FOREIGN TRADE UNIVERSITY
FACULTY OF INTERNATIONAL ECONOMICS
---------***--------
GRADUATE THESIS
Major: International Economics
SUGGESTIONS TO ATTRACT MORE FOREIGN
DIRECT INVESTMENT TO INDUSTRIAL SECTOR
IN HUNG YEN PROVINCE
Name of the Student: Duong Viet Anh
Student ID: 1914450503
Class: English 02 – High quality class
K58 International Economics
Supervisor: MSc Nguyen Minh Thuy
Hanoi, December 2022
DECLARATION
I herewith formally declare that I myself have written the submitted Graduate Thesis
independently. I did not use any outside support except for the quoted literature and
other sources mentioned at the References of this Thesis.
Hanoi, ...../...../.....
Student’s Signature
ii
ACKNOWLEDGEMENTS
This would be a great opportunity to express my deep gratitude toward my
supervisor MSc Nguyen Minh Thuy. In implementing the theme, MSc Nguyen Minh
Thuy has provided the author with attentive and devoted direction. The author wishes
to express her most heartfelt gratitude. In addition, the author would like to express
gratitude to Department of Planning and Investment of Hung Yen province and all
the lecturers at Foreign Trade University in Hanoi for providing an incredibly useful
knowledge foundation that allowed the author to accomplish this research.
Due to limits in knowledge, experience, and materials, it is inevitable that errors
and omissions will occur despite the author’s best efforts to research and write the
thesis. The author hopes to receive forgiveness for the thesis’s flaws and welcomes
comments from instructors and readers on how to make it more comprehensive.
iii
ABBREVIATIONS
FDI
Foreign Direct Investment
OECD
Organization for Economic
Cooperation and Development
BCC
Business Cooperation Contract
BTO
Build Transfer Operate Contract
BT
Build Transfer Contract
GDP
Gross Domestic Product
IMF
International Monetary Fund
WTO
World Trade Organization
iv
TABLE OF CONTENT
DECLARATION .............................................................................................................................. ii
ACKNOWLEDGEMENTS............................................................................................................ iii
ABBREVIATIONS ..........................................................................................................................iv
LIST OF CHARACTERS ............................................................................................................. vii
LIST OF TABLES ........................................................................................................................ viii
INTRODUCTION ............................................................................................................................. 1
ii) Aims and Objectives of the research....................................................................................... 3
iii) Scope of research ................................................................................................................. 4
iv) Research methods .................................................................................................................... 4
v) Structure of the thematic ..................................................................................................... 6
CHAPTER 1 ATTRACTING FOREIGN DIRECT INVESTMENT: A THEORETICAL AND
PRACTICAL BASIS ....................................................................................................................... 9
1.1 Theoretical basis ...................................................................................................................... 9
1.1.1 The basics of foreign direct investment .......................................................................... 9
1.1.2 Factors affecting FDI capital attraction ....................................................................... 13
1.2. Practical basis ....................................................................................................................... 14
The situation of attracting FDI in Vietnam in recent years .................................................... 14
CHAPTER 2 STATUS OF ATTRACTING FOREIGN DIRECT INVESTMENT TO HUNG
YEN PROVINCE’S INDUSTRY FIELD ..................................................................................... 18
2.1 Description of the province Hung Yen ................................................................................ 18
2.1.1 Location geographically .................................................................................................. 18
2.1.2 Conditions climatic and meteorological ......................................................................... 19
2.1.3 Aspects of a society’s socioeconomic standing ............................................................... 19
2.1.4 Hung Yen Province’s Industrialization .......................................................................... 23
2.2 Hung Yen Province’s Industrial Sector and the problem of enticing Foreign Direct
Investment.................................................................................................................................... 24
2.2.1 Conditions for attracting Foreign Direct Investment to Hung Yen ................................. 24
2.3 Influences on attracting Foreign Direct Investment capital to industrial sector of Hung
Yen in 5 Years, from 2016 to 2020 ............................................................................................. 35
2.3.1 Regarding the quantity of projects.................................................................................. 35
2.3.2 Regarding the investment form....................................................................................... 37
2.3.3 Regarding the investment companion ............................................................................ 38
2.3.4 Foreign Direct Investment capital investment by industry ............................................ 40
2.4 Attracting Foreign Direct Investment into industrial sector in Hung Yen province:
accomplishments, limitations, and causes of limitations ......................................................... 42
v
CHAPTER 3 HUNG YEN PROVINCE INDUSTRIAL SECTOR ORIENTATIONS AND
SOLUTIONS TO ENTICE FOREIGN DIRECT INVESTMENT ............................................ 52
3.1 Hung Yen province’s industry development aimpointments and directions ............... 52
3.1.1 Industrial development aims ........................................................................................... 52
3.1.2 Some provinces’ experience in drawing Foreign Direct Investment ............................ 52
3.1.3 Attracting Foreign Direct Investment: What Hung Yen Can Learn? .......................... 56
3.1.4 Industrial development directions................................................................................... 58
3.2 Hung Yen province innovations to entice Foreign Direct Investment in the Industrial
Sector ............................................................................................................................................ 60
3.2.1 Methods for Improving Infrastructure ........................................................................... 60
3.2.2 Policy and mechanism improvements ............................................................................ 61
3.2.3 Reforms to administrative processes............................................................................... 62
3.2.4 Methods for bettering human resource standards ......................................................... 63
3.2.5 Solutions for gaining access to land ............................................................................... 64
3.2.6 Methods to increase investment activity ......................................................................... 66
3.2.7 Methods for fostering the growth of ancillary businesses ............................................. 67
CONCLUSION................................................................................................................................ 69
vi
LIST OF CHARACTERS
Figure 1.1. FDI inflows into Vietnam in the period 2006 – 2021 ............................................... 16
Figure 3.1. Structure of FDI projects in industrial zones of the province ................................ 37
vii
LIST OF TABLES
Table 2.1. Gross product in the area at current prices by economic sector.............................. 21
Table 3.1. Summary of investment projects by industrial zones ............................................... 26
Table 3.2. Foreign direct investment from 1995-2020 ................................................................ 36
Table 3.3. FDI structure by form of investment in production and business activities ........... 37
Table 3.4. FDI capital in the industrial sector ....................................................................... 39
Table 3.5 FDI capital by economic sector.............................................................................. 40
Table 3.6. Number of FDI projects by sector ........................................................................ 41
Table 3.7. Investment capital at current prices by economic sector ...................................... 42
Table 3.8. Current labor by economic sector ........................................................................ 44
viii
SUMMARY OF THESIS
Research: Suggestions to attract more Foreign Direct Investment to Industrial sector
in Hung Yen Province
Student: Duong Viet Anh
ID: 1914450503
Intake: 58
Class: English 02 High quality class
Supervisor: MSc Nguyen Minh Thuy
Department/ Faculty: International Economics
Keyword: Foreign Direct Investment, industrial sector
Contents of the Summary:
Foreign Direct Investment (FDI) in Vietnam’s industrial sector has been on
the rise in recent years, fostering an environment conducive to the transfer of
knowledge and expanding the country’s access to a wider variety of raw materials.
As a result of the foregoing, the thesis “Suggestions to attract more Foreign Direct
Investment to Industrial sector in Hung Yen Province” is of both theoretical and
practical importance in that it can help bring about the necessary influx of funds to
finance the expansion of the province’s manufacturing sector and bring about the
socioeconomic development goals set out in the province’s long-term master plan.
The research compile documents and secondary data for theme studies from 2016 to
2020. In order to clarify Hung Yen province’s ability to attract FDI capital, the
research applied five methods to have a clear overview The Hung Yen province’s
ability to attract FDI capital which were descriptive statistics method, compare and
contrast method, data analysis and processing methods, descriptive statistics method
and synthetic method. When it comes to the content and main findings of the thesis,
this research analyzes the factors that affect Hung Yen’s potential to entice FDI in its
manufacturing sector. Furthermore, this research is helpful for presenting an overall
picture of the success or failure of Hung Yen province’s industrial sector in drawing
FDI during the last several years.
ix
INTRODUCTION
Foreign Direct Investment (FDI) in Vietnam’s industrial sector has been on
the rise in recent years, fostering an environment conducive to the transfer of
knowledge and expanding the country’s access to a wider variety of raw materials.
Growing FDI operations boost industrial growth by generating employment, boosting
value-added content, opening up new markets, and increasing exports.
Red River Delta province Hung Yen is part of the North Key Economic Zone.
In Hung Yen province, the industrial sector plays a crucial role in the province’s
socioeconomic development strategy, contributing to growth, increasing GDP and
income, generating revenue for the state budget, and providing employment for the
local labor force because of the province’s advantageous location, land, and human
potential. Consolidating factories into larger “industrial clusters” is a key part of the
government’s plan for economic growth. The transition from agriculture to industry
in the province’s economy is being sped up with the help of craft communities.
Leader board of the Party Committee as well as the citizens of Hung Yen province
have prioritized attracting foreign investment to industrial growth as part of their
efforts to transform the province into an industrial hub by the year 2030.
Hung Yen province has established 13 industry zones (IZs) in recent years,
covering a total area of 3,685 hectares, all of which are included in the Prime
Minister’s authorized plan for the future development of IZs in the province until the
year 2020. Currently, Garment, Minh Duc, Pho Noi and Pho Noi A, Thang Long II
Textile and Garment Industrial Zones have been all up and running, providing the
necessary technological infrastructure to accept investment projects.
Still, the province’s industrial growth in particular and its socioeconomic
development in general are hampered by flaws in the recruitment and utilization of
FDI capital in the industrial sector. Mainly, this is due to insufficient FDI capital
mobilization and inefficient use. Increasing the province’s ability to attract and make
good use of Foreign Direct Investment (FDI) capital, particularly FDI capital for the
industrial sector, will be a necessary step in the near future for the province to achieve
its socio-economic development plan.
1
The thesis “Suggestions to attract more Foreign Direct Investment to
Industrial sector in Hung Yen Province” has theoretical and practical value in that it
can help to meet the needs of investment capital for the development of the industrial
sector for the reasons stated above, thereby assisting the province in achieving its
strategic objectives for the province’s socioeconomic growth.
i) Rationale of the research
Foreign Direct Investment (FDI) has steadily expanded in Vietnam’s industry
over the past several years, fostering the transfer of technology and diversifying the
sources of raw materials used in manufacturing. The growth of FDI operations has
promoted the development of the sector by fostering the creation of jobs for
employees, enhancing value-added content, opening up new markets, and increasing
exports.
