FDI in the Delta is now increasing at more than double the country’s national average, and is flowing toward a diverse range of projects, according to VCCI Cần Thơ.   

 

The number of FDI projects in the region has increased by 73 per cent since 2010, driving FDI investment growth by nearly 20 per cent per year.

 

With a population of more than 17 million, the Delta has more residents than neighbouring countries like Cambodia or Laos, which can enhance purchasing power.

 

Moreover, labour costs in the Delta region are the lowest in the country.

 

Half of the region’s 10 million workers are employed in the agricultural sector, so there is potential to source labour for new factories and service centres.

 

The area is moving from quantity to quality in both agriculture and aquaculture, which has significantly increased demand for higher quality input materials, including agricultural equipment, seeds, fertilisers and pesticides.      

 

Philipp Angst, managing director of Swiss Post Solutions Việt Nam Ltd Com, said “With a total workforce of more than 10 million, the delta has large, widely untapped labour resources. Half of the workers are occupied in the low-paying agricultural sector. This holds tremendous potential for labour-intensive industries.”

 

FDI in the region is also becoming more diverse and flexible, and is expected to drive growth across a greater range of sectors, said Võ Hùng Dũng, director of VCCI Cần Thơ.          

 

Takimoto Koji, chief representative of the Japan External Trade Organisation (JETRO), said the delta, with a location between Hong Kong and Singapore, has great potential to become a logistics centre in Asia.

“The region has not had enough foreign investment, but it has become more attractive to Japanese companies for its fertile land, low labour costs, improved transport infrastructure and well-developed industrial zones,” Koji said. 

Most provinces in the region are ranked highly on the Việt Nam Provincial Competitiveness Index (PCI), which is conducted regularly by VCCI and the US Agency for International Development (USAID).

 

Three provinces, Đồng Tháp, Long An and Kiên Giang, have managed a top 10 ranking on the PCI.

 

In addition, the Government has offered incentives for foreign investors in preferred sectors and geographic areas.

 

The incentives include reduced corporate income tax rates, tax holidays, special enterprise zones, favourable permitting and licensing procedures, exemption from land rent, and other policies that reduce costs and complexities for foreign investors.

 

In the next 10 years, the region’s economy is expected to achieve a high growth rate, supported by rapid improvement of transport and electronics as well as low labour costs and an abundant food supply.

Challenges

 

Though it has potential, the Mekong Delta has limited options for heavy industry. Much of the region is alluvial land with sandy soil not suited for heavy industry.

 

Many provinces can only handle light manufacturing, and global warming risks might exacerbate this challenge.

 

Though most of the region is well-connected to HCM City and other areas in Asia, some provinces still lack strong transport links.

 

Besides, the port system remains weak, especially for container handling and large vessels.

 

Another issue is the shortage of skilled labour, particularly well-trained technicians and managers, who are hard to find in the region.

 

Climate risks pose another challenge. With an average elevation of one metre above sea level, the region is susceptible to rising sea levels and other risks from global warming.

 

Among other disadvantages, support services in the region are still weak.

 

Because the region is in the beginning stage of industrialisation, only a few local suppliers and service providers for industries other than agriculture and aquaculture are operating.