HCM City (VNS/VNA) - Foreign direct investment in supporting industries isexpected to spike in the coming months as more and more foreign companiesestablish production facilities in Vietnam and seek to develop supply chainshere, experts said.

HCM City has, for instance, exceeded this year’s FDI target despite theCOVID-19 pandemic, racing to more than 591 million USD in the first 10 months,a 7 percent increase from the same period last year, according to the HCM CityExport Processing and Industrial Zones Authority (HEPZA).

The investment was focused in sectors prioritised by the city government,including supporting industries, Hua Quoc Hung, head of HEPZA, said.

Six of the 11 newly licensed foreign companies are in supporting industries, hesaid.

Japanese company Nikkiso Vietnam MFG invested an additional 3 million USD inits medical equipment factory at the Tan Thuan Export Processing Zone to expandproduction.

Other localities in the south have also licensed a number of large foreignprojects in supporting industries this year.

Binh Duong province has licensed a 20 million USD venture by Singapore’s EverGiant International Private Limited in the Bau Bang Industrial Zone and a 30million USD project by Singapore’s Sung Shin Tech Limited at the Tan Dong HiepB Industrial Park.

A majority of FDI in Dong Nai province this year has gone into supportingindustries, according to its Industrial Zones Authority.

Many foreign companies in supporting industries in the province have increasedtheir investment. Germany’s Schaffler Vietnam based in the Amata IndustrialPark pumped in another 50 million USD and the Republic of Korea’s Chang ShinVietnam at Thanh Phu Industry Park increased its investment by 87 million USD.

The Saigon Hi-Tech Park in HCM City last month signed an agreement with exportprocessing and industrial zones authorities in the South Key Economic Zone,which comprises HCM City and the provinces of Binh Duong, Dong Nai, Long An, TayNinh, and Ba Ria- Vung Tau, to develop a network for supporting small andmedium-sized supporting industry firms by promoting regional linkages.

Fifteen of 30 Japanese enterprises diversifying their supply chains toSoutheast Asia under the Japanese Government’s pandemic stimulus package haveopted to move to Vietnam, according to the Japan External Trade Organisation.

They include nine small and medium-sized enterprises and six large ones, withmost producing medical equipment, semi-conductors, mobile phones and parts, andair conditioners.

Vietnam has become a preferred alternative manufacturing base for itsfacilities and labour costs, according to a report on the industrial propertymarket released recently by Savills Vietnam.

Multinationals producing high value added products such as electronics, underincreased pressure to cut costs, would shift more and more to Vietnam and therest of Southeast Asia, the report added./.