The HCM City Institute for Development Studies on March 12 held a workshop on industries that HCM City prioritizes to attract investment under the spirit of Resolution No 98.

Tran Du Lich, a respected economist, said the city carried out economic restructuring, shifting from labor- and land-intensive industries to technology and capital-intensive ones, in 2006-2010. 

However, restructuring has been going slowly because of many reasons.

As land prices are overly high, land is used for urban development rather than industrial production. The high prices are affordable only for capital-intensive industries, while other manufacturing industries cannot be competitive with such high land prices.

Tran Viet Ha, deputy head of the HCM City Industrial Zone and Export Processing Zone Management Board (Hepza), said that at first Vietnam attracted investment in business fields which can exploit the advantages of localities, such as textiles and garments, footwear, mechanical engineering, and plastics manufacturing. 

But now Vietnam focuses on hi-tech fields such as microchips and semiconductors.

Meanwhile, there are shortcomings in attracting investment in HCM City compared with neighboring localities.

HCM City pioneered developing Industrial Zones (IZs) and Export Processing Zones (EPZs), so enterprises in that period have become old and no longer among the industries the city is encouraging to develop.

And, a cheap labor force and rich natural resources are no longer the competitive edge for HCM City. Many neighboring areas have been urbanized, with surrounding IZs and EPZs. How to develop and shift to hi-tech industries is the question HCM City authorities need to mull over.

But city is lacking land to develop hi-tech industries.

Pham Van Viet, deputy chair of the Vietnam Textile and Apparel Association (Vitas), suggested establishing a multi-functional fashion center, where human resources development, fashion design, research and development and fashion event organization would be carried out. This is a national long-term strategy and needs 100 hectares of land to develop.

“We have been seeking land in inner and suburban districts, but we have not found suitable land plots,” Viet said. “We think that Can Gio district may be a reasonable choice as activities in the industry won’t affect the environment."

Protecting enterprises and manufacturing

According to the head of the Hi-tech Zone Management Board, Nguyen Anh Thi, HCM City needs to develop knowledge-intensive industries, not just capital-intensive ones. 

The city needs to develop industries based on strengths in its labor force, high technology and innovation. It needs to focus on biotechnology and semiconductors.

In the global value chain which comprises design, production and packaging, Vietnam still only does design and packaging, but still cannot manufacture.

Land should not be seen as the competitive edge, and it would be better to develop knowledge-intensive fields, he said. 

Human resources are the most important factor and the great advantage of HCM City. Also, overseas Vietnamese are an important labor source.

Vu Kim Hanh, chair of the Vietnam High-Quality Goods Business Association, said she is concerned about protecting domestic enterprises and production against foreign giants’ attempts to take over businesses.

“We are concerned about the takeover of Vietnamese companies. We have quietly collected information and discovered abnormal things,” Hanh said.

She said that there are foreign companies which "buy Vietnamese businesses like buying a bunch of vegetables". After taking over Vietnamese businesses, foreign companies bring foreign goods to Vietnam, and label the goods with Vietnamese brands and sell in the market.

She believes this is a way to " kill Vietnam’s industry" and a concerning issue.

To deal with the problem, Vietnam should consider Japanese laws, she said. Any country which sell products online to Japanese consumers must make declarations and set up branches in Japan and be responsible for their products and pay taxes.

Ho Van