prolonged and caused many losses and costs for investors. That is why in the early stages, investors preferred the form of joint ventures so that the Vietnamese side could take care of the legal procedures for the implementation and deployment of real estate projects.
However, in reality, investors choose the form of joint ventures because they cannot have their own land for projects, they have to find land with good locations, especially cleared land ... Because of the above difficulties, they seek domestic investors, those who hold land in favorable locations or investors with large urban area projects that have completed land clearance, completed investment procedures or have converted land use purposes, and then only need to invest capital, take over management rights and start investing immediately. In addition, when raising funds to implement projects, foreign investors are under great pressure to disburse from investment funds due to the commitment to disburse within a certain period of time, so choosing a local investment partner is a smart way to reduce disbursement pressure and receive incentives from local authorities.
However, since 2003, the trend of establishing 100% foreign-owned enterprises has increased, possibly due to:
After a period of operating in the investment environment in Hai Phong, foreign investors have the opportunity to understand more about the law and policies, so their concerns about administrative procedures have been reduced. On the other hand, the local government also creates incentives and encourages foreign investors, creating conditions for them to implement projects faster and more effectively, so the need to find Vietnamese partners has also decreased.
In fact, Vietnamese partners do not have enough financial capacity and management skills to participate in joint ventures. When participating in joint ventures with foreign countries, most Vietnamese parties contribute land use rights. However, at present, to attract investors in the city, land rental prices have decreased significantly, and many areas even exempt land rental fees. Therefore, foreign companies want to directly lease land and invest their own capital. In addition, businesses sometimes encounter conflicts in profit sharing between parties.
In the city area, up to December 2008, there has not been any business cooperation contract in the real estate sector because for Hai Phong this form is too new and the cooperation relationship with foreign investors is still uncertain. Besides, if
When investing in this form, investors are not directly in charge of managing the project, so they are still hesitant about this form.
2.2.2.3 By investment sector
Currently, investment projects in the real estate sector in general are divided into four main groups: new urban area construction (UAR), office-apartment construction (VP - CH), industrial park construction (IZ) and hotel - tourism (KS - DL). In which, the capital source and number of projects allocated to the above fields are as follows:
Table 2.5 FDI in Hai Phong real estate sector by investment sector as of December 2008
Field
Project Number | Investment capital (million USD) | |
Construction of new urban area | 2 | 185.4 |
Office and Store Construction | 10 | 243,279 |
Infrastructure construction of industrial parks and export processing zones | 5 | 613,176 |
Hotel and Resort Construction | 6 | 744,555 |
Total | 23 | 1786,409 |
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Source: Foreign Economic Affairs Department, Hai Phong Department of Planning and Investment
In terms of the number of projects, the office - residential construction sector leads with 10 projects, accounting for 43.47% of the number of projects, followed by the two groups of hotel - tourism and industrial park construction, accounting for 26.09% and 21.74% respectively. The office - residential construction sector includes: office construction, apartments for sale or lease, construction of commercial centers with a total investment capital of more than 243 million USD. Although the number of projects in the hotel - residential sector is less than the office - residential construction sector (accounting for 26%), it has attracted a very large amount of investment capital (744.555 million USD - leading in investment capital) about 3 times the investment capital in office - residential. Similarly, with only 6 projects accounting for 26.09% of the total number of projects, the investment capital in the industrial park construction sector surpassed the office - commercial construction sector and ranked second in terms of investment capital with 613.176 million USD. In addition, the urban area construction sector only participated in two projects accounting for 8.7% of the number of projects with a relatively small capital ratio (185.4 million USD) compared to projects in other real estate sectors.
Office and apartment construction field
Perhaps never before has the office rental market in Hai Phong become as vibrant as it is today. New buildings such as DG, ACB, Khanh Hoi have just been inaugurated and have been quickly filled. Some old buildings have seen their rental prices skyrocket.
