More funding needed for Southern Key Economic Region

HCM CITY — The Southern Key Economic Zone needs special policies to attract foreign direct investment (FDI) and improve linkages between localities to ensure sustainable development, experts have said.

The Southern Key Economic Region includes HCM City and the provinces of Bình Phước, Tây Ninh, Bình Dương, Đồng Nai, Bà Rịa-Vũng Tàu, Long An and Tiền Giang. 

The region accounts for only 8 per cent of the country’s area but plays a leading role in its economic development as it makes up 60 per cent of the Government’s revenues.

The region ranks highly in FDI attraction, accounting for 50 per cent of the capital and 60 per cent of projects of the entire country.

However, the region’s technical and social infrastructure has not met socio-economic development needs, experts said.

Dr Dư Phước Tân, head of the urban management and research division at the HCM City Institute for Development Studies, said the region needed a huge amount of funds each year to develop road infrastructure, but the funds allocated by the government were insufficient. 

“The Government’s finances are limited, so we need to look for other sources of capital,” he said.

According to statistics from the Ministry of Transport, around VNĐ300 trillion (US$12.9 billion) is needed to build road infrastructure in the region. 

Tân said that policies for financing traffic infrastructure linking the city and provinces in the region and elsewhere in the country are limited, and the Government should issue more “breakthrough policies”.   

A transport development plan in the region by 2020 envisages building more new expressways such as between Biên Hòa City in Đồng Nai Province and Vũng Tàu City in Bà Rịa-Vũng Tàu Province, between HCM City and Bình Phước Province’s Chơn Thành District passing through Bình Dương Province’s Thủ Dầu Một City, between Long An Province’s Bến Lức District and Đồng Nai’s Long Thành District, and between HCM City and the Mộc Bài international border gate in Tây Ninh Province.

Many other waterway transport projects are expected to be added to the plan.

Solutions

With a leading role in the region, HCM City has proposed many solutions to mobilise capital for socio-economic development not only for the city but also for the whole region. 

In 2010, the city government issued a decision on the establishment of the HCM City Financial Investment Company (HFIC). 

To date, HFIC has attracted investment in major infrastructure projects in the city to ensure efficient use of State capital.

HFIC has provided credit for 131 infrastructure projects in the city with a total investment of more than VNĐ14 trillion with a credit limit of VNĐ6.076 trillion in key fields such as technical infrastructure (33 per cent), health (22 per cent), education (41 per cent) and others (4 per cent). 

HFIC has also managed a number of funds from the city budget such as a power grid renovation project; science and technology development fund; information technology human resources development fund; and pollution reduction fund.

It has also given loans to social and political organisations with total disbursement value of VNĐ2.064 trillion, while ensuring debt collection in a timely manner.

Lê Thị Huỳnh Mai, deputy director of HCM City Department of Planning and Investment, said the city government should issue government bonds to mobilise investment capital. 

The department will seek funds from the private sector for infrastructure projects, she said.

She said the department would continue to seek potential investors for all sectors through public-private partnerships (PPP). 

The department will also connect investors with banks and credit institutions, and help businesses access loans and simplify administrative procedures.

The province has improved road infrastructure significantly to enhance connections with HCM City and surrounding provinces, developed concentrated industrial zones (IPs), and attracted labour resources from provinces and cities in the country. 

As of the end of 2018, the industry-service sector had accounted for 88.2 per cent of Bình Dương Province’s economic structure, while budget revenue collection had reached VNĐ50 trillion and per capita income VNĐ130.8 million per year.

The province has no poor households, according to national criteria.

Meanwhile, Đồng Nai Province has shifted to attracting FDI from big corporations, investment projects in high-tech fields, and supporting industries instead of projects using outdated technology.  

Improved infrastructure and consistent land planning have helped Đồng Nai attract investors. 

In 2018, Đồng Nai had VNĐ27 trillion of domestic investment and $1.85 billion worth of FDI. 

Every year the province organises many dialogues to solve obstacles for businesses. Đồng Nai also works with other localities with large labour resources to support enterprises to recruit workers. 

Đồng Nai has also furthered administrative reform to attract more investment in the province.

Improved infrastructure

In Bình Dương, in the 2011-15 period, total investment for road infrastructure reached more than VNĐ98 trillion, accounting for 37.3 per cent of the total capital, of which the budget capital accounted for only 24.8 per cent with the rest coming from other economic sectors.

The capital source is primarily for investment in transport infrastructure and construction of industrial parks. 

Currently, Bình Dương Province has 29 IPs with a total area of 12,7ha, of which 27 IPs are operating with leasing area of 80.8 per cent.

Phú Hữu Minh, deputy director of the province’s Department of Planning and Investment, said mobilising investment from the private sector in transport infrastructure and industrial parks had helped attract more investment. 

To date, the province has 36,379 domestic enterprises with a total registered capital of VNĐ296.989 trillion and 3,509 FDI projects with a total investment of $32.2 billion, contributing greatly to the province’s socio-economic development.

Recently, Bình Dương hosted the Horasis Asia Meeting 2018 to promote its potential with international partners, improve its management capacity, and apply advanced technologies to implement its Smart City.

The event offered local enterprises an opportunity to network with international partners who are senior founders, general directors and CEOs of leading companies from around the world. 

Bình Dương was also chosen to host the 2018 World Technopolis Association Summit in 2018.

Long An Province has attracted about 11,748 enterprises investing in the province, including 951 FDI projects.

In 2018, the province’s economic growth reached 10.36 per cent; per capita GRDP reached VNĐ61 million per year; and the poverty rate fell to less than 2.92 per cent.

The province’s total State budget revenue in 2018 reached VNĐ13.83 trillion, topping the Mekong Delta region. 

According to a Government master plan, the Southern Key Economic Region needs total capital of VNĐ6.54 quadrillion for its economic development in the 2015-20 period.

Total budget revenue of the region accounted for 41.3 per cent of the country’s total budget revenue.

In 2016, localities in the region had an economic growth rate of 1.5 times the average level of the country, contributing 60 per cent of the national budget revenue. — VNS