City Spotlight: Hanoi
Nov. 20 – Lying on the right bank of the Red River in northern Vietnam, approximately 85 miles inland from the South China Sea, is the charming capital city of Hanoi. Hanoi is Vietnam’s old imperial capital and its modern center of politics and culture. The previous generation of people in Hanoi experienced a strict communist domination. While still recognized for their humility and simpler lifestyle compared to those living in the south of the country, today Hanoi people display an increasing warmth and openness in communication and work.
Hanoi was predicted to be the fastest growing city in the world in terms of GDP growth from 2008 to 2025, according to a report by PricewaterhouseCoopers. Despite the recent economic crisis, Hanoi remains one of the fastest growing cities in Vietnam, with its economy expanding 7.88 percent during the first 10 months of this year.
Economy and Investment Climate
Foreign investment into Hanoi is significant, normally ranking in the top three provinces/municipalities in the nation. One major example is the recent license acquired by Samsung Electronics to build a research and development center in Hanoi to develop high tech products in Vietnam. The R&D center is a part of Samsung’s US$1.5 billion investment plan to make Vietnam one of its largest manufacturing bases in the world.
Vietnam as a whole has experienced a resurgence of foreign direct investment inflows this year, increasing 66.5 percent during the first ten months of 2013. Hanoi has also benefitted from this rise, with FDI inflows growing nearly 300 percent during the first three quarters of 2013 compared to the prior year, reaching US$999.6 million.
In terms of imports and exports, Hanoi reached an export value of US$7.4 billion during the first three quarters of the year and imported US$17.2 billion in goods during that time. The city’s largest export was computer components and peripherals, followed by garments and textiles, agricultural products and petroleum.
In the coming decade, Hanoi will focus on developing an industrial center with strength in high technology, according to the draft plan for industrial sector development by the People’s Committee of Hanoi. The city’s high technology emphasis is supported by the fact that Hanoi is the center of education in Vietnam, with an estimated 62 percent of all scientists living and working in the city’s universities.
The city plans to spend a total of VND238.757 trillion (US$11.3 trillion) during the period 2011-2020 on developing centers for research, design, manufacturing and expanding office space for larger production companies. The target is to increase industrial production by 11.3 percent during the period 2011-2015, 12.1 percent during 2016-2020 and 10.2 percent during 2012-2030.
The city itself is also expanding. Under the “Master Plan to develop Hanoi to 2030 with a Vision Towards 2050,” approved by the Ministry of Construction, Hanoi’s future administrative heart will be based in newly developed urban areas, which will also house new academic and medical institutions.
Along with implementing these plans, Hanoi’s Department of Industry and Trade has also invested VND50 billion (US$2.37 million) to develop policies aimed at increasing export activity and boosting enterprise productivity in the city. These reforms include simplified administrative procedures and anti-corruption measures.
Thanks to these measures, the People’s Committee of Hanoi expects to see the city’s economy grow by 8.2 percent this year, greater than Vietnam’s overall growth rate of 5.14 percent.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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