Hung Yen is located in the Northern Key Economic Region, the province is in
the Red River Delta. The industrial sector plays a pivotal role in the socio-economic
development strategy and also contributes to development. Besides, Hung Yen
province has several benefits in terms of its location, land, and people capacity, all of
which may be used to raise the country’s GDP and income, increase state budget
revenue, and create jobs for locals. The province’s aim to transform its economy from
agricultural to manufacturing relies heavily on the development of concentrated
industrial zones, industrial clusters, and Craft villages. The Party Committee, leader
board, and people of Hung Yen province have prioritized attracting foreign
investment to industrial growth as part of their efforts to transform the province into
an industrial hub by 2030.
Hung Yen province has developed 13 industrial zones (IZs) covering 3,685
hectares in recent years, all of which have been given the green light by the Prime
Minister as part of the national strategy for the expansion of industrial zones by the
year 2020. Currently, Thang Long II textile, Pho Noi A, Minh Duc, Garment
industrial zones and Pho Noi are all up and running, providing the necessary
technological infrastructure to accept new investment projects.
2
However, there are still gaps in the province’s capacity to attract and deploy
Foreign Direct Investment (FDI) capital in its industrial sector, which impedes
industrial and societal growth. The fundamental cause is the inefficiency and
difficulty of utilizing FDI funds. Finding ways to boost the attraction and efficient
use of FDI capital, especially FDI capital for the industrial sector, will be a pressing
need in the near future if the province is to carry out its strategy for social and
economic growth.
As a result of the foregoing, the thesis “Suggestions to attract more Foreign
Direct Investment to Industrial sector in Hung Yen Province” is of both theoretical
and practical importance in that it can help bring about the necessary influx of funds
to finance the expansion of the province’s manufacturing sector and bring about the
socioeconomic development goals set out in the province’s long-term master plan.
ii) Aims and Objectives of the research
 General aims of research
Offering suggestions for luring foreign direct investment (FDI) can help the
province’s industrial sector grow and prosper, therefore bringing the province closer
to its long-term strategic goals for social and economic development.
 Detailed aims of research
Brief introduction to the concepts and difficulties involved in luring foreign direct
investment to the province’s manufacturing sector; Proposing solutions to attract FDI
capital to the industrial sector in Hung Yen province in the coming years; analyzing
the state of attracting FDI capital to the province’s industrial sector from 2016-2020;
The objectives of this research are to (1) examine the forces at work in luring foreign
direct investment (FDI) and (2) determine the root causes of the province of Hung
Yen’s industrial sector’s successes and failures in this area, before offering
recommendations for improving its ability for the years ahead.
Subject of research
3
Attracting Foreign Direct Investment (FDI) to a province’s manufacturing
sector is the focus of this research’s research.
iii) Scope of research
 Scope of content
The research includes the idea, evaluation criteria, and variables influencing
FDI capital attraction activities for the industrial sector of a province, as well as the
role of FDI in the sector.
The research also examines the state’s macro management from project
planning to implementation, as well as the experience of some neighboring provinces
in attracting FDI capital, in order to provide a foundation for the development of
recommendations for how to best entice FDI into the industrial sector in Hung Yen.
 Scope of research subject
The province of Hung Yen is the source of the materials and data utilized in research
studies. Capital sources in the province that are not included in this discussion include
government-managed FDI capital, FDI capital through indirect foreign investment,
and any other types of capital.
 Scope of research period
From 2016 through 2020, the research compile documents and secondary data
for theme studies. The period from 2022 to 2025 is covered, and solutions are given
for drawing FDI funds.
iv) Research methods
 Data analysis and processing methods
 Descriptive statistics method
The current state of luring and deploying FDI projects in the province’s industrial
sector between 2016 and 2020 is shown via the use of descriptive data.
 Synthetic analysis method
4
Companies’ investment situations are analyzed using a synthetic analytic
approach that takes into account variables such as investment kind, economic sector,
and investment partners. Then, you should assess the average size of an FDI project,
the FDI structure, the FDI sector’s output value, and its export turnover, as well as
the extent and speed with which the province attracts FDI capital into its industrial
sector; investment (FDI) sector budget and the economic structure of the province to
identify the major strategic variables on which to base decisions about which partners
to seek for the province’s long-term growth.
 Compare and contrast methods
Methods of comparison and contrast are used to assess the rate of FDI growth
and to investigate the scope of FDI across various economic domains and sectors.
 System of indicators for analyzing and processing data
Total number of all Foreign Direct Investment projects in the province; Quantity
of nations authorized to make province-based investments; The province’s total
investment capital as a percentage of FDI project registrations; Total investment
capital realized as a percentage of total registered capital;
When compared to the total number of licensed projects and the registered
investment capital of the projects, the number of projects that have been placed into
production and business is shown.
Number of people employed by FDI projects; Impact of FDI on local economic
restructuring;
Value of FDI projects’ industrial sectors as a percentage of the value of the
industrial sectors of all firms in the province
5
v) Structure of the thematic
There are three sections to this report to clarify the objects mentioned above
CHAPTER 1: ATTRACTING FOREIGN DIRECT INVESTMENT: A
THEORETICAL AND PRACTICAL BASIS
CHAPTER
2:
STATUS
OF
ATTRACTING
FOREIGN
DIRECT
INVESTMENT TO HUNG YEN PROVINCE’S INDUSTRY FIELD
CHAPTER 3: ORIENTATIONS AND SOLUTIONS FOR ATTRACTION OF
FOREIGN DIRECT INVESTMENT TO INDUSTRIAL SECTOR OF HUNG YEN
PROVINCE
6
LITERATURE REVIEW
For a research review of related literature is an aspect to understand about the
studies that have already been conducted in the same field. The word “review” itself
gives a clear meaning of it. It means revision or “look over” or “to refer back on”. It
is all about finding, studying and assessing the reports and findings of relevant
researches, studying publishes article research abstracts as well as reports of casual
observation and opinion that are related to the individuals’ planned research project.
The research, on the issues related to how Increase Hung Yen’s ability to attract
and make good use of Foreign Direct Investment (FDI) capital, particularly FDI
capital for the industrial sector, will be a necessary step in the near future for the
province to achieve its socio-economic development plan. In order to clarify Hung
Yen province’s ability to attract FDI capital, the research applied five methods to
have a clear overview The Hung Yen province’s ability to attract FDI capital which
were descriptive statistics method, compare and contrast method, data analysis and
processing methods, descriptive statistics method and synthetic method. There has
been a research about the topic of concerned. When it comes to the content and main
findings of the thesis, that research analyzes the factors that affect Hung Yen’s
potential to entice FDI in its manufacturing sector, they have a positive relationship.
Long. N. N. (2022) argued that this has contributed greatly to the literature of study
examining determinants of attracting more Foreign Direct Investment to industrial
sector in Hung Yen province.
The research aims to make recommendations for attracting Foreign Direct
Investment (FDI) can assist the province's industrial sector in growing and
prospering, bringing the province closer to its long-term strategic goals for social and
economic development.
The research assess the situation of attracting FDI capital to the province's
industrial sector between 2016 and 2020; The goals of this research are to (1) evaluate
the factors at work in attracting foreign direct investment (FDI) and (2) identify the
core reasons of the province of Hung Yen's industrial sector's achievements and
7
failures in this area before making recommendations to improve its potential in the
future.
8
CHAPTER 1
ATTRACTING FOREIGN DIRECT INVESTMENT: A
THEORETICAL AND PRACTICAL BASIS
1.1 Theoretical basis
1.1.1 The basics of foreign direct investment
1.1.1.1 The concept of FDI
To begin with, when a company from another country invests in a company in
the country where it is located, it is said to be making a “direct investment,” as defined
by the International Monetary Fund (IMF). The minimum percentage of FDI
company stock required for this kind of ownership is 10%. When an investor from
one nation (the host country) acquires an asset and the right to administer the asset in
another country, this is considered Foreign Direct Investment (FDI) by the World
Trade Organization (WTO) (the host country). What sets FDI apart from other
financial instruments is the investor’s right to oversee the asset in question. Usually,
when investors engage in FDI, they insist on running their overseas operations in their
own name. For simplicity’s sake, let’s call the investors the “parent company” and
the assets the “subsidiary” or “branch of the firm” in this scenario.
Foreign Direct Investment (FDI) indicates the long-term objective advantages
that an economic organization in one nation receives through an economic facility in
another economy, as defined by the Organization for Economic Cooperation and
Development (OECD). In the case of direct investment, the initial capital transaction
and any future capital transactions between two closely related firms are considered
to be part of the same transaction.
Vietnamese law does not contain any provisions pertaining to FDI or other
forms of foreign direct investment. Given the context, this action might be seen as a
domestic or international entity making a financial contribution in order to make an
investment in Vietnam. In accordance with the provisions of the Vietnamese Law on
Investment, foreign investors must maintain a certain capital investment ratio
(National Assembly, 2020).
9
Foreign Direct Investment (FDI) is an international investment type that permits
foreign investors to take part in the operating investment operations of a host country.
In order to engage in investing activities, investors must first have access to sufficient
investment cash. Investors’ capital, on the other hand, is tied to the privilege of using
investment assets.
Based on the foregoing, Foreign Direct Investment (FDI) can be measured by
the amount of money or other assets that are brought into a nation (the receiving
country) by foreign companies or people for the purpose of conducting business there
in compliance with the rules of the host country. advantages from the country that is
the recipient. According to their equity stake, investors are entitled to participate in
the company’s management. Capital investment encompasses not only the original
investment capital in the form of legal capital but also, during operation, the loan used
by the firm to deploy or develop the project and, most importantly, capital invested
from profits.
1.1.1.2. Characteristics of FDI
First and foremost, international investors must follow the laws of the country
in which they are investing. If the foreign investor does not meet the standards, the
host nation may cease operations in accordance with the terms of the agreement
between the two countries. Foreign Direct Investment (FDI) is an investment activity
undertaken only for the purpose of generating profits and is thus unaffected by any
political relations that may exist between the investor’s home nation and the host
country.
Second, FDI is any investment backed by funds from a foreign government,
company, or individual. Foreign investors run their own operations, make their own
decisions, and employ their own resources in the fields of production and commerce.
Effectiveness of manufacturing and commercial operations is entirely on the
shoulders of foreign investors.
Third, when there are dangers in a project, a foreign investor’s management
rights, earnings, and obligations will be proportional to the amount of capital he
contributed to the venture.
10
Fourth, FDI often goes into industries with strong profit margins and extended
operational horizons. In order to tap into untapped markets or take advantage of the
host country’s cheaper labor, these companies frequently invest in previously
untapped sectors.
Fifthly, there is bidirectionality in foreign direct investment, meaning that a
country can both attract direct investment from outside and make outward
investments to other nations. Foreign Direct Investment (FDI) funds can flow either
from developing to industrialized nations or vice versa.