According to a survey, in just the past year, office rental prices have increased by about 20 - 30%. Currently, the average office rental price in high-rise buildings is up to 15-20 USD/m2 / month. Investors assess that the reason the office rental market in Hai Phong has "heated up" recently is due to the increase in enterprises and foreign investment projects. Statistics from the Department of Planning and Investment of Hai Phong show that in the past 5 years, the number of newly established companies and representative offices has increased by 10%.
area, branches increased from 30 - 40% compared to before. Of which, the proportion of enterprises operating in the service, consulting and business sectors accounts for the majority. Currently, Hai Phong has 10 office buildings for rent with a total floor area of up to 18,030 m2 . Most of the offices for rent are located in the city center or key economic areas. Assessing the potential of the office rental market in Hai Phong, Mr. Richard Leech, Director of CBRE Real Estate Investment and Management Company, said that with a low vacancy rate (under 15%), combined with the current development trend of enterprises, Hai Phong is considered an attractive market for office businesses. However, not stopping at the office rental sector, investors are targeting a more potential market, which is multi-functional high-end real estate projects. Typically, large real estate projects have been and are being promoted in Hai Phong such as TD Plaza, Cozy Ville, Bac Song Cam urban area project, Our City... These projects all have a combination of luxury apartment models, commercial centers and offices for rent, ranging in scale from a few dozen to more than 1,000 hectares, with diverse types of services and utilities according to international standards.
Hotel business
Due to the development of Vietnam's economy and tourism and the appearance of low-cost airlines such as Asia Air, Jet Star, Tiger Airlines and Hong Kong Airline... in recent years, Hai Phong has attracted a large number of international visitors. Foreign tour companies and organizations often sign cooperation contracts with
large hotels according to the tourist season or festival events that attract visitors to Hai Phong. Therefore, in recent times, there have been times when visitors cannot rent a 4-star hotel room. From 1991 to present, the number of FDI projects in Hai Phong tourism real estate is 6 projects with a total investment capital of more than 744.554 million USD - leading the registered capital in the real estate sector in Hai Phong. Hotels with FDI capital in Hai Phong are all 4-star hotels, typically the Harbor View Hotel of Korea. These hotels all have high utilization efficiency with average rental prices ranging from 87 USD/day to 130 USD/day including taxes and service fees.
Currently, Hai Phong does not have any 5-star hotels, so in the near future the city hopes to attract the attention of large international hotel groups such as Hilton, Sheraton, Sofitel, InterContinential Hotels Group... to invest in building a system of 5-star hotels in the city, bringing the city's hotel system to international standards, on par with other major cities such as Hanoi, Ho Chi Minh City and meeting the needs of international tourists.
Infrastructure construction field of industrial parks and export processing zones
Up to now, Hai Phong has established 3 industrial parks with foreign investment capital: Nomura Industrial Park, Do Son Industrial Park, Dinh Vu Industrial Park, attracting 94 enterprises to lease land.
Table 2.6 List of industrial park infrastructure construction projects in Hai Phong with FDI capital in the period 1991 - 2008
Project name
Date of issue GPĐT | Investment company | Registration capital investment (USD) | Host country invest | |
Industrial Park Nomura | December 23, 1994 | Industrial Park Development Company Nomura - Hai Phong | 137.104.321 | Japan |
Dinh Industrial Park Dance | April 2, 1997 | Industrial Park Joint Stock Company Dinh Vu | 79,930,144 | America, Belgium |
Industrial Park Do Paint | June 26, 1997 | Industrial Park Joint Venture Company Do Son Hai Phong | 75,000,000 | Hong Kong |
Source: Foreign Economic Affairs Department, Hai Phong Department of Planning and Investment
In Hai Phong city, there are 3 industrial parks that were established very early and associated with the establishment of joint venture companies with foreign countries under the previous Law on Foreign Investment in Vietnam (Nomura Industrial Park - Hai Phong; Dinh Vu Industrial Park; Hai Phong Export Processing Zone - 96, now Do Son Hai Phong Industrial Park). The industrial land area in the industrial parks has been basically filled up (leased to investors to carry out investment projects). Nomura Industrial Park - Hai Phong has an area of 153 hectares, of which the industrial land area is 123 hectares, and has been filled up to now by over 90%. Dinh Vu Industrial Park has a total area of 945 hectares, of which phase I is 164 hectares (industrial land area of 133 hectares), and has been filled up to now by over 85%, the remaining area of phase I has been signed by investors to lease to prepare for investment projects. The Phase II project of Dinh Vu Industrial Park has an area of 377 hectares, with a total investment capital of 146 million USD, and has been granted an investment certificate for immediate implementation in 2008. Hai Phong Export Processing Zone - 96, now Do Son Hai Phong Industrial Park, has an area of 150 hectares, of which 97 hectares are industrial land. Currently, 35 hectares have been leased, with an occupancy rate of about 36%. This industrial park is calling for and attracting small and medium-sized projects.
