Investing in Hai Phong – A Bright Spot of FDI in Vietnam

Investing in Hai Phong – A Bright Spot of FDI in Vietnam

Phuong Pham

Hai Phong is in the Northern Key Economic Region – the most dynamic and important economic center of the North and the whole of Vietnam. Located in a strategic location, Hai Phong is the main gateway of international trade in the Northern region of Vietnam and is expected to become a regional and global logistics center. The city offers an efficient logistics network and connectivity to other provinces and countries.

Along with its convenient location, Hai Phong is the destination for foreign investment due to its supportive investment environment, consistent economic growth, developed infrastructure, and skilled and abundant labor force.

*Hai Phong Economic Profile*
	Area	1,561.76 km2
	Population	2.05 million people
	Labor force	1.11million people
	Neighboring provinces	Quang Binh, Hai Duong, Thai Binh
	Key industries	Shipbuilding, steel, cement production, chemicals, footwear, garments, textiles, and computer & electronics
	GRDP growth rate	12.28%
	Total FDI projects	896 projects
	FDI	US$ 1.5 billion (2020) \| US$ 2.8 billion (first 11 months of 2021)
	Port throughput	142.87 million tons per annum

Economic Profile

Hai Phong’s gross regional domestic product (GRDP) in the first 9 months of 2021 is estimated to increase by 12.28% over the same period last year. The forestry and fishery sector increased by 1.23%, the industry-construction sector increasedelevated by 19.9%, and the service sector raised by 3.96%.

The main driver of Hai Phong economy is the industry and construction sector (49.73%), followed by the service sector (39.51%), taxation (6.16%), and agriculture, forestry & aquaculture sector (4.6%).

Hai Phong’s Economic Structure

According to the 2020 Provincial Competitiveness Index (PCI) evaluation, Hai Phong ranked 7th out of 63 provinces in Vietnam in terms of having the most competitive business environment.

Hai Phong is popular with the young, abundant, and skilled workforce. With a population of over 2 million, Hai Phong’s labor force makes up 53.6% of the population. The city has five universities, 16 colleges, and 26 vocational schools.

The local government is working on investment environment improvement, focusing on building new industrial parks, administrative reform, and IT applications, to meet the ambition of attracting another US$3 billion of FDI in 2022.

FDI and Industrial Zones

According to the Ministry of Planning and Investment (MPI), in the first eleven months of 2021, Hai Phong recorded the third-largest portion of FDI in Vietnam, only after Long An and Ho Chi Minh City. Regardless of the pandemic, foreign firms invested US$2.8 billion in the city this year, with a total of 45 new projects. Korea, Taiwan, Japan, and Singapore are the leading nation investors in Hai Phong. LG Corporation (Korea) has the biggest FDI project in Hai Phong. This company just invested an extra US$1.4 billion in its subsidiary (LG Display Vietnam) in June 2021, increasing the total investment of the project to US$4.65 billion. Pegatron (Taiwan) – electronic component supplier for Apple, Sony, Microsoft, etc., is planning to invest US$1 billion into Hai Phong to establish a newestablish new manufacture in Deep C Industrial Park and intends to move its research and development (R&D) center from China to Vietnam.		896 FDI projects
		US$ 23.1 billion FDI
		13 Industrial Parks (73% occupied)
		15 new Industrial Parks by 2025
		US$ 96 per sqm
		Top investors: Korea, Taiwan, Japan, Singapore
Along with the aforementioned large projects, Hai Phong has various FDI projects in 2021, including Tongwei Electronics Company (An Duong Industrial Park) capitalizing an additional US$31 million or Ohsung Vina Company (Trang Due Industrial Park) raising its investment by US$19 million. Infrastructure and Connectivity Hai Phong’s location and connectivity is a critical component of its investment attractiveness. With a well-developed road, waterway, airway, railway, and seaport system, the city has a relatively high connectivity level, providing a favorable condition for trading among Hai Phong, other provinces, and the world. In terms of transport connectivity, the city is 102km away from Noi Bai International Airport and 200km away from the Chinese border. The city is connected to Hanoi by both National Highway 5 and the Hanoi – Hai Phong Expressway. The coastal highway connecting Hai Phong and the Northern coastal provinces has been approved for construction and is under development. Cat Bi International Airport upgrade project was completed in 2016, making this airport a backup for Noi Bai International Airport, serving not only domestic routes but also international routes to Bangkok (Thailand), Incheon (Korea), Kunming (China). By 2025, the expected capacity of the airport is 2 million passengers, equivalent to 800 passengers per peak hour, and 20,000 tons of cargo per annum. Hai Phong has 49 ports equipped with advanced equipment and technology. The waterway system of Hai Phong connects to most of the provinces in the Northern region and transports 40% of the total volume of goods of the Northern provinces by waterway. Seaports of Hai Phong allow ships of up to 160,000 tons, through which goods can go directly to Europe and America without having to transit through ports in the region such as Singapore and Hong Kong. As the seaport with the largest traffic volume in the North of Vietnam, Hai Phong seaport has the capacity to receive about 10 million tons per annum. [For more information on how to invest in Vietnam, contact us at [info@oneip.vn]]