1.1.1.3 Forms of FDI
(i) Business Cooperation Contract
A Business Cooperation Contract (BCC contract) is an agreement between
company partners to work together, share resources, and sell their wares (National
Assembly, 2020). To set up an economic organization, you don’t need this form,
which contains the following features:
This does not result in the formation of a separate legal body. The basic
material of this template is based on the business cooperation contract that reflects
the obligations and interests of the parties.
The parties and the business licensing agency must agree on the length of the
contract based on the firm’s goals and objectives.
Representatives of the appropriate parties should sign the contract. The parties’
separate legal identities are preserved during the course of their commercial
relationship.
(ii) Joint venture enterprise
Joint venture companies are businesses in Vietnam that are founded by two or
more parties working together, as defined by Clause 2, Article 2 of the Law on
Foreign Direct Investment in Vietnam. Joint venture agreements between the
Vietnamese government and foreign governments, joint venture agreements between
foreign-invested firms and Vietnamese enterprises, and joint venture agreements
11
between a joint venture enterprise and a foreign investor all constitute the
fundamental structure. The most fundamental type is a pact or agreement between the
Vietnamese government and another country’s government that authorizes a joint
venture between the Vietnamese government and a foreign investor, or between a
foreign investor and a Vietnamese company that is a party to the joint venture.
Specifically, the from exhibits the following traits:
Creating a new that uses double-entry bookkeeping and has a limited liability
corporation structure. Each side is on the hook for its own financial resources.
Starting a new firm as a limited liability corporation that employs double-entry
accounting. Each party is responsible for its own costs.
The Board of Directors is the highest governing body of a joint venture, and its
members are nominated by each partner in proportion to their financial commitment.
Important business decisions can be made by the Board of Directors according to the
notion of group agreement.
Each participant in a joint venture will receive a share of the profits and losses
proportional to their capital investment, unless otherwise agreed upon by the
participants.
The duration of the venture cannot be longer than 50 years, although in
exceptional circumstances, it may be extended by an additional 20 years.
(iii) 100% foreign owned enterprise
In order to carry out commercial operations in Vietnam, foreign investors often
form new businesses or buy existing Vietnamese businesses through capital
contributions, share purchases, mergers, or outright acquisitions of 100% of the
business’s capital.
(v) Build Transfer Operate (BTO) Contract
A Build Tranfer Operate Contract is an investment agreement between a
governmental agency with the authority to do so and a foreign investor for the purpose
of building public works. The investors will hand over the finished project to the host
12
country once building is complete. For investors to recoup their funds and make a
decent return, the government of the host nation will cede control of the project for a
set amount of time.
(vi) Build - Transfer (BT) Contract
When it comes to infrastructure development, a Build Transfer contract is an
investment agreement between a state body having the power to do so and investors,
with the latter handing over ownership to the former once construction is complete.
The government creates favorable conditions for the development of another project
so that the investors may recoup their initial capital and any later gains or get
payments under the Build Transfer contract.
1.1.2 Factors affecting FDI capital attraction
1.1.2.1 Socio-cultural features
To name only a few examples of sociocultural factors: language, religion,
conventions, educational level, and preferences.... Indirectly or directly, these
variables impact international investment. When two people speak different
languages, it’s tough to communicate, which can lead to misunderstandings and poor
business outcomes. Among the many elements that influence the actions of
multinational corporations is the standard of education available to its employees.
Use of human resources, especially high-quality human resources, will be more
expensive and less efficient if education levels are low.
1.1.2.2 Features of natural conditions, geographical location
Examples of natural conditions include geographical location, weather patterns,
and the availability of natural resources. That an investment’s capital is profitable and
beneficial depends largely on these factors. Investment operations will benefit from
easy access to cheap and plentiful inputs as a result of these favorable conditions.
Locations convenient to public transportation are highly sought after by investors.
Advantages like a central location for domestic or international trade, an abundance
of natural resources, and considerable reserves all increase the return on investment.
13
Access to a stable supply of raw materials and an adequate labor force are major
issues for investors in the manufacturing industry.
1.1.2.3 Mechanisms and policies to attract investment
When investing abroad, foreign nationals must comply with the local legal
system and government rules. Putting investing activities within the bounds set by
the law and guided by policy. Therefore, the legal and policy environment influences
the choices of foreign investors. A country with a coherent, clear, and stable legal
policy system will be more attractive to foreign investors. To entice FDI,
governments often employ fiscal policy to create a more favorable environment for
investment.
1.1.2.4 Production development level
The economy serves society by producing commodities and services that
people want and need. The level of development of productive forces and relations
of production is represented by economic activities as measured by the increase of
their constituents and the products achieved. The level of industrialization in the
country of investment has a significant impact on the profitability of Foreign Direct
Investment (labor level , production technology, etc.).
1.1.2.5 Policy, law and fairness
The relationship between politics and the economy is mutually influential;
policy decisions have consequences for and are influenced by the economy, and vice
versa. The economic impact might be beneficial or detrimental. Even if direct
investment is essential to economic progress, it won’t work until the political system
is secure. Foreign direct investment (FDI) is lower in politically unstable areas
because of the government’s inability or limited willingness to guarantee its earlier
pledges to foreign investors due to the consequent irregularities in economic progress.
1.2. Practical basis
The situation of attracting FDI in Vietnam in recent years
14
Since Vietnam joined the World Trade Organization in 2007, the country has
seen a dramatic increase in FDI, with three times as much coming in in 2008
compared to the previous year. As of 2016, the country had received a total of $64
billion in foreign direct investment (FDI).
Foreign direct investment (FDI) into Vietnam fell sharply between 2009 and
2012 as a result of the global financial crisis of 2008 and the European public debt
crisis of 2010, but has since recovered and fluctuated rather regularly between 2013
and 2019. As a result of the worldwide economic downturn caused by the COVID19 pandemic in 2020, FDI into Southeast Asian countries, and Vietnam in particular,
fell precipitously. Capital inflows to Vietnam in 2020 reached 21 billion dollars,
down 6.7% from 2019, with an adjusted registered capital of 14.6 million USD and
newly registered capital of 6.4% billion USD. When compared to the adjusted
registered capital, the value of freshly registered capital is often two to three times
greater during this time. That fresh investors keep coming to Vietnam’s market is a
clear indication of this.
Despite the worsening of the COVID-19 epidemic in Vietnam in 2021
compared to 2020, the results of enticing FDI investment into Vietnam in 2021 are
still rather favorable. Newly registered capital reached 14.1 million dollars, an
increase of 3.76 percent from 2020, while adjusted registered capital surpassed $8
billion, an increase of 26.7 percent.
15
70
3,7
Capital, billion USD
60
50
40
60,3
30
20
2,50
5,1
21,3
1,9
3,4
10
2,6 17,90
7,8
16,3 17,9
12,3
8,6
14,5 16,5 15,6
14,9
7,7
7,9
0
5,4
7,1
5,6
8,4
17,9
16,7 14,6 14,1
7,6
5,8
6,4
8
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Year
Newly registered capital
Adjusted registered capital
Figure 1.1. FDI inflows into Vietnam in the period 2006 – 2021
Source: Foreign Investment Department, Ministry of Planning and Investment
Office of Overseas Investment
As of the year 2021, Vietnam had attracted a total of 405.9 billion dollars in
FDI capital across 34,424 individual investment projects.
According to data compiled by Vietnam’s General Statistics Office as of January 1,
2019, 72.8% of the country’s total cumulative FDI registered capital was invested in
projects with a 100% foreign capital share. In terms of the overall amount of
cumulative FDI registered capital, 21.4% was invested through joint venture
businesses. About 5.8 percent of the total capital is invested through other kinds of
FDI such as BOT, BT, BTO, and business cooperation contracts.
Thus far, 141 different nations and territories have sent foreign direct
investment dollars to Vietnam. East Asian countries like South Korea, Japan, and
Singapore have traditionally been at the top of the list of foreign direct investment
(FDI) providers to Vietnam. As of 2021, the total registered investment capital from
these three nations made up 49.8 percent of Vietnam’s total FDI capital. Besides the
16
United States, the major foreign direct investors in Vietnam come from a number of
other nations in Asia, including Taiwan (China), Hong Kong (China), China,
Malaysia, and Thailand, as well as two partners from Europe, the Netherlands and
the British Virgin Islands.
17
CHAPTER 2
STATUS OF ATTRACTING FOREIGN DIRECT INVESTMENT TO HUNG
YEN PROVINCE’S INDUSTRY FIELD
2.1 Description of the province Hung Yen
2.1.1 Location geographically
The province Hung Yen is located in the Northern Key Economic Zone in the
Red River Delta. Hung Yen consists of ten administrative units, including: Hung Yen
city and My Hao town, An Thi district, Phu Cu district, Van Giang district, Yen My
district, Kim Dong district, Tien Lu district, Van Lam district and Khoai Chau district.
In 2020, the province is expected to have an average population of 1,269,090
throughout its 930.22 km2 of natural land. Compared to the rest of the country and
the Red River Delta area, the average population density of Hung Yen is considered
high, which was 1,364 people/km2 (Hung Yen Statistical Office, 2020).
Hung Yen is connected to the surrounding province including Ha Noi, Quang
Ninh, Hai Phong, which are the northern economic hubs, through the Hanoi - Hai
Phong highway. Hung Yen’s closeness to important northern economic centers like
Hanoi, Hai Phong, and Hai Duong, as well as its placement on major transportation
arteries, give it an advantageous geographical and economic position. Furthermore,
located close to the region of rapid economic development in the Northern Gulf. Hung
Yen province’s societal and economic growth has been profoundly impacted by the
following geographical features:
Bring up considerable development chances and encouragements by
exploiting the established not only the infrastructure network but also the training and
technology transfer support from big cities, regional centers.
Another point worth noticing is there have been a substantial market for
consumer goods, especially foodstuffs and manufactured goods, handiworks…
The atmosphere can be considered as a factor that leads to conduciveness to
draw Foreign Direct Investment funding.
18
2.1.2 Conditions climatic and meteorological
The province has a hot and humid tropical monsoon environment that divides
into two distinct seasons (hot and cold seasons). The first half of winter is rather dry
, whereas the rest of the time is damp. Humidity and precipitation are common during
the early stages of the summer heat season. Rainfall totals an average of 1,746
millimeters, although it’s spread out all wonkily: the wetter months of May through
October account for as much as 70 percent of the yearly total, while the colder, more
seldom wetter months of November through April are typical. Precipitation occurs,
making it an excellent environment for cultivating a variety of high-value, short-term
crops. Humidity ranges from a high of 89 percent in March to a low of 74 percent in
December, with an annual average of 81 percent.
The climate is favorable for drawing in Foreign Direct Investment.
