A report of the Ministry of Planning and Investment (MPI) shows that Vietnam has attracted US$290 billion worth of foreign direct investment (FDI), while the disbursement has reached US$160 billion. However, FDI in food processing industry is modest with US$7.6 billion in investment capital and 521 projects.
Foreign invested projects in food processing are mostly located in big urban areas such as Hanoi, HCMC, Long An, Binh Duong and Dong Nai.
Meanwhile, Mekong Delta provinces, despite plentiful natural resources and labor force and a population of 18 million, remains unattractive in foreign investors’ eyes.
Analysts noted that most of the foreign invested projects in the food processing industry are mostly in fields where investors can take back the investment capital quickly, such as raw farm produce processing, drink manufacturing and seafood processing.
Meanwhile, a large proportion of the projects are from Asian countries including Thailand, Taiwan, Malaysia, South Korea and China, not from countries with strong food processing industries such as the US, Australia, Japan and the EU.
Most of the projects are only outsourcing, which creates jobs, but Mekong Delta provinces seek technology transfer and help for businesses so they can join global value chains.
What do investors want?
Mekong Delta provinces have been making great efforts to improve their investment environment.
Three provinces in the region are among the top 10 in the provincial competitiveness index (PCI) in the country. Most of the Mekong Delta has a PCI above average while 50 IZs in the Delta are listed as having high competitiveness.
Analysts believe that poor infrastructure, weakness in the labor force, and the lack of reasonable policies make the food processing sector less attractive to investors.
At an investment promotion conference, when the representative of a business asked about investment incentives if he set up a brewery in Hau Giang province, the provincial authorities said that agencies would contact the investor for further information.
The representative said that it would be better if the policies were made public so that businesses can easily check information.
The policies change often, which makes it difficult for businesses to draw up their plans.
Koji Takimoto from JETRO HCMC also commented that Japanese businesses were still not interested in investing in the Mekong Delta because of the lack of information. Most Japanese businesses don’t know much about the advantages of the Mekong Delta or its policies.