Rice harvest in the Mekong Delta province of An Giang (Photo: VNA) Hanoi (VNS/VNA) - Foreigninvestors looking for an investment destination in Vietnam would make a mistakeif they did not consider the Mekong Delta in southern Vietnam.
Many investors lack information about the region and areunaware that the Delta is the third-largest industrial region in the countryafter the metropolitan areas of HCM City and Hanoi.
In recent years, many provinces have greatly improved theirinvestment climate, partly due to substantial investments in transportinfrastructure, which has increased access to the region.
Travel time from HCM City to CanTho, the major hub in thedelta, is now three hours from six hours in 2010.
The Mekong Delta is the largest agricultural hub, accountingfor 40 percent of national agricultural production.
Truong Quang Hoai Nam, Vice Chairman of the Can Tho People’sCommittee, said the Mekong Delta supplies more than 90 percent of the nation’srice and 50 percent of seafood, as well as other agro-forestry-fishery exports.
Rice is a major product with an output of 25.2 milliontonnes a year. The region exports more than 6.5 million tonnes of rice everyyear.
Aquaculture output is 3.62 million tonnes a year, or 57percent of national production, while shrimp exports reached 3 billion USD andcatfish 1.7 billion USD a year.
Fruit cultivation covers an area of more than 300,000 ha,year-round production of mango, coconut, dragon fruit, mangosteen, durian andlongan.
The region has a fairly mild climate of an average of 27Celsius, with a rainy season from May to October and a dry season from Decemberto April.
In addition, the region has an abundant network of riversand canals with many islets or orchards.
Despite its advantages, the Mekong Delta has only 6 percentof the country’s FDI projects and 5 percent of all registered capital.
The region is currently calling for investment in 50projects in agriculture, with a projected total investment of 1.385 billion USD,according to VCCI Can Tho.
As of last year, FDI in the Delta had reached 13 percent ofthe country’s total FDI, a sharp rise from the 5 percent figure recorded formany years, according to the agency.
For the first nine months of the year, FDI reached 1.67billion USD, accounting for 10.2 percent of the country’s total FDI.
As of October, the region had attracted 50 agriculturalprojects with total registered capital of 209.64 million USD.
Hong Kong is the biggest investor with five projects worth 67.93million USD, followed by Taiwan with nine projects worth 41.98 million USD,Japan with five projects worth 30.02 million USD, and Australia with sevenprojects worth 19.85 million USD.
Two American projects are worth 11.96 million USD and oneIsraeli project worth 5.2 million USD.
Investment prospects
FDI in the Delta is now increasing at more than double thecountry’s national average, and is flowing toward a diverse range of projects,according to VCCI Can Tho.
The number of FDI projects in the region has increased by 73percent since 2010, driving FDI investment growth by nearly 20 percent peryear.
With a population of more than 17 million, the Delta hasmore residents than neighbouring countries like Cambodia or Laos, which canenhance purchasing power.
Moreover, labour costs in the Delta region are the lowest inthe country.
Half of the region’s 10 million workers are employed in theagricultural sector, so there is potential to source labour for new factoriesand service centres.
The area is moving from quantity to quality in bothagriculture and aquaculture, which has significantly increased demand forhigher quality input materials, including agricultural equipment, seeds,fertilisers and pesticides.
Philipp Angst, managing director of Swiss Post SolutionsVietnam Ltd Com, said “With a total workforce of more than 10 million, thedelta has large, widely untapped labour resources. Half of the workers areoccupied in the low-paying agricultural sector. This holds tremendous potentialfor labour-intensive industries.”
FDI in the region is also becoming more diverse andflexible, and is expected to drive growth across a greater range of sectors,said Vo Hung Dung, director of VCCI Can Tho.
Takimoto Koji, chief representative of the Japan ExternalTrade Organisation (JETRO), said the delta, with a location between Hong Kongand Singapore, has great potential to become a logistics centre in Asia.
“The region has not had enough foreign investment, but ithas become more attractive to Japanese companies for its fertile land, lowlabour costs, improved transport infrastructure and well-developed industrialzones,” Koji said.
Most provinces in the region are ranked highly on theVietnam Provincial Competitiveness Index (PCI), which is conducted regularly byVCCI and the US Agency for International Development (USAID).
Three provinces, Dong Thap, Long An and Kien Giang, havemanaged a top 10 ranking on the PCI.
In addition, the Government has offered incentives forforeign investors in preferred sectors and geographic areas.
The incentives include reduced corporate income tax rates,tax holidays, special enterprise zones, favourable permitting and licensingprocedures, exemption from land rent, and other policies that reduce costs andcomplexities for foreign investors.
In the next 10 years, the region’s economy is expected toachieve a high growth rate, supported by rapid improvement of transport andelectronics as well as low labour costs and an abundant food supply.
Challenges
Though it has potential, the Mekong Delta has limitedoptions for heavy industry. Much of the region is alluvial land with sandy soilnot suited for heavy industry.
Many provinces can only handle light manufacturing, andglobal warming risks might exacerbate this challenge.
Though most of the region is well-connected to HCM City andother areas in Asia, some provinces still lack strong transport links.
Besides, the port system remains weak, especially forcontainer handling and large vessels.
Another issue is the shortage of skilled labour,particularly well-trained technicians and managers, who are hard to find in theregion.
Climate risks pose another challenge. With an averageelevation of one metre above sea level, the region is susceptible to rising sealevels and other risks from global warming.
Among other disadvantages, support services in the regionare still weak.
Because the region is in the beginning stage ofindustrialisation, only a few local suppliers and service providers forindustries other than agriculture and aquaculture are operating.
High-tech agriculture
Speaking at a recent conference in Can Tho, Vo Hung Dung, Directorof VCCI Can Tho, said the delta region had great demand for high-techtechnologies for agriculture.
Dung, however, said the use of advanced technologies inagricultural production and processing to add value was still limited.
Besides, the rate of mechanisation in agriculture remainsmodest and is only 65 percent for rice harvesting.
“These factors have resulted in low productivity, valueaddition and competitiveness,” Dung said.
Every year, rice farmers in the region have incurred a lossof more than 3.2 trillion VND (143.32 million USD) during post-harvest due to alow rate of mechanisation, according to the Mekong Delta Rice ResearchInstitute.
The Delta has set a goal of modern agriculture practices,including a large volume of high-quality products, with 3.5 percent growth peryear, ensuring national food security in the short and long term.
Tu Minh Thien, head of the management authority for the HCMCity High-Tech Agriculture Area, said the region would emphasise the use ofhigh technology in businesses and cultivation areas.
In the next five years, the production value of high-techagriculture would account for 30-35 percent of total agricultural production.
Thiện said it was necessary to establish high-techagricultural zones, which would play a crucial role in sustainable development.
He also emphasised connectivity between bio-technologycentres and high-tech agricultural zones, and improving the training of humanresources in high-tech agriculture.
Policies for businesses to invest in high-tech agricultureand a high-tech agricultural forum where technical issues and market initiativescan be discussed are also needed in the Mekong Delta, Thien said.-VNA
VNA