2.1.3 Aspects of a society’s socioeconomic standing
* Concerning human population and workforce
In the year 2020, the average population of Hung Yen province has been
1,269,090, with a density of 1,364 inhabitants per square kilometer. 13 percent of the
province’s population resides in the city. Furthermore, numerous colleges,
universities, and industrial zones lead to the result that tens of thousands of students
and employees from throughout the nation chose the province to become a place to
dwell, research, and work in. Another point worth noticing is, Hung Yen has a high
number of mechanically-minded residents.
The province employs around 740,000 people with strong health and cultural
qualities. Workforce is hired in all economic sectors, accounting for around 85-90
percent of working-age people. The workforce is youthful and healthy, and the cost
of living, wages, and salaries, particularly in the production workers sector of firms,
are considered to be comparatively affordable in comparison to surrounding
provinces and cities. This will be a valuable source of extra human resources for
Foreign Direct Investment initiatives, particularly those carried out in the province
(Hung Yen Statistical Office, 2020).
19
* Concerning social and economic development
2020 is the last year of socioeconomic development plan implementation for
the period 2016-2020. As a result of being impacted by the Covid-19 pandemic, the
production and business of enterprises in Hung Yen encountered many difficulties,
such as a lack of imported raw materials, a shrinking domestic market, difficulties in
exporting goods, a lack of capital for production and business, and insufficient
revenue to cover expenses... The Provincial Party Committee, Provincial Council,
and Provincial People’s Committee successfully took steps to avoid, control, and
inspect the Covid-19 epidemic in this instance. With the perspective completing the
twin mission of both avoiding the Covid-19 epidemic and growing socioeconomic,
the province has achieved great economic achievements due to the efforts of all
individuals and enterprises. Compared to 2019, the province’s Gross domestic
product (GDP) at constant prices rose by 6.26 percent in 2020. This is the lowest
growth rate since the province’s reestablishment in 1997. Nonetheless, Hung Yen is
a shining example of the nation’s socioeconomic prosperity, ranking fifth in the area
and eleventh in the country in terms of economic growth.
The 2016-2020 socioeconomic development plan implementation phase
concludes in 2020. As a result of the Covid-19 pandemic, production and business in
Hung Yen encountered numerous challenges, including a lack of imported raw
materials, a shrinking domestic market, difficulties in exporting goods, a lack of
capital for production and business, and insufficient income to cover expenses... In
this instance, the Provincial Party Committee, Provincial Council, and Provincial
People’s Committee were effective in preventing, controlling, and inspecting the
Covid-19 pandemic. Due to the efforts of all individuals and businesses, the province
has achieved remarkable economic success with the goal of accomplishing the dual
aim of preventing the Covid-19 epidemic and fostering socioeconomic development.
In 2020, the province’s real Gross Domestic Product (GDP) increased by 6.26 percent
compared to 2019. This can be seen as the lowest growth rate since 1997, when the
province was reestablished. In spite of this, Hung Yen is a shining example of the
20
nation’s socioeconomic success, ranking fifth in the region and twelfth in the nation
when it comes to economic growth.
Table 2.1. Gross product in the area at current prices by economic sector
Product
taxes less
subsidies
on
productio
n
Economic field
Year
Total
Agriculture
, Forestry
& Fishing
2016
2017
2018
2019
2020
65,350,32
2
72,850,74
0
83,119,67
6
92,572,99
5
99,874,79
4
7,046,033
6,857,151
7,390,888
7,900,724
9,286,151
Industry
35,571,53
2
40,449,89
3
47,110,84
0
52,700,43
0
56,296,04
1
Constructio
n
Service
2,549,884
15,757,639
4,425,234
3,050,048
17,424,648
5,069,000
3,698,195
19,310,616
5,609,136
4,308,770
21,432,447
6,230,624
4,947,157
22,732,071
6,613,374
Continuity growth rate, %
2016
100
100
100
100
100
100
2017
111.48
97.32
113.71
119.62
110.58
114.55
2018
114.10
107.78
116.47
121.25
110.82
110.66
2019
111.37
106.90
111.86
116.51
110.99
111.08
2020
107.89
117.54
106.82
114.82
106.06
106.14
107.15
112.16
118.02
109.59
110.57
Average growth rate, %
111.19
Source: Hung Yen Statistical Department
21
In 2020, at current prices, agriculture, forestry, and fishing contributed 9.30% to
GRDP; industry and construction will contribute 61.32 percent; trade and services
contributed 22.76 percent; product tax minus product subsidies will contribute 6.62
percent or trade, service, and product tax contributed 29.38 percent; and GRDP per
capita reached 78.7 million VND per person per year.
In 2020, the amount output in agriculture field in Hung Yen was essentially
stable, There have been no outbreaks of animal or poultry disease, and the Covid-19
pandemic has had less of an impact on the sector (The domestic market supplies the
majority of the production, and the majority of the output is for domestic
consumption.). As a result of the outbreak of African swine fever in 2019, a shortage
of breeding stock and the high cost of growing pigs has slowed the pace of pig reherding in the region. Despite this, the province’s agricultural output did well in 2018;
the agricultural sector’s GRDP grew by 7.89 percent in 2020 compared to 2019,
adding 2.78 percentage points to the growth of the agriculture, forestry, and fishing
sectors. Furthermore, the fisheries sector is sustaining and increasing in the direction
of intensive agriculture, with a portion of low-efficiency rice land being converted to
perennial crops and aquaculture. The fishing industry increased at a reasonable pace
due to its high efficiency, increasing by 5.83 percent in comparison to 2019, adding
0.76 percentage points to the total growth of the forestry, fisheries, and agricultural
fieldss.
The Covid-19 epidemic has had varying degrees of influence on the
manufacturing and commercial activities of various enterprises in the province,
particularly those with import and export activity. Another point worth noticing is,
through the second research on the impact of the Covid-19 pandemic on the output
and business of enterprises in 2020 found that 84.08 percent of firms in Hung Yen
province are affected by the pandemic, with 82.76 percent affected adversely. Given
this context, the GRDP of industry grew by 6.82 percent in 2020 compared to 2019,
for an average annual growth rate of 112.16 percent.
As for building operations, which is an industry less impacted by the Covid19 outbreak as well, therefore the construction sector of the province continues to
22
thrive. The province’s construction industry grew by 16.51 percent in 2020 compared
to 2019, for a compound annual growth rate of 114.82 percent.
The Covid-19 pandemic had a devastating effect on the service industry in the region,
delaying the start of most commercial enterprises. This was especially true once
towns began enforcing social isolation as a result of new laws. The Prime Minister’s
Directives Nos. 15 and 16, as well as local guiding documents. The service industry’s
GRDP growth slowed to 6.06 percent in 2020, the lowest rate of the era. The
wholesale and retail sectors (0.28 percentage points), information and communication
(0.12 percentage points), finance, banking, and insurance (0.19 percentage points),
and real estate (0.19 percentage points) all contribute to the development of the
provincial economy in the service sector (0.18 percentage points).
The province is one of the nation’s seventeen provinces with discretionary
revenue and expenditure that has contributed to the federal budget via the product tax
minus product subsidies. Product tax minus product subsidies in the province in 2020
increased by 6.14% over the previous year, contributing 0.33 percentage points to the
overall growth of the province’s economy despite substantial hurdles due to the
Covid-19 epidemic and the implementation of Government restrictions.
2.1.4 Hung Yen Province’s Industrialization
Hung Yen province was home to 13,706 separate industrial establishments,
the majority of which were state-owned. The province also had 19, handicraft
cooperatives, 9 private firms, 8 limited companies, produced mostly handmade goods
on a small scale, and had low productivity, low quality, and low economic efficiency.
The province uses a wide range of policies and laws to encourage and facilitate
investment in order to foster the development of manufacturing, artisanal goods, and
commercial hubs. To the Hung Yen countryside at the period of industrial
modernization, this is incredibly accurate and practical help for both the industrial
sector and the sector of handicraft production and craft villages.
23
2.2 Hung Yen Province’s Industrial Sector and the problem of enticing Foreign
Direct Investment
2.2.1 Conditions for attracting Foreign Direct Investment to Hung Yen
In 2020, the Covid-19 pandemic severely stunted the province’s economic
development. Advantages include lower interest rates and better access to credit for
companies, organizations, and people, notwithstanding the challenges presented by
the Covid-19 outbreak.; Investment funding from the state budget has been paid and
disbursed more quickly, and infrastructure in transportation, healthcare, education,
agriculture, and many other fields throughout the province has benefited from this
increased focus. Total development investment capital in the province increased to
37,200 billion VND in 2020, up 8.25 percent from 2019. Capital in the state sector
amounted to VND 6,072 billion, an increase of 19.08 percent; capital in the non-state
sector amounted to VND 18,029 billion, an increase of 4.74%; and capital in regional
capital with foreign investment amounted to VND 13,099 billion, an increase of 8.68
percent.
World FDI inflows have dropped significantly over the previous two years as
a result of the Covid-19 outbreak and the global economic depression, and the
province’s attempts to attract FDI capital have met with various obstacles. The
number of newly licensed projects in Hung Yen province in 2020 will be 26, with a
registered capital of 280.40 million US dollars. This is a decrease of 44.68% and a
decrease of 31.11%, respectively, from 2019. Through 2020, Hung Yen’s industrial
parks will be home to a total of 460 valid secondary investment projects, 259 of which
will be funded by overseas investors with a combined registered investment capital
of $4,428 million USD, and 201 of which will be funded by local investors with a
combined registered investment capital of 26,790 billion VND. There are seven
industrial zones in which investment projects are concentrated: Pho Noi A Industrial
Park, Thang Long II Industrial Park, Pho Noi Textile and Garment Industrial Park,
Minh Duc Industrial Park, Yen My II Industrial Park, Yen My Industrial Park, and
Minh Quang Industrial Park. The industrial park with the most registered investment
projects is Pho Noi A, with 206 projects, comprising 92 foreign-invested projects
with a total registered investment capital of US$989.67 million and 114 projects with
24
domestic investment capital with a total registered investment capital of 19,464.5
billion dong; Thang Long II Industrial Park came next, with 101 projects funded by
foreign investors and a total investment capital of 2,730.4 million USD;
25
Table 3.1. Summary of investment projects by industrial zones
Foreign projects
Domestic projects
Name of
No industrial Number
Total
Registere
zone
of
running
d capital
projects
project
1
Pho Noi A
114
19,464.50
2
Thang
Long II
3
Pho Noi
Textile
31
2,469.10
4
Yen My II
27
5
Minh Duc
6
7
101
Number
of
projects
Total
Registere runnin
d capital
g
project
Total
valid
projects
92
989.7
83
206
101
2,730.40
99
101
26
35
432.6
32
66
2,867
13
14
120.3
8
41
20
851.2
19
7
10.6
6
27
Minh
Quang
7
781
0
4
28.6
0
11
Yen My
2
359.5
0
6
116.4
0
8
Total
201
26,792
159
259
4,428
228
460
Source: Hung Yen Department of Planning and Investment (2020)
Industrial land leased and used by secondary investment projects that are still
valid according to registration is spread across 859.8 hectares, with the largest areas
being found in the Pho Noi A Industrial Park (365.5 hectares), Thang Long II
Industrial Park (235.3 hectares), Pho Noi Textile and Garment Industrial Park (92.9
hectares), Yen My II Industrial Park (63.2), Minh Duc Industrial Park (37.7 hectares),
and Yen My Industrial Park (42.3)
26
The following sectors and disciplines are the focus of investment initiatives in
provincial industrial parks: Prefabricated metal product manufacturing (63 projects);
rubber and plastics product manufacturing (49 projects); real estate development and
sales (38 projects). Production of Automobiles and Other Motor Vehicles (31
Projects); Textile Production (30 Projects); Production of Electronic and Computer
Products (26 Projects); Production of Machinery and Equipment Not Otherwise
Classified (23 Projects); Production of Food Items (23 projects).