Accumulated to the end of 2008, Hai Phong Industrial Zones have attracted 93 valid FDI projects, with a total registered investment capital of more than 1.2 billion USD. Including investment projects to develop industrial zone infrastructure, the total registered FDI capital reached 1.558 billion USD [18]. In particular, it has attracted an electrical equipment manufacturing project of GE Group (USA) with a capital of up to 61 million USD. FDI enterprises achieved a revenue of 650 million USD, equal to 122% compared to the same period last year and equal to 118% compared to the annual plan. The export turnover of industrial zones reached 500 million USD, reaching 111% of the annual plan, an increase of 21% compared to 2007 [18].
Regarding domestic investment, cumulatively by the end of 2008, Hai Phong's industrial parks had 17 valid DDI projects with a total registered investment capital including industrial park infrastructure investment projects of 12,735 billion VND. In 2008, 4 new projects were attracted with a total registered investment capital of 2,197 billion VND. Domestic enterprises achieved a revenue of 3,000 billion VND, equal to 61% compared to 2007 and 54% of the yearly plan.
Accumulated from the time the enterprises in the industrial parks started operating until December 2008, the total budget payment reached over 64 million USD and about 1,500 billion VND [18]. The results of implementing the investment capital of FDI projects in the industrial parks to date have reached
The rate is about 60%, projects with large investment capital are all implemented immediately after being granted investment licenses.
As of February 2009, in addition to the Dinh Vu Industrial Park infrastructure construction project being implemented in phase II, Singaporean investors are planning to promote the construction of a combined industrial park with the North Song Cam urban area with a total investment capital of up to 100.4 million USD. At the same time, Chinese investors are also implementing the initial steps of the An Duong Industrial Park construction project in phase I with a total registered capital of 175 million USD.
Despite such results, in reality, industrial parks are still not attractive to foreign investors to continue investing in building infrastructure for industrial parks - export processing zones. According to the Management Board of Hai Phong Export Processing Zones - Industrial Parks, there are seven reasons why attracting investment and developing industrial parks in Hai Phong is considered "weak". However, four of them are related to the city's mechanisms and policies. In addition, there are two subjective reasons related to the activities of this board. Meanwhile, despite its geographical advantages, the rental price of Hai Phong's infrastructure is not cheap. The reason is that the investment cost to build these infrastructures is high. For example, the investor of Nomura Industrial Park had to invest in all infrastructure (electricity, water, transportation...) according to international standards on the entire area of 153 hectares before leasing. At Dinh Vu Industrial Park, the joint venture company developing Dinh Vu Industrial Park - the investor - had to sandblast from a depth of... 9 meters to create a flat surface for the CALTEX lubricant factory.
Reasons for weaknesses in industrial park development in recent times:
- Technical infrastructure development is not yet synchronous and the city has not promptly issued preferential policies and incentives that are superior to other localities.
- Some services outside the industrial park fence are slow to be implemented, greatly affecting the implementation of projects in the industrial park. For example, Dinh Vu Industrial Park has not had electricity or clean water for 6-7 years, Do Son Industrial Park has not had clean water yet, and the electricity is not enough to handle the load.
- The city's advisory agency on investment management, mobilization and promotion has many focal points, and the responsibility of following up, detecting and attracting investors is not strong enough.
