City Spotlight: Ho Chi Minh City
Aug. 19 – Ho Chi Minh City (HCMC, known as Saigon until 1976) is much younger than Hanoi, with many historians dating the city at just over 300 years old. A prosperous and densely-populated trade hub, the city is today considered the commercial and economic center of Vietnam. HCMC is actually a municipality (on the same governmental level as a province) and, with a population of over 7 million, it is the most populous province/municipality in Vietnam.
The inhabitants of HCMC – the “Saigonese” – are generally seen as industrious and tolerant. HCMC is in many ways a “promised land,” attracting immigrants from across Vietnam to pursue economic fortune. While the majority of people in HCMC are ethnic Vietnamese, the city is also known for cultural diversity.
Economy and Investment Climate
Ho Chi Minh City accounts for over 20 percent of Vietnam’s GDP and 25 percent of the country’s industrial production. HCMC is also the number one location for FDI inflows into Vietnam.
HCMC plays host to a series of international exhibitions, most at the Saigon Exhibition and Convention Centre in Phu My Hung New Urban Area. Earlier this year, for example, the city hosted the International Industrial Machinery Exhibition, Metal & Weld 2013 (an international exhibition for metalworking and welding technology) and the Analytica – a trade fair for scientific and laboratory equipment.
Real estate in HCMC suffers from an oversupply of luxury housing, with greater demand for low-income residency. Despite this surplus, development of luxury apartments and office space continues in HCMC as developers seek to transform the city into an international and financial hub.
Foreign direct investment into HCMC has increased in 2013, with 78 new projects approved in the first quarter of 2013. Investment in export processing zones (EPZs) and industrial zones (IZs) increased 21.4 percent over the first quarter of 2012 after attracting US$144.5 million in new investment.
Following a slump in 2011, the city’s manufacturing sector has also begun to pick up again. Exports from HCMC’s manufacturing zones have increased 15.6 percent year-on-year for a total of US$9.2 billion in goods in the first quarter of 2013.
Furthermore, the Ho Chi Minh City EPZ and IZ Authority (HEPZA) has approved the development of a special manufacturing zone for Japanese small and medium-sized engineering enterprises. The 100-hectare zone will be built near the Hiep Phuoc Industrial Park.
Other major manufacturing zones in the HCMC include the Tan Phu Trung, Hiep Phuoc and Dong Nam IZs, and the Tan Thuan EPZ – each have their own industry focus. Hiep Phuoc IZ, for example, prioritizes investment into precise engineering, information technology, chemical and pharmaceutical, food processing and production of building materials for interior decoration. Tan Phu Trung IZ, on the other hand, has set aside 300 hectares for investors in hi-tech, eco friendly and supporting industries.
Following the nation’s general push in the direction of industrial clusters, an automotive industry cluster is being developed in the Cu Chi district. In this district there are incentives to attract both foreign and domestic investors, such as rent fixed at US$55 per square meter for the park’s 50-year life span and rent waived for the first five years for small and medium-sized enterprises.
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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