2.2.2. The role of provincial policies in drawing foreign direct investment into the
industry field
2.2.2.1. Establishing goals, organizational frameworks, and tactics to attract Foreign
Direct Investment
Hung Yen province has had rapid annual growth in the number of enterprises
and FDI projects over the last decade, despite having started as a province with a
young and immature industrial base and FDI projects that are not of the big scale and
cannot be the significant industriesTo further industrial development, the XIV
Provincial Party Congress (covering the years 1997-2000) decided to boost
accumulation and make better use of investment fund. Industrialization and
modernisation of agricultural and rural regions will play a crucial role in the near
future: Choose biotechnology, strengthen the processing industry, rapidly construct
infrastructure, and enhance irrigation quality in order to rapidly implement
communication and power in production and everyday life. Establish a setting that is
appealing to local and international investors in vegetables, fruits, tubers food
production, food processing and industrial animal feed processing. Industry focuses
on growing and utilizing existing industrial firms, constructing a number of facilities
that produce high-quality construction materials, shoes, and garments for export...
Utilize investor collaboration to rapidly establish three industrial zones, including
Nhu Quynh, Noi street, and Hung Yen town.
Hung Yen prioritized the hiring of people for labor-intensive sectors like
textiles and footwear during this time. Foreign Direct Investment was low, though;
just about 30 million dollars in registered capital was drawn in. The province’s less
27
attractive policies to attract FDI investments and the consequences of the Asian
financial crisis of 1997 account for this. From 2001 to 2020, Hung Yen’s most
important manufacturing businesses included mechanical engineering, and food
processing, electronics while the city’s most important service industries included
banking, logistics, and education. According to the Prime Minister’s order about the
growth of key economic zones, Hung Yen will become a center for advanced
academics and training. Thus, the University of Technical Education had grown to
include a second branch in the district of My Hao and been upgraded to a big
interdisciplinary institution. Also proposed is the Pho Hien university district (14
important institutions, to move out of Hanoi (among them the Foreign Trade
University, the University of Education, the University of Transport, etc.).
In particular, the textile, garment, consumer good, mechanical assembly,
electrical and electronic assembly, and food processing industries are all located
within the Pho Noi B industrial park, which is a concentrated multi-industry industrial
park that does not cause pollution (in particular with regards to pollution (smoke,
dust, and stench). Minh Duc Industrial Park is a general industrial park that includes
steel
processing,
mechanical
engineering,
ceramics,
electrical
equipment
manufacture, electronics and refrigeration, plastic items, and agricultural processing.
Hung Yen, Taiwan is a clean, pollution-free industrial park that is home to light
manufacturing, agro-food processing, electronic production, and mechanical
assembly.
2.2.2.2 Support for technical infrastructure building
The Prime Minister signed a decree approving the Pho Noi planning project
on December 4, 2003. Place where most of the province’s manufacturing takes place.
The province of Hung Yen benefited from this as they expanded their efforts to plan
for attracting investment overall and FDI in particular. Hung Yen has made it a top
priority to create a long-term socioeconomic development strategy and master plan
until the year 2020 in order to increase the likelihood of attracting foreign direct
investment (FDI). The key goals are as follows:
28
 Figure out where to put industrial zones, how big to make them, and how to
spread them about evenly. Make the plan known to the public at large so that
government officials and average individuals can carry it out effectively;
 For the purpose of organizing investment projects in industrial parks and
managing the investment in the project’s construction in accordance with the
plan, it is necessary to first conduct general planning of industrial parks, which
will serve as the basis for investor mobilization, and then conduct detailed
planning of industrial parks.
 The expansion of social infrastructure outside of industrial parks, as well as
urban and residential design to accommodate industrial park growth, all
require cooperation with traffic-transportation, electrical grid system, post
and telecommunications, drainage and water supply planning.
 To lay the groundwork for the development of a land use plan by outlining
the scope and scale of the province’s anticipated industrial growth through
2015 and the policy priorities of the province moving forward to 2020.
 To lay the groundwork for a new approach to farming and rural revitalization;
 Sustainable industrial growth requires a steady stream of new workers, so it’s
important to have a plan for investing in the infrastructure needed to support
that expansion, as well as a plan for educating and training the work force.
2.2.2.3 Public programs designed to entice investment
From the year 1997, when Hung Yen was re-established, Hung Yen has
devised a plan to draw investment and revitalize Hung Yen’s economy. State
investment incentive policies were adopted with some leeway to make things as good
as they might be for investors. According to the state’s present legislation, the
province of Hung Yen enjoyed the most investment benefits.
The provincial People’s Committee of Hung Yen announced “Regulations on
incentives for local and foreign investment in the province” in Decision No.
13/2003/QDUBND dated March 18, 2003. The regulations clearly stated that, Land
29
rental pricing, land rental exemption and reduction periods, support for labor training
expenditures, and site clearing aid within the province’s authority were all provided
as incentives on top of the state’s goals (Hung Yen Provincial People’s Committee,
2003). All FDI enterprises investing in the province were subject to the requirements
of the Law on Foreign Investment in Vietnam.
The province has split the territory into segments, each with its own set of
investment incentives, to attract investors to economically depressed areas and boost
investment in the region as a whole.
Region I, which includes locations with good circumstances for investment;
Region II, which includes areas with restricted chances for investment; and this is
Region III, which includes areas on the list of municipalities with problematic
socioeconomic conditions.
The incentives for land rent outlined in the rules are as follows:
Apply a price equal to 70% of the price applied in region I, 50% of the price applied
in region I, and 70% of the price applied in region I in region III.
In all parts of the province, Foreign Direct Invesment projects are free from
land rent for seven years following the signing of the land lease agreement.
The province committed to compensating firms for site removal under the
provincial budget:
Investment projects in region II: supported 50% of the cost of site clearing
compensation for all domestic and international businesses, and 70% assistance for
effective projects within 12 months of construction completion, projects that
contribute at least 3 billion VND/year to the provincial budget, and projects that
attract at least 200 and no fewer than 70 local workers/ha.
Investment projects in region III: able to support 70% of the cost of site
clearance for all local and international businesses, 100% support for successful
projects within twelve months of construction, projects that provide at least 3 billion
30
VND annually to the budget and projects that recruit at least 200 local workers per
hectare.
Commit to assisting businesses in training and hiring local workforce
Additional incentives would be offered on a case-by-case basis for large-scale
projects with a substantial influence on the socioeconomic growth of the province, in
addition to the aforementioned conditions.
2.2.2.4 Policy for investment attraction
Hung Yen has ordered all levels of management to get ready for investment
projects in areas such Pho Noi A, Pho Noi B, Nhu Quynh A, Nhu Quynh B, town
Minh Duc industrial zone and the Hung Yen town Minh Duc industrial zone after the
date of re-establishment. Simultaneously, A Resolution was issued by the Provincial
Party Committee with the title “Promoting Investment Cooperation in Hung Yen
Province”; A resolution was passed by the Provincial People’s Committee ordering
the implementation of legislation governing the issuance of investment licenses and
the regulation of foreign direct investment activities.
The province is in favor of investments in the following industries:
Technologically advanced projects that have the potential to stimulate growth
in unrelated fields;
Effective and financially beneficial early ventures;
Activities involving farming, food production, and processing with regional
resources;
Projects that requires a sizable number of local employees to be employed.
Prioritize the South for the promotion of labor-intensive projects;
Export-oriented production and processing projects.
To enhance investor attractiveness, the province recommends granting
projects the fullest degree of investment policies permitted by government legislation.
The process for awarding investment incentives is straightforward and expeditious.
31
For unique initiatives that stimulate investment in the province’s economic growth,
the province may be granted extra incentives, such as:
Payment of a portion of the cost of vocational school;
Financial aid, to some extent bolster the system’s foundation;
Lengthen the time when land rent is discounted and exempted from taxes...
A land use plan for industrial and commercial expansion: The province has
established advantageous circumstances for businesses desiring to rent land for
manufacturing and office space. The land leasing process has been streamlined and
reduced, while still ensuring compliance with the law.
The province has urged all economic sectors to engage in vocational training
initiatives in order to assist businesses with workforce training. All facets of
vocational training initiatives, such as facilities, funding, and processes, had been
enabled and assisted...
Support Information and Trade Promotion Policy: Business and individuals
may easily find and read up on the province’s policies, regulations, and goals for
social and economic growth.
The province had mandated that all relevant ministries, agencies, and
industries reduce administrative procedures when accepting investment proposals,
therefore this reform was put into effect, including: reducing the length of time
needed to assess license or investment project approval, and encouraging local
jurisdictions to excel in site clearance, by simplifying the enterprise registration
process under the Law on Enterprises and other applicable laws, regulations, and
policies.
Meetings are held annually between companies and senior officials of Hung
Yen to stimulate and support the fruitful combination of productivity and capital
expenditure initiatives, and to effectively execute state policies and legislation.
Typical efforts were praised and rewarded in a timely manner. The proposals of
businesses are taken into account by the appropriate authorities, who provide prompt
32
responses. Industrial parks and industrial clusters have been constructed by the
province with the purpose of creating the conditions under which investment projects
can enter production and start making money as soon as possible.
2.2.2.5. Implement Investment-Support Measures.
Province officials have briefed investors on procedures, methods, and required
paperwork for each kind of work content, allowing them to accomplish their
investment goals swiftly and easily. The methods, sequence of papers, and deadlines
for granting business registration were announced in full and clarity by the office of
business registration for anybody desiring to create a business registration company.
