The key to the "downward spiral" of the Mekong Delta economy.

TPO - Annual economic reports on the Mekong Delta over the years have indicated that a lack of investment and inefficiency are key causes of the "downward spiral" and are causing the region to fall further behind.

This information was presented at a seminar on "Current Situation and Solutions for Attracting Investment to the Mekong Delta," organized by the Vietnam Chamber of Commerce and Industry (VCCI) Mekong Delta branch in collaboration with the Can Tho Institute of Economics and Society on the afternoon of September 20th.

Investment shortfall

Mr. Nguyen Khanh Tung, Director of the Institute of Economics and Society of Can Tho City, stated that the Mekong Delta is identified as having a particularly important strategic role and position in terms of the country's economy, culture, society, environment, national defense, security, and foreign relations. The Mekong Delta is planned to become a key agricultural region with many flagship products, especially rice, shrimp, catfish, and fruits.

The scene at the seminar. Photo: CK.

Government Resolution 78/NQ-CP, which promulgates the action program to implement Resolution 13 of the Politburo on the development of the Mekong Delta region until 2030, with a vision to 2045, stipulates that the size of the Mekong Delta economy will increase 2-2.5 times compared to 2021; average growth from 2021-2030 will reach 6.5-7% per year; and average economic growth per capita per year will be 146 million VND.

The Mekong Delta regional planning for the period 2021-2030, with a vision to 2050, sets the goal of developing a multimodal transportation infrastructure system connecting the region and internationally. By 2030, investment will be made in the construction and upgrading of approximately 830 km of expressways, about 4,000 km of national highways, 4 airports, 13 seaports, 11 passenger port clusters, and 13 inland waterway cargo port clusters… This shows that the Mekong Delta urgently needs diversified capital sources to create momentum for rapid and sustainable development.

According to Mr. Tung, annual economic reports on the Mekong Delta over the years have identified that a lack of investment and inefficiency are key reasons leading to a downward spiral and causing the Mekong Delta to lag behind other regions in development. Although the Government and local authorities have increased investment in infrastructure for the Mekong Delta, the disbursement rate remains low and has not met the set targets. Meanwhile, attracting non-budgetary capital and foreign direct investment (FDI) remains limited.

Mr. Nguyen Khanh Tung - Director of the Institute of Economics and Social Sciences of Can Tho City - speaks at the seminar. Photo: CK.

According to the Director of the Institute of Socio-Economic Studies of Can Tho City, during the period 2014-2023, only Long An province had the best opportunity to attract these capital sources, especially non-budgetary capital; followed by Tien Giang and Kien Giang provinces, while the remaining localities faced many limitations. Can Tho, in particular, still heavily relies on allocations from the central budget (averaging 13.8% over the 10-year period), while non-budgetary capital and FDI are very limited (only reaching 7.5% and 5.2% respectively).

"The above analysis shows that the Mekong Delta is facing many difficulties and challenges if it continues to lack investment capital and exploitation capacity," Mr. Tung said.

Weaknesses

According to Mr. Nguyen Phuong Lam, Director of VCCI Mekong Delta, the total amount of government investment in the Mekong Delta has increased significantly in recent years, contributing to infrastructure investment in the region, but there are no other positive signs. Investment growth in the region during the 2015-2023 period was the lowest in the country. This is due to two weaknesses: a decrease in FDI flows and a decline in the number of businesses, both in terms of quantity and registered capital.

Total social investment also varies significantly among localities. The largest province averages nearly 35 trillion VND, while the smallest averages 12 trillion VND, indicating uneven development across localities with nearly similar conditions. Even the state investment is not uniform, leading to slower development across the region.

Mr. Nguyen Phuong Lam - Director of VCCI Mekong Delta - speaks at the seminar. Photo: CK.

Regarding FDI investment, Mr. Lam stated that the Mekong Delta has been inherently weak and underdeveloped for a long time. To date, the Mekong Delta has 2,063 FDI projects with a total capital of US$35.6 billion, accounting for 7.6% of the national total (if large projects such as wind and thermal power plants are excluded, this rate is less than 5%). The average ratio of capital to population is very low compared to other regions.

The rate of newly established businesses is also not high compared to other regions, and even lower compared to the rate of businesses leaving the market. Specifically, in 2023, the Mekong Delta region had over 15,000 newly established businesses, but also 14,800 businesses leaving the market, meaning only 190 businesses entered the market, compared to over 1,000 in previous years. Private capital contribution to total social investment in the Mekong Delta is much lower than in other regions…

"The key to development is investment capital, and currently the Mekong Delta lacks investment capital because its infrastructure hasn't been improved. Without good infrastructure, investors won't come; without investors, jobs won't be created; without jobs, labor will continue to migrate, a vicious cycle that affects the economy, society, and environment," the Director of VCCI Mekong Delta stated.

Comment (0)