Land prices are soaring, Ho Chi Minh City lacks land funds for industrial development

According to experts, land in Ho Chi Minh City is excessively expensive, which is more attractive for urban development and real estate rather than industrial development. Therefore, the industrial restructuring is facing a shortage of land funds for implementation.

On the morning of March 12, the Ho Chi Minh City Institute for Development Research organized a seminar on the strategic development of the industrial sector linked to priority industrial sectors to attract strategic investors under Resolution 98.

At the seminar, Mr. Tran Du Lich, PhD, stated that the city's orientation is to shift the economic structure from labor-intensive and land-intensive industries to technology and capital-intensive ones from 2006-2010. However, the process has been slow due to various reasons.

Particularly for Ho Chi Minh City, urban development land is more attractive than industrial land. Therefore, industrial land in the city is extremely expensive, only industries with high capital utilization can afford it, otherwise, it's difficult to compete with land prices.

Additionally, Ho Chi Minh City has many industrial sectors but lacks leaders in this field. There hasn't been a development focal point to lead. These weaknesses need to be addressed in the industrial development strategy.

According to Mr. Tran Viet Ha, Deputy Head of the Management Board of Export Processing Zones and Industrial Parks of Ho Chi Minh City (Hepza), initially, the industries attracted were those that could leverage the city and Vietnam's advantages such as textiles, leather, mechanics, plastics. However, the current trend is towards high-tech industries, focusing on intellectual property such as semiconductor chips.

However, when looking back and comparing with neighboring areas, the city's industrial investment attraction has weaknesses.

Firstly, the city is the first unit in the country to lead in the development of industrial parks. The first companies attracted have now become outdated and no longer fit the city's priority sectors.

Cheap labor and abundant resources are no longer competitive advantages. Many surrounding areas have been urbanized, with industrial parks squeezed among residential areas. Therefore, how to develop towards high technology is an essential requirement in the current context. "To attract high-tech industries, the city is now facing a shortage of land," according to Mr. Ha.

Mr. Pham Van Viet, Vice Chairman of the High-Quality Vietnamese Enterprises Association, emphasized the need to establish a multi-functional fashion center, including human resource training, fashion design, technology application research, and fashion events. This is a national-scale strategic project, long-term, requiring land area up to 100 hectares.

"Recently, we have searched in all districts and counties but have not found suitable land according to the planning. According to research, perhaps Can Gio district is suitable because it does not affect the environment," Mr. Viet said.

According to Assoc. Prof. Nguyen Anh Thi, Head of the High-Tech Park Management Board, for Ho Chi Minh City, industrial development should be based on the utilization of knowledge, not just capital. Industrial development must be based on strengths such as human resources, scientific and technological research, and innovative approaches. Priority sectors should focus on biotechnology, semiconductor microelectronics, etc.

According to him, in the global value chain of design - manufacturing - packaging, Vietnam has only been able to do design and packaging, not manufacturing.

Also according to him, land cannot be a competitive strength, it needs to follow the path of knowledge-intensive development. Human resources are the most important resource, which is the strength of Ho Chi Minh City and cannot ignore the important resource which is the Vietnamese people abroad.

According to Ms. Vu Kim Hanh, Chairwoman of the High-Quality Vietnamese Enterprises Association, we are discussing the strategy for industrial development, but in the short term, we need to address the issue of protecting enterprises and production against the trend of foreign companies taking over.

Ms. Hanh expressed concern about the current situation of buying and selling companies being quite hot. "We are quite worried about the acquisition of Vietnamese companies by foreigners. We have quietly collected data and found some very illogical things," she said.

According to her, currently, some countries are buying Vietnamese companies like buying vegetables. Especially, since 2018, Thai companies have often bought Vietnamese companies.

After successful acquisitions, they have ways to bring foreign goods in, then label them as Vietnamese and sell them on the market.

According to Ms. Hanh, this is also a way to eliminate the Vietnamese industry. This is a worrying issue if viewed from the perspective of production.