The “one-stop” system had been implemented into the everyday operations of the
majority of provincial state administrative agencies. No longer were investors
required to knock on the doors of several authorities with numerous administrative
processes. The province had exerted considerable effort to undertake administrative
process reform, with the “one-stop” system rigidly enforced at local state
administrative agencies. The “one-stop” method was implemented by the Department
of the Department of Labor, Department of Planning and Investment, the Department
of Construction, War Invalids and Social Affairs etc., and ten districts and
municipalities of the province. In general, the province’s “one-stop” mechanism
deployment has yielded positive results:
Administrative processes have been articulated in terms of tasks and the time
necessary for civil cadre to execute them; there has been an apparent shift from the
request-for-grant method to the “civil cadre serving the people” mechanism.
The majority of the people supported making administrative processes
transparent and open as a means to reduce problems and harassment for businesses
and citizens when dealing with administrative procedures.
Professional civil might have the potential of reduce the time spent on
reception and increase time spent on expertise, hence enhancing productivity on the
job.
33
Nevertheless, the “one-stop shop” system showed several drawbacks.
Human resource support for the “one-stop” method was deficient and
inadequate. Some cadres and civilians were unwilling to participate in professional
learning and ethical training. Consequently, they remained confused and inactive
when confronted with complex problems; the quality of their work was poor; and
their working style was sluggish to develop. Mass media indoctrination and education
on administrative reform had not influenced the minds of cadres and public officials
at any level.
Commitment to reforming administrative procedures in government
organizations and organizations responsible for managing FDI specifically has led to
beneficial developments in the province of Hung Yen’s ability to attract and execute
FDI projects. The most noticeable shift was in the project reception phase, when the
time required for license evaluation and awarding announcements was reduced.
Nonetheless, consultant’s efforts to finish the document were futile.; In order to
complete the necessary paperwork for an investment, investors still needed to rely on
personal connections with state management agencies.
2.2.2.6. Engage in Investment Promotion
Businesses and individuals have easy access to information on the
socioeconomic development plans of the province, as well as information on state
policies and regulations.
The province’s enterprise information system was nearing completion and
would soon be made available to businesses and individuals upon request, while the
Department of Trade’s effort to establish a Trade Promotion Center had been carried
out and was functioning normally. To encourage firms to invest more on industrial
parks, Hung Yen Radio and Television Station and Hung Yen Newspaper offered a
50% discount on advertising information prices for two years following the start of
the projects.
There were no more than four advertising campaigns per year for any firm,
and each campaign lasted no longer than 10 days. Newspaper ads cannot exceed one-
34
fourth of a page, and radio and television spots cannot exceed two minutes. Provincial
People’s Committee created optimal conditions for businesses to engage in trade
exchange, exhibit, seek, participate in seminars and fairs and exploit chances to
expand domestic and foreign markets, and engage in trade exhibitions.. The
Provincial People’s Committee arranged favorable conditions in terms of both time
and money for provincial authorities to work with the Industrial Park Infrastructure
Development Company to begin investment campaigns in the industrial park.
Considerations are made annually by The Provincial People’s Committee to honor
companies and people for their efforts in attracting many investment projects with
socioeconomic value benefits to invest in the province’s industrial parks.
Numerous policy systems had been released and were intended to be
implemented, giving fresh impetuses for operations to draw FDI to Hung Yen in the
near future. To meet the increasing needs of the business environment, the province
would continue to create policies and processes for the management of foreign direct
investment.
2.3 Influences on attracting Foreign Direct Investment capital to industrial
sector of Hung Yen in 5 Years, from 2016 to 2020
2.3.1 Regarding the quantity of projects
By the year 2020, 544 FDI projects with a combined registered capital of up
to 4,326,814 thousand dollars had been established in the province.
35
Table 3.2. Foreign direct investment from 1995-2020
Year
Number of projects
Registered capital (Thousand
USD)
Total
544
4,326,614
1995
1
20,200
2000
3
29,861
2001
2
31,000
2002
11
40,881
2003
9
102,229
2004
11
36,346
2005
13
25,800
2006
25
227,119
2007
28
116,181
2008
49
534,810
2009
21
74,311
2010
22
162,713
2011
29
389,080
2012
27
228,020
2013
31
109,030
2014
49
378,536
2015
31
282,999
2016
39
339,684
2017
40
444,468
2018
30
139,299
2019
47
363,649
2020
26
250,396
1996
1997
1998
1999
Source: Hung Yen Statistical department (2020)
36
2.3.2 Regarding the investment form
Table 3.3. FDI structure by form of investment in production and business
activities
Number of FDI
projects
Investment form
100% foreign invested
capital
Registered capital
Capital
(Thousand
Rates, %
USD)
Projects
Rates,
%
216
94.74
1,535,309
92.2
10
4.39
124,284
7.74
2
0.88
5,500
0.33
Venture
Contract of business
cooperation
0,98
12,2
86,82
100% foreign invested capital
Venture
Contract of business cooperation
Figure 3.1. Structure of FDI projects in industrial zones of the province
37
Among the 228 active FDI projects in the industrial sector in Hung Yen
province, 215 had 100% FDI capital, for a total of 2,540,336 thousand USD. Joint
ventures accounted for 4.39 percent of all projects with a total capital of 124,284
thousand dollars while business cooperation contracts accounted for the remaining
5.5 million dollars. The majority of FDI projects in the industrial sector in Hung Yen
consist of 100 percent foreign capital because to investors’ familiarity with
Vietnamese regulations, laws, conventions, and business practices. In addition,
Vietnamese participants in joint ventures sometimes lacked both finance and
managerial expertise, resulting in inefficient corporate operations.
There were 167 foreign direct investment (FDI) projects in Hung Yen
province’s industrial zones, 158 of which were 100% FDI, accounting for 94.61
percent of total FDI projects, for a total FDI capital of 2,435,500 thousand USD; 5.99
percent of the FDI projects in the industrial park were joint ventures, with a total
capital of 611,997 thousand USD.. It revealed that the majority of FDI projects in the
industrial zone in Hung Yen province were funded entirely by foreign cash.
2.3.3 Regarding the investment companion
There were eighteen countries and territories that have signed up to invest in
the province’s industrial park. With 137 projects and 3,015.8 million dollars in
registered investment capital, Japan ranked first. This represents 52.7 percent of the
total number of projects and 66.25 percent of the total investment capital ; With 50
projects and 497.8 million USD in registered investment capital, Korea placed
second, making up 19.2 percent of the total number of projects and 10.94 percent of
the overall investment capital.; Third place went to China, which accounted for 10.94
percent of all projects and 5.63 percent; of all investment money with its 24 projects
and total registered investment capital of 256.2 million dollars; came after that is
Hong Kong with 15 projects and total amount of registered investment capital of
186.9 million USD, Singapore, with its seven projects and total registered investment
capital of 132.1 million dollars,...
Computers, Electronics, , and optical products; automobiles and other motor
vehicles; rubber and plastics; other non-metallic mineral products and food
38
processing are the top five industries receiving foreign direct investment (FDI) in
industrial parks around the province at present. including 228 secondary investment
projects and one industrial park infrastructure investment project, would be expected
to be implemented in the industrial zones of the province. Approximately 47,000
persons were employed by FDI firms.
Table 3.4. FDI capital in the industrial sector
Registered capital
No.
Countries and
territories
Registered Running
project
project
Value
(million USD)
Rate %
1
Japan
3015.8
66.25
137
129
2
Korea
497.8
10.94
50
43
3
China
256.2
5.63
24
17
4
Hong Kong
186.9
4.11
15
14
5
Singapore
132.1
2.9
7
4
6
Switzerland
111
2.44
1
1
7
Thailand
106.7
2.34
3
3
8
Italia
71.2
1.56
5
5
9
Taiwan
58.5
1.28
4
1
10
Samoa
30
0.66
1
0
11
Sri Lanka
18.6
0.41
1
1
12
Indonesia
17.2
0.38
1
1
13
USA
15.4
0.34
1
1
14
England
12
0.26
1
1
15
Netherlands
9.4
0.21
5
5
16
Germany
6.9
0.15
2
2
17
Canada
3.9
0.09
1
1
18
United Arab Emirates
Total
2.2
0.05
1
0
4552
100
260
229
Source: Hung Yen Statistical department (2020)
39
2.3.4 Foreign Direct Investment capital investment by industry
By economic sector, the primary investment sectors and fields of FDI projects
in the industrial sector were mechanical industry, informatics, medical, equipment
manufacturing industry, machinery and equipment assembly; manufacturing
industry, Textile industry; ….
Table 3.5 FDI capital by economic sector
No
Realized
Number of Registered
investment
Realized
operation
capital
By economic sector
capital capital/registered
projects (thousand
(thousand capital ratio (%)
(project)
USD)
USD)
1
Auto and Moto
22
150,000
75,000
50.00
2
Textile
38
290,000
120,500
41.55
3
Plastic
30
95,000
45,000
47.37
4
Material XD
15
120,000
75,000
62.50
5
Electrical
12
625,000
455,000
72.80
6
Equipment
21
10,000
3,950
39.50
7
Electronic
refrigeration
29
650,000
450,000
69.23
8
Fodder
6
150,000
60,000
40.00
9
Other
30
379,914
117,467
30.92
10 Heavy industry
24
192,500
113,200
58.81
11 Mechanical
19
65,000
31,600
48.62
12 Chemistry
2
25,000
14,970
59.88
Total
227
2,670,150
1,522,397
57.02
Source: Hung Yen Statistical department (2020)
40
By breaking down FDI into its component economic sectors, we can see how
foreign investors have increasingly gravitated toward sectors with high economic
efficiency and rapid capital recovery; in particular, making use of accessible labor
resources and a strategically located market to trade both raw materials and completed
products. The production of rubber and plastic items had the most FDI projects, at
33, followed by the manufacturing of prefabricated metal products, with 27 FDI
projects expected to be completed by the end of 2020.; Featuring 25 FDI projects, the
electronics, computer, and product manufacturing business; and with 21 FDI projects,
the clothing manufacturing sector.
Table 3.6. Number of FDI projects by sector
Unit: Project
No
Branch
2016
2017
2018
2019
2020
1 Food production and processing
3
6
6
8
10
2 Textile
8
11
14
15
17
3 Clothers
Manufacture of leather and related
4 products
Processing wood and products from
5 wood and bamboo
Manufacture of paper and paper
6 products
Manufacture of chemicals and
7 chemical products
Producing products from rubber and
8 plastic
Producing products from other
9 minerals and non-metals
16
15
16
20
21
1
3
3
4
5
0
0
0
0
1
4
5
5
5
6
1
5
4
6
7
7
20
24
28
33
3
3
4
3
4
10 Metal production
Producing products from
11 prefabricated metal
Producing electronic products,
12 computers...