- Lack of clean land and lack of planning and construction of industrial parks with conditions to attract large-scale investment projects.
- Compensation and site clearance procedures are slow, prolonged, and lack finality, affecting the attraction of large-scale investment projects.
Reasons for the existence of the Management Board of Hai Phong Export Processing Zones and Industrial Parks:
- The coordination between the Management Board of Export Processing Zones and Industrial Zones and central and city agencies is not close, affecting the effectiveness of investment promotion and care and service for enterprises.
- The Management Board has not really followed up and grasped the situation and has not been proactive and timely in directing the resolution of problems arising from enterprises in the Industrial Park and attracting investment.
Therefore, the urgent task of the Hai Phong Industrial Park Management Board in the coming time is to quickly overcome weaknesses and shortcomings, take advantage of available natural, economic and political advantages to attract FDI projects into the Hai Phong Industrial Park sector to develop commensurate with its position.
New urban construction field
Currently, Hai Phong has two investment projects to build new urban areas with a total capital of up to 185.4 million USD, namely Our City urban area and Bac Song Cam urban area - this is a combined urban area with an industrial park of Singaporean investors.
Our City is the first 100% foreign-owned urban area construction project and also the first "green urban area " in Hai Phong because 60% of the urban area is dedicated to trees and lakes. This urban area is built on an area of 43.46 hectares, with 450,000 m2 of luxury apartments and villas. In addition, the urban area also has a 5-star hotel, a commercial center, an entertainment and sports area, a school, and a high-quality international hospital. The project is divided into 5 phases, phase 1 will be implemented from now until the end of 2009. Bank for Investment and Development of Vietnam
- Hai Phong Branch is the unit providing credit capital for the project. The total value of the credit contract is 21 million USD, the remaining capital for the project implementation is contributed by shareholders of Hiep Phong Group (Hong Kong).
Hai Phong City is also urgently preparing the necessary conditions to start the project of the North Cam River Urban and Industrial Park Complex in 2009, by the Vietnam - Singapore Urban and Industrial Park Development Joint Stock Company.
as the investor. This is the second urban and industrial park complex in the North of Vietnam (in Bac Ninh and Hai Phong) invested by this joint venture company. The completion and operation of the new industrial park and urban area of Bac Song Cam will create conditions for the expansion of Hai Phong to the North, gradually completing the city center system according to the urban space development orientation according to the general planning until 2025, turning Thuy Nguyen district into a new district with a complete and modern technical infrastructure system, contributing to the development of Hai Phong into a type 1 urban area, a national center. The construction of modern industrial park and urban infrastructure will create favorable conditions to attract secondary investors, serving the needs of production, business and housing development of residents and businesses in the area.
In the coming time, these urban areas will attract a large number of residents and foreigners to live and work there. Therefore, the city government needs to combine attracting investment for infrastructure development in the areas surrounding this project. At the same time, when investing in developing urban areas, foreign investors also need to focus on developing these projects to ensure the synchronization and convenience of the residential area, and at the same time be able to develop the retail business management sector.
2.2.3 Implementation and operation status of FDI projects in the real estate sector in Hai Phong
Year | Capital realized up to 2008 (Million) USD) | Capital realized up to Q2/2009 (Million) USD) (1) | Proportion (1)/Total investment capital investment in real estate (%) |
1991 | 3,456 | 3,456 | 65.52 |
1992 | 34,000 | 34,000 | 100 |
1993 | 0 | 0 | 0 |
1994 | 152,171 | 152,171 | 98.76 |
1995 | 0 | 0 | 0 |
1996 | 8,250 | 8,250 | 30 |
1997 | 67,966 | 67,966 | 39.88 |
1998 | 0 | 0 | 0 |
1999 | 0 | 0 | 0 |
2000 | 0 | 0 | 0 |
2001 | 0 | 0 | 0 |
2.2.3.1 Implementation status of FDI projects in the real estate sector in Hai Phong Table 2.7 Capital implemented in the real estate sector in Hai Phong as of February 2009