- Vietnam’s Dong Nai province, situated in shut proximity to Ho Chi Minh Metropolis is an funding hub, a part of Vietnam’s southern key financial area.
- Industrial zones stay the spine of Dong Nai’s funding attractiveness. In 2021, international companies invested US$1.17 billion in Dong Nai’s industrial zones. 7,537 hectares of latest industrial zones are anticipated to be added to the present 10,200 hectares.
- Dong Nai has attracted investments in digital element manufacturing, textile and garment manufacturing, and tech-intensive industrial items manufacturing.
Positioned in Vietnam’s southern key financial area in Vietnam, Dong Nai has emerged as a hub for international direct investments in supporting industries and high-tech manufacturing. The province provides environment friendly logistics networks and connectivity to Ho Chi Minh Metropolis along with a wide selection of focused funding incentives.
Quite a few elements have contributed to Dong Nai’s emergence as a hub for FDI. These embody constant financial progress, infrastructure belongings, the province’s industrial zones, and a supportive funding coverage.
In 2021, Dong Nai’s GRDP was estimated at VND 214.37 trillion (US$9.2 billion). The business and building sector grew by 3.21 % whereas companies contracted by 1.4 % and agriculture, forestry and fisheries sectors grew by 3 % as a result of results of the pandemic.
Vietnam Briefing discusses the important thing drivers of Dong Nai’s financial progress.
Dong Nai’s location and connectivity is a crucial element of its funding attractiveness. By way of transport connectivity, the province is 62 km (38 miles) away from Ho Chi Minh Metropolis’s Tan Son Nhat Worldwide Airport. 5 nationwide highways (1A, 1K, 20, 51, and 56) move by the province along with the North-South Railway. Quite a few street connectivity tasks such because the Ben Luc – Lengthy Thanh expressway, and Dau Giay – Da Lat expressway are at present below growth.
As is Lengthy Thanh Worldwide Airport which can be situated in Dong Nai however will serve and finally substitute Ho Chi Minh Metropolis’s Tan Son Nhat Worldwide Airport. As soon as accomplished this airport will significantly shorten journey time between the province and main city centres in Vietnam. By 2025, anticipated capability of the airport is 25 million passengers and 1.2 million tonnes of cargo each year.
The mission plan additionally contains tasks within the surrounding areas together with accommodations, hospitals, and rail networks. By some estimates, the airport may be part of the ranks of Singapore’s Changi Airport and Thailand’s Suvarnabhumi Airport as a significant cargo and transport hub in Southeast Asia.
The province can be properly served by waterway routes and seaports. Dong Nai hosts the Lengthy Binh Tan seaport whereas the Thi Vai river hosts the Go Gau A and B seaports. These ports deal with greater than 3.5 million tonnes of annual cargo. The upcoming Phuoc An Port in Nhon Tract district will enable ships with tonnage capability of 60,000 DWT.
FDI and industrial zones
In 2021, Dong Nai attracted the seventh-largest portion of FDI in Vietnam. Knowledge reveals that in 2021, regardless of the pandemic, international companies invested US$1.36 billion within the province, with US$1.17 billion of those investments focused at industrial zones.
At current, the province’s land use plans reveal that along with the present 10,200 hectares of business zones, 7,573 hectares of latest zones can be added within the years forward. A majority of those can be concentrated within the Lengthy Thanh, Cam My, Nhon Trach, and Trang Bom.
Demand for areas in industrial zones has been rising in 2020 and 2021. That is primarily as a result of the pandemic has elevated demand for warehouse belongings. Within the first quarter of 2022, rents within the Southern Key Financial Area rose 9 % year-on-year. In Dong Nai, common land rents are above US$125 per sq. meter, which is 60 % decrease than common rents in Ho Chi Minh Metropolis. Demand from sectors equivalent to e-commerce and logistics has resulted in occupancy ranges as excessive as 80 %.
FDI within the province is concentrated in digital element manufacturing, textile and garment manufacturing, and tech-intensive industrial items manufacturing. Corporations from South Korea, Japan, China, Singapore, and Thailand are main traders within the province.
Over the past 5 years, Dong Nai has constantly improved its rating within the Provincial Competitiveness Index (PCI). At the moment, it ranks 22 within the index, in comparison with 34 in 2016. Areas of great enchancment embody land entry, time prices, casual prices to companies, and rule of legislation.
Enhancements within the enterprise setting over the previous 5 years have supported infrastructure effectivity, funding incentive roll-outs, and industrial zone growth technique. As an illustration, time and casual prices to enterprise are lowered when connectivity is elevated, land entry in industrial zones is streamlined and companies have higher entry to funding incentive schemes.
Dong Nai can be identified for its younger, dynamic, and succesful human sources. The province has seven universities, 10 faculties, and 13 technical colleges together with round 50 vocational coaching facilities. The province has additionally invested in schooling and healthcare.
For workers working at industrial parks, the province has invested in constructing housing for staff with supermarkets, eating places, colleges, and different amenities shut by.
Dong Nai’s capability to draw investments in high-tech manufacturing and supporting industries rests on a set of funding incentives. In industries equivalent to digital elements, instruments, and equipment tools, the coverage aim is to extend the localization ratio of export merchandise.
This can enable companies to learn from preferential tariffs by quite a few free commerce agreements such because the EU-Vietnam free commerce settlement (EVFTA). The localization ratio is an important measure in figuring out product origins. Corporations equivalent to Bosch, Hyosung, Fujitsu, and Imaginative and prescient Group are invested in such industries.
To draw funding into supporting industries, Dong Nai provides quite a few incentives. These embody an preliminary four-year tax exemption adopted by a 50 % discount in taxes over the following 9 years. As well as, the federal government provides 50 % expenditure help for pilot tasks in supporting industries. As well as, traders who construct homes for staff are exempt from paying land lease and company earnings tax.
The province’s Supporting Industries Growth Program additionally provides funding schemes for workforce growth, analysis and growth, and expertise switch. These funding incentives have led to Dong Nai rising right into a hub of home materials provide.
Challenges stay, however Dong Nai’s progress trajectory stays intact
Whereas Dong Nai’s progress is optimistic challenges stay. As traders look to alternate land for funding, land rents in Dong Nai are additionally growing with most industrial zones nearing capability. Whereas the authorities have deliberate for added industrial zones, organising these zones might take time and thus current constructions could also be overburdened.
Whereas the funding local weather has considerably improved, bureaucratic hurdles and pink tape might additional add to the challenges. The province has additionally known as for added funding in high-tech manufacturing as most tasks are at present utilizing easy technological improvements for manufacturing.
As well as, many mid-level and international expats sometimes work in Ho Chi Minh Metropolis and commute to Dong Nai which leads can result in lengthy commute instances. Dong Nai would want to develop its personal cities with massive buying malls and leisure facilities that may match Ho Chi Minh Metropolis in order that workers can reside there and have an sufficient work-life stability. The upcoming Lengthy Thanh airport might encourage the event of such cities in Dong Nai.
However, given constant financial progress regardless of the pandemic, Dong Nai stays an funding hub and a dynamic locality for international traders.
Vietnam Briefing is produced by Dezan Shira & Associates. The agency assists international traders all through Asia from workplaces the world over, together with in Hanoi, Ho Chi Minh Metropolis, and Da Nang. Readers might write to email@example.com for extra help on doing enterprise in Vietnam.
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