3
5
4
5
4
13
24
25
27
27
6
10
13
14
25
5
6
5
7
12
6
15
12
12
14
13 Manufacture of electrical equipment
Manufacture of other machinery and
14 equipment
41
15 Manufacture of vehicles with motor
Manufacture of other means of
16 transport
6
15
14
16
16
15
17
15
14
14
17 Other manufacturing industry
4
4
6
7
7
17 Garbage collection and treatment
1
2
1
2
2
Source: Hung Yen Statistical department (2020)
2.4 Attracting Foreign Direct Investment into industrial sector in Hung Yen
province: accomplishments, limitations, and causes of limitations
2.4.1 Accomplishments
Initially, expanding investment capital
Total social investment has constantly grown and stayed at a high level over
the previous two decades, growing by an average of 20,24 percent each year. Capital
invested in foreign direct investment (FDI) projects in Hung Yen province
contributed to the province’s increased investment capital. FDI policies that
encouraged the attraction of foreign investment contributed to FDI’s steady growth
over the years. In 1997, FDI sector development investment capital comprised 12.5%
of the province’s total capital.; in 2016, it reached VND 7,534,916 million,
accounting for 30.3%; and in 2020. It is expected to reach VND 13,099,210 million,
representing 35.21 percent of the province’s total capital and a 2.8-fold increase since
1997.
Table 3.7. Investment capital at current prices by economic sector
Unit: Billion VND
Sector
2016
2017
2018
2019
2020
Government sector
4,161,648
4,683,222
4,965,209
5,099,451
6,072,499
Capital in the nonstate sector
13,189,285 15,087,082 16,658,405 17,212,792
18,028,734
42
Capital of foreign
direct investment
sector
7,534,916
8,631,132
9,915,048 12,053,228
13,099,210
Source: Hung Yen Statistical department (2020)
For the province’s social development, domestic and foreign projects, notably
FDI projects accepted in recent years, have contributed to a surge in investment
capital.
Second, fostering economic expansion and reorganization capital for the
province’s social development has increased as a result of both domestic and
international initiatives, especially foreign direct investment (FDI) projects obtained
in recent years. The influx of foreign direct investment (FDI) into the province has
grown steadily over the years, contributing significantly to the province’s GDP and
the region’s overall economic and social progress. Foreign direct investment (FDI)
into the province has increased consistently over time, which is beneficial to the
province’s GDP and the region’s general economic and social development,
including the production and assembly of iron and steel automobiles, electronic
goods, footwear, motorcycles, garments, motorcycles, animal and poultry feed
processing, etc.
And thirdly, it helps people by giving them opportunities to earn a living and
improve Employment prospects, especially for young people, have increased as a
result of FDI investments in the province’s industrial sector. Another point worth
noticing is it also increased income, better material and spiritual conditions for
workers, and a healthier bottom line for the provincial government were all side
effects. Moreover, because the presence of FDI firms had led to the formation and
robust growth of service sectors servicing production and life, it had also resulted in
the creation of a large number of new employment for local employees.
Thus, FDI capital has generated chances for individuals to have more capacity
to find or create work for themselves, so contributing to higher wages, improved
lifestyles, and the establishment and growth of the province’s labor market. The
43
growth in FDI capital resulted in a rise in demand for products and services with
higher quality standards. Therefore, chances and conditions had been established for
the development of service industries. Consequently, FDI capital played a key role
for indirect labor in other economic sectors, in addition to its potential to create jobs
for direct employees. Consequently, the number of extra workers in the province of
Hung Yen has expanded dramatically lately in the past few years.
Table 3.8. Current labor by economic sector
Unit: Person
Economic sector
2016
2017
2018
2019
2020
Total
167,939 193,633 201,056 203,691 220,181
State enterprises
3,834
3,552
2,309
2,611
1,841
Government
2,409
2,080
1,015
1,075
815
Local
1,425
1,472
1,294
1,536
1,026
Non-state enterprises
104,966 116,659 126,640 124,507 138,338
Private
3,054
2,554
2,658
2,377
1,540
Partnerships
45
32
18
32
10
56,925
61,190
69,285
68,391
76,068
2,607
2,547
2,471
3,190
2,592
42,335
50,336
52,208
50,517
58,128
Enterprises with foreign
investment
59,139
73,422
72,107
76,773
80,002
Enterprise with 100% foreign
capital
54,780
63,253
68,233
72,473
75,422
Joint venture enterprises with
foreign countries
4,359
10,169
3,874
4,300
4,580
Limited liability company
State-owned joint stock
company
Joint stock company without
state capital
Source: Hung Yen Statistical department (2020)
44
2.4.2 Limitations and causes of limitations
2.4.2.1 Limitations
The first problem was the irrational investment structure and the gradual
increase in the number of investment partners.
Only 29 nations and territories have shown interest in investing in Hung Yen
province by the end of 2020. (Foreign Direct Investment (FDI) flows into Vietnam
from 78 different nations and territories), with the majority of investors coming from
countries in Asia; US and EU investors accounted for less than 10% of all FDI
projects in the province. Investors from Asian nations, with the exception of those
from Japan and South Korea, had little access to high-tech capital and primarily drew
on the provinces’ comparatively cheap and plentiful supply of work force. These
investors brought outmoded equipment to the province. This is a major stumbling
block in the way of FDI projects expanding their industrial base.
Conversely, the pace of attracting FDI projects varied and changed throughout
time. There seems to be a rush of foreign direct investment projects in some years,
while other years attract a small number. This demonstrated that the investment
climate was unattractive and unfavorable. FDI projects were unevenly spread across
the province’s districts, with the majority concentrated in Yen My, Van Lam, and My
Hao, and in industrial zones such as Thang Long II Industrial Park, Pho Noi A
Industrial. Industrial Park Minh Duc. Particularly, Thang Long II Industrial Park
draws a big number of Japanese FDI projects with substantial money and advanced
technologies. In the remaining districts, there are few interesting initiatives, and their
scope is modest.
Second, small size investment initiatives slowed implementation pace.
In comparison to the average capital size of an FDI project in Vietnam, which
was 13 million dollars per project, the average capital size of a project in China is 9.6
million USD per project
Several projects, however, had budgets far lower than $1,000,000, with some
having budgets as low as 150 thousand dollars; many FDI firms lacked the capital to
45
purchase property or build facilities, forcing them to lease space for manufacturing.
This either shows that these are very small investors with little potential, or that
investors still lack the confidence to take part in big firms.
The province of Hung Yen got few FDI projects with large investment capital
and high-tech technical substance, and some of those that were started never saw
fruition. The number of Foreign Direct Investment (FDI) projects in Hung Yen
province’s industrial zones has been on the rise, but maybe not at the rate that would
be optimal for maximizing the province’s ability to reap the advantages of such
investment. Inadequate contributions to provincial budget revenues; limited job
creation (some FDI ventures have fewer than ten workers); outdated technology;
environmental contamination; etc. are just a few examples of the socioeconomic
benefits that certain projects have failed to give to the province.
The insatiable desire to establish a sustaining industry
Hung Yen Province, and Vietnam more broadly, lacked a developed
supporting industry that could supply the raw materials necessary for the production
and commerce of corporations, notably Foreign Direct Investment (FDI) firms.
Consequently, this had a substantial impact on the quantity and business effectiveness
of FDI businesses. According to the research results, up to 83.33 percent (25/30) of
FDI businesses cited a scarcity of raw materials and components as the cause for their
difficulties. In several industries, in order to continue production, business, and
export, FDI businesses relied primarily on imported raw materials.
In the province’s socioeconomic development planning, regional planning was
not pushed in conjunction with socioeconomic development. This has led to the
underdevelopment of the province’s supporting industries. For instance, when
considering the construction of factories for manufacturing, processing, etc., To avoid
raw material shortages and decreases in investment efficiency, it is important to look
at the region as a whole when assessing the source of input materials. The limitation
not only caused a surge in input costs for FDI firms, but it may also have driven some
of those businesses to look elsewhere, maybe to a country that already had a better
developed infrastructure to support them.
46
The fourth problem was the lack of coordination between administrative
processes and physical facilities.
Land leasing processes, particularly site approval, remained problematic for
investment projects located outside industrial zones. The province has spent heavily
in the infrastructure system inside and outside of industrial zones, but it has not
satisfied the expectations of international investors, notably in terms of energy, water,
and roads.
2.4.2.2 The causes of limitations
To begin, there was a lack of cohesion and uniformity in the FDI legal and
policy environment.
The successful implementation of investment promotion policies has a major
impact on FDI. Investment incentive schemes in the province, such as financial aid
for vocational training, reimbursement for infrastructure projects, and an extended
exemption and reduction term for land leasing, were highly valued by investors.
Foreign investors often select the province with the most favorable land investment
policy, which creates new production and commercial facilities. Foreign investors’
selection of Hung Yen is predicated mostly on the firm’s relative success. In general,
FDI companies evaluated the province’s FDI attraction policies positively. However,
these regulations had numerous flaws and were difficult to apply since the province
aimed to attract businesses with high brain content and current technology, yet many
registered projects did not match the policies’ standards, therefore discouraging
investors.
The inducements FDI firms praised the province’s investment policies,
although others said they lacked originality and were identical to those of other
jurisdictions. This is mostly the viewpoint of FDI firms located outside of industrial
zones. Numerous investors lacked the proper company registration license. In rare
instances, the license for business registration was acquired after the formal
appointment date. Due to the oversight of the responsible authorities, some investors
were forced to make multiple trips back. Investors in the province did not get
47
adequate assistance from government entities in delivering information, navigating
procedures, and resolving problems; nonetheless, investors must navigate the
investment process on their own. Very significant unauthorized charges were
incurred by provincial public workers.
Second, workers lacked expertise and managerial credentials.
Human resources had not satisfied the conditions for attracting investment;
over 80 percent of the province’s firms and projects are located in the province’s
northern regions. Therefore, finding workers in this region was challenging,
particularly for businesses that need a large number of employees. Furthermore, the
province has a number of vocational training institutions, but these facilities were
underequipped to meet the province’s enterprises’ need for qualified and highly
technical human resources.
The province of Hung Yen has a large labor pool, however it was challenging
for FDI businesses to acquire trained and qualified people. The majority of
recruitment firms were required to train their employees, resulting in increased time
and financial losses. It was extremely difficult to recruit senior employees with
management degrees.
The local work force was still quite restricted. Commonplace is the scarcity of
trained workers, technical labor, capable of running contemporary technology.
Therefore, the province has steadily lost its labor advantages. Moreover, workers
operating in joint-venture firms and management in FDI enterprises lacked market
economics understanding, legal expertise, and foreign language proficiency.
