île-de-France Regional Chamber of Commerce and Industry, emphasized that the province has great potential for collaboration in areas such as technology, green energy, and renewable energy. “We will continue to support Long An in implementing and promoting its potential to attract the interest of French businesses, enabling them to invest in the province or export its products to France and the EU in general, thus strengthening the cooperative relationship between European partners and Long An.”

However, many businesses have reported facing challenges during the investment process, including complex administrative procedures, land issues, and inadequate transportation infrastructure, particularly in regard to ports and industrial parks. Such obstacles result in delays in transporting goods and raw materials and present difficulties in obtaining work permits for experts and senior management personnel.

Experts suggest that local authorities in the southern region need to simplify administrative procedures, offer tax and financial incentives, and improve infrastructure and labor policies to enhance the region’s attractiveness. Cities and provinces should also proactively create more favorable conditions to attract and retain investors, including accelerating administrative reforms, developing green and sustainable industrial park infrastructure, and ensuring a high-quality workforce is available. These measures will help the southern region maintain its position as an attractive destination and a reliable partner, providing tangible value to investors while contributing to local economic development.