"For example, they import goods from China to test on the market, then see which items sell well, suitable for the market before starting to produce those items... This is very difficult to detect," she raised the issue.

To counteract this situation, according to Ms. Hanh, some countries have laws to ensure transparency and protect their industries. For example, Japan stipulates that by 2025, any country selling goods online to Japan must declare and have an official branch in Japan, to be responsible for consumers and pay taxes, avoiding the situation of goods flooding across borders, causing damage to domestic manufacturers. Even Singapore has laws, domestic companies selling more than 5% of shares must obtain government permission.

"The fact that they enact laws shows a genuine concern to protect their manufacturing industry," Ms. Hanh affirmed.

Furthermore, Ms. Hanh highlighted the imperative need for stronger regulatory frameworks to safeguard domestic enterprises against predatory acquisitions. She emphasized that while discussions around industrial strategies are crucial, immediate action is essential to shield local businesses from being overtaken by foreign interests.

The current trend of aggressive mergers and acquisitions poses significant risks to the integrity of Vietnam's industrial landscape. Ms. Hanh expressed deep apprehension about the acquisition of Vietnamese companies by foreign entities, noting the clandestine nature of some transactions. These acquisitions often result in the influx of foreign goods, repackaged and marketed as Vietnamese products, ultimately undermining the competitiveness of domestic industries.

To address these challenges, Ms. Hanh advocated for proactive measures, citing examples from other countries where stringent regulations have been implemented to protect local industries. Japan, for instance, has enforced strict guidelines requiring foreign sellers to establish official branches within the country, ensuring accountability and tax compliance. Similarly, Singapore mandates government approval for domestic companies selling significant stakes to foreign investors, preventing undue influence on the local market.

Ms. Hanh's concerns underscore the critical importance of regulatory oversight in preserving the integrity and competitiveness of Vietnam's industrial sector. She urged policymakers to prioritize the enactment of transparent and robust laws to safeguard domestic enterprises from predatory practices, thereby fostering sustainable growth and development in the Vietnamese economy.

One pressing issue highlighted by Ms. Hanh is the need for greater transparency in corporate acquisitions. The opaque nature of some transactions often obscures the true intentions of foreign investors, raising concerns about the long-term sustainability of Vietnam's industrial base. Without clear regulatory frameworks in place, there's a risk of vital industries falling under foreign control, potentially eroding the country's economic sovereignty.

Moreover, the influx of foreign goods masquerading as Vietnamese products not only undermines the credibility of domestic brands but also poses a threat to consumer trust and safety. Counterfeit goods entering the market through deceptive practices not only harm legitimate businesses but also expose consumers to substandard products, risking their health and well-being.

Addressing these challenges requires a concerted effort from both government authorities and industry stakeholders. Strengthening regulatory oversight and enforcement mechanisms can deter illicit activities and ensure a level playing field for domestic enterprises. By implementing stringent measures to monitor and regulate mergers, acquisitions, and foreign investments, Vietnam can safeguard its industrial landscape from undue foreign influence and maintain its competitive edge in the global market.

Furthermore, fostering innovation and technology adoption is crucial for enhancing the competitiveness of Vietnam's industrial sector. Investing in research and development, promoting collaboration between academia and industry, and incentivizing technological innovation can drive productivity gains and fuel sustainable growth. By embracing emerging technologies such as artificial intelligence, automation, and advanced manufacturing processes, Vietnamese industries can enhance their efficiency, agility, and resilience in the face of evolving market dynamics.

Additionally, nurturing a skilled workforce is essential for driving industrial development and innovation. Investing in education and vocational training programs can equip workers with the knowledge and skills needed to thrive in an increasingly digital and technologically advanced economy. By prioritizing human capital development, Vietnam can unlock its full potential and position itself as a regional hub for innovation and high-value-added manufacturing.

In conclusion, while Vietnam's industrial sector faces numerous challenges, it also presents significant opportunities for growth and development. By adopting a comprehensive approach that combines robust regulatory frameworks, technological innovation, and human capital development, Vietnam can overcome current obstacles and emerge as a global leader in industrial excellence and innovation.