Ho Chi Minh City tops nation in foreign investment attraction
Ho Chi Minh City tops nation in foreign investment attraction
Ho Chi Minh City leads the country’s cities and provinces in attracting foreign investment capital in the first month of 2019, mainly through capital contribution and share acquisition deals.
According to a report by the Ministry of Planning and Investment, in January 2019, Ho Chi Minh City continued to attract the largest volume of foreign direct investment (FDI) in the country. Specifically, the city attracted $745.7 million, accounting for 39.1 per cent of the total investment.
According to a report by the municipal People’s Committee, 68 FDI projects were granted new investment registration certificates with a total investment capital of $32.72 million in January, increasing by 36 per cent in number and making up 33.7 per cent of the investment capital attracted last year. Another 11 projects increased investment capital by $4.07 million.
The city has also licensed 191 foreign investors to contribute capital to and/or buy shares worth a total of $452.71 million in the city, up 1.6 per cent in the number of cases and 3.7 per cent in investment capital.
According to Le Thanh Liem, deputy chairman of the Ho Chi Minh City People's Committee, the city attracted $7 billion in FDI capital last year, $6 billion of which came through capital contribution and share acquisition deals.
He noted that mergers and acquisitions (M&A) activities have picked up momentum in recent years. M&A capital in the city increased from $1.5 billion in 2016 to $3.68 billion in 2017. Since 1988, foreign investors have been licensed to pump over $10 billion into Ho Chi Minh City via M&A deals, accounting for 22 per cent of the total FDI in the city.
According to experts, foreign investors prefer investment through capital contribution and share acquisition as the current procedures for these deals are favourable. Accordingly, investors can register with regulatory bodies instead of applying for investment licenses when contributing capital to and/or buying shares at local companies.
However, local authorities are cautious about investment via M&A. According to a representative of the city’s Department of Planning and Investment, this form of investment may help foreign investors avoid some issues related to the state management of investment.
Foreign investors do not need to set up investment projects and apply for investment certificates if they acquire 100 per cent of a local company. When acquiring a property project from local firms, foreign investors do not need to deal with procedures of project transfer.
“Despite being an important channel to attract foreign capital, the form of investment remains a headache to regulatory bodies,” he said, noting that it needs legal documents guiding the management of this capital flow.
