Foreign Investment Needed for Infrastructure and Agriculture Projects in Vietnam

May 9, 2014 Posted by Vietnam Briefing Reading Time: 3 minutes

HANOI – Prime Minister Nguyen Tan Dung has approved a list of projects that require foreign investment. These projects will take place over the next six years, with a tentative completion date of 2020.

The list includes 127 projects in several industries and will require US$58 billion in investment to complete. The sectors that should benefit the most are infrastructure, which received the majority of the capital invested into 35 projects, and the agricultural sector, with 44 projects planned.

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One of the biggest projects is a US$8 billion refinery located within the Nam Van Phong Economic Zone. Foreign investors can contribute up to 75 percent of the capital for this particular project.

Another major infrastructure project is the Long Thanh Airport in Dong Nai Province (US$5.6 billion for Phase 1). However, this project has some obstacles to overcome due to concerns about its long-term feasibility.

In particular, there are worries that Long Thanh cannot become a transit airport since there are already two existing transit points in Thailand and Singapore. Additionally, the decision to build just one runway instead of two has raised further doubts as to whether it can reach its target of 17 million passengers per annum – a failure to reach this target would drastically devalue the investment.

Additional projects include:

The Noi Bai-Ha Long highway, US$1.8 billion;
The Bien Hoa-Vung Tau railway, US$5 billion;
The Dau Giay-Lien Khuong highway, US$3.5 billion;
The power center in Binh Dinh Province, US$4 billion; and
The North-South highway project, US$1.9 billion in the form of public-private partnerships.

In the agricultural sector, the city of Can Tho, situated in the Mekong delta, is set to attract a US$26 million investment project to build a high-tech agricultural zone in Co Do district. This zone, called the Thoi Hung High-Tech Agricultural Zone, will cover up to 500 hectares of land.

The project is expected to produce plant varieties, breed livestock under international standards and apply cutting-edge technology in processing agricultural and aquatic products. Another objective of the project is to expand the application of advanced agricultural technology in Vietnam – a network of satellite farms and businesses will be linked with the zone.

Key advantages for foreign investors in the zone include having to pay only half of the land-use fee, as well as being permitted to acquire land without charge for the purpose of constructing residential buildings for workers and public facilities.

As an increasing number of foreign businesses look to expand their operations to the country, Vietnam’s government knows that it must continue improving its infrastructure in order to increase the ease of doing business. These newly approved projects are a step in the right direction.

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