According to statistics, only roughly 45% of workers in Hung Yen are
employed in FDI projects; the remainder are foreign labor. In which the majority of
direct employees are recent high school graduates who lacked training or training but
lacked specialization and were not in the correct sector of investment activities. In
the meanwhile, the majority of foreign direct investment Most FDI projects used
cutting-edge assembly lines, which in turn need skillful workers, Consequently, this
48
was a widespread problem that needed fixing quickly if the country was going to meet
investors’ needs and attract FDI.
Poor and inadequate infrastructure persisted.
Province and State have spent extensively on the infrastructure system both
inside and outside of industrial zones in recent years, but not simultaneously, certain
investment regions prioritized building, while others lacked adequate attention;
others had inadequate roads, warehouses, yards, transportation, power, or water. This
meant that they failed to meet the appealing needs of international investors. While
investors were urged to put money into Hung Yen, many remain wary due to the
province’s subpar infrastructure.
There had been several upgrades and improvements to the traffic system, but
it still often became backed up and failed to fulfill the transit demands of local
companies. To be more specific, District-to-district connections on provincial
roadways were modest and weak, making it difficult to operate large-tonnage vehicles
and increasing transportation costs. This would damage the province’s ability to
recruit international investors.
In recent years, the power grid has been enhanced. There were 110 and 220
transformer stations dispersed across the province’s regions, which served the
demands of the population. However, the power scarcity persisted, and there were
two days of continuous power outages, resulting in enormous production and
business outcomes losses.
In spite of being put in place to ensure the smooth functioning of businesses,
the drainage system in industrial zones is subpar and cannot keep up with the volume
of water that is generated, so businesses continued to dump garbage, negatively
impacting the surrounding environment.
The water infrastructure was insufficient for the manufacturing operations of
businesses. Due to the lack of a public water infrastructure, dug wells were still drilled
for a variety of applications outside of industrial zones.
49
The fourth category, methods for acquiring land, including leasing procedures,
has persisted in posing a number of difficulties.
Currently, investors were mostly interested in production- and business-ready
elements. Low land prices, lenient tax and credit policies, etc., which have
traditionally been used to entice investors, are losing their allure. Some difficulties
were encountered throughout the compensation and site clearing processes since the
economy in Hung Yen was significantly more difficult than those of its bordering
provinces. The compensation amount for land clearance did not satisfy the needs of
the people, making it difficult for investors to obtain site clearance for project
implementation. but Hung Yen had done no action to address the issue.
In addition, both the state and municipal governments had precise legislation
about compensation for site clearing, but the “party’s will” must align with the
“people’s will.” Consequently, site clearing was one of the most difficult elements of
the province’s efforts to build suitable manufacturing facilities to attract international
investors.
Fifthly, the province of Hung Yen’s FDI promotion strategy proved
ineffective.
Even while the province of Hung Yen’s FDI promotion and mobilization had
achieved many gains in recent years, it had not been truly successful and able to
predict global economic development patterns and capital flow shifts. Therefore, the
campaign’s efficacy was low, investment promotion efforts were still dispersed, and
resources were dispersed and not concentrated on potential partners.
In addition, the province of Hung Yen’s national investment promotion policy
had not been established synchronously and according to the goal of attracting
priority investment in areas and disciplines connected to competitive advantages and
actual local development conditions. Consequently, national and provincial
authorities lacked coherence and synchronization in their investment promotion
strategies and objectives. In order to promote investment, it required the coordination
between ministries, branches, and investment promotion centers in the planning of
50
investment promotion programs investment promotion campaign. Investment
promotion was ineffective since diplomatic operations, trade, and tourism were still
heavily regulated.
51
CHAPTER 3
HUNG YEN PROVINCE INDUSTRIAL SECTOR ORIENTATIONS AND
SOLUTIONS TO ENTICE FOREIGN DIRECT INVESTMENT
3.1 Hung Yen province’s industry development aimpointments and directions
3.1.1 Industrial development aims
Specifically, the province’s aspires to construct high-tech industrial hubs
connected to expand
service and local agricultural sectors based on regional
industrial planning; and to ensure high added value; to prioritize the growth of
modern and high-tech firms; for targeted growth in service, processing, and
manufacturing sectors
This includes revising and augmenting the master plan on the and clusters and
system of industrial zones and clusters to guarantee synchronization with master
plans and plans on human resource development, construction of social facilities and
vocational schools; accelerating construction progress; and completing the
infrastructure of industrial zones synchronously and qualitatively. At the same time,
nurture an environment that is friendly to commerce, one that draws in investors with
cutting-edge skills and resources from near and far.
3.1.2 Some provinces’ experience in drawing Foreign Direct Investment
3.1.2.1 Bac Ninh province’s experience
Over the last several years, Bac Ninh has attracted foreign direct investment
projects from around 20 different nations and regions. Foreign Direct Investment
(FDI) in Bac Ninh province comes mostly from the following three
countries/organizations: First, investments from South Korea totaled 1,077 million
dollars (100 projects) and represented 30% of the province’s total registered FDI
capital.; (52 projects with a total registered investment capital of 638 million USD
from Japan (18% of the province’s total registered FDI capital) and 33 projects from
Taiwan (6 million USD) rounded out the top three (28 projects, registered investment
capital of 543 million USD). Companies including Canon, Nokia, Pepsi Co, Hong
52
Hai, Samsung and many more have set up shop in the city of Bac Ninh. To entice
foreign direct investment (FDI) money, Bac Ninh has adopted the following
measures:
To begin luring investors, you must first create a climate of openness and
transparency in which to do business. Reforming cumbersome administrative
processes in troubled sectors including land, construction, labor, and customs;
reviewing and refining the institutional framework; shortening the duration of the
public process;
Secondly, expedite the process through which investment certificates are
issued by having the Department of Planning and Investment and the Management
Board of the provincial Industrial Zone work together.
Third, provide investors with helpful information about projects, guide them
through the investment process, and assist them in building and implementing their
initiatives. Create a report to “introduce the investment climate,” updating and adding
to the 2016-2020 list of FDI calling projects on a monthly basis.
The fourth step is to boost public perception and expose potential investors to
the local business climate via active marketing campaigns. Advertise and introduce
foreign direct investment (FDI) through the media. Develop investment promotion
delegations to go to Japan, Korea, Taiwan, etc. to present and promote Bac Ninh.
Fifth, establish mutually beneficial connections for promoting investments.
Engage the Northern Investment Promotion Center and other foreign diplomatic,
economic, and trade agencies (such as JETRO, AUSAID, KOTRA, JICA, etc.) in an
effort to share information and build mutually beneficial partnerships. In addition,
Bac Ninh province has frequent meetings with companies to address issues with
increasing production and strengthening the attractiveness of industrial clusters and
zones.
53
3.1.2.2 Vinh Phuc province’s experience
In recent years, the province has risen to prominence as one of Vietnam’s most
attractive investment destinations. The province had an effective approach to dealing
with investors and attracting investment money, in addition to its advantageous
position (near Hanoi and major transportation hubs). Numerous well-known
companies, including Honda and Toyota (Japan), Fullpower (Taiwan), Piaggio,
Foxcon, YCH (Singapore), Compal, and GO Max and Kumho Lotte (Korea), have
benefited from foreign direct investment (FDI), allowing them to expand their
production capacities and reach new heights.
Vinh Phuc uses the following strategies to entice foreign direct investment
(FDI) money:
A project license in as little as three days: The strategy of administrative
reform is key to Vinh Phuc’s success in luring FDI capital. In addition to providing
favorable business environments, Vinh Phuc has promoted the province via the
publication of books, newspapers, and magazines and the translation and dubbing of
3D films. To explain Vinh Phuc’s plans in English, Japanese, Korean, and Chinese,
we’ve created the slogan “Vinh Phuc - an investor’s destination.”
Giving a leg up to the agricultural sector in the hunt for foreign direct
investment funds: Vinh Phuc prioritized FDI projects in the agricultural sector
because they have the potential to make use of cutting-edge technology and expand
output. Twenty years after it was reestablished as a province, Vinh Phuc’s economy
has flourished.
3.1.2.3 Hai Duong province’s experience
With a total registered investment capital of 6,736 million dollars across 348
FDI projects from 23 countries and regions, Hai Duong is in the top 17 provinces in
terms of FDI capital. The sum of all FDI firms’ realized invested capital is
$2,195,000,000 USD. When it comes to luring foreign direct investment funds, Hai
Duong uses the following strategies:
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First, publish the detailed policies and procedures. In order to draw Foreign
Direct Investment, the province of Hai Duong prioritized investments with a high
technical content, source technologies, competitive goods, and export-oriented
manufacturing are prioritized, contributing to manufacturing and other fields that
benefited from access to inexpensive, readily available materials produced in the
immediate area. Projects that employ out-of-date technology, have a negative impact
on the environment, or might have a ripple effect on other ongoing endeavors should
be denied licenses. Projects that need a large amount of land should be thoroughly
vetted, land should be allocated with conditions based on the project’s progress, and
the investment rate/land area should be taken into account.
Second, maintain a constant stance on the issue of attracting FDI capital, serve
as a solid legal support for businesses, and make it possible for them to operate in the
best possible environment. The province pushed for technological innovation to boost
productivity, reduce costs, boost competitiveness, and care for employees’ lives, and
it urged businesses to hurry up the execution of approved projects.
Thirdly, apply the solutions to regulate the quality of foreign investment
projects; suggest the answers to improve the asynchronous, inconsistent, and
confusing legislation connected to investment and business processes to the relevant
ministries and branches. The measures would pave the way for investment in
productive businesses, boosting the province’s economy and ensuring its long-term
viability.
3.2.2.4 Dong Nai’s experience
Dong Nai has recently shifted from an agricultural-based economy to a
socialist-oriented market economy thanks to the planning and building specialized
industrial zones to attract domestic and foreign investors. When it comes to building
and expanding, Dong Nai is among the top cities in Vietnam. in terms of industrial
parks, it is the leader in the nation, with 29. There are almost 14,000 private
businesses operating inside these zones, and their combined output value is
equivalent to around 60% of the province’s total industrial-construction value.
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The province adopted the following measures to entice FDI funding:
Prioritize elevating the level of energy and innovation within the regional
management team. A group from Dong Nai province, headed by the provincial party
secretary, visited Taiwan’s industrial zones in 1989 and 1990. Local management
boards might then use the report as a starting point for making the province a more
attractive location for foreign direct investment.
Second, we make the most of the provinces convenient location. Dong Nai is
conveniently close to key business hubs including Ho Chi Minh City, Ba Ria - Vung
Tau, Lam Dong, and others thanks to its location in the south’s thriving economic
zone. Natural features of Dong Nai are also very desirable. include a mild climate,
abundant water, a wide range of soil types, and a wide variety of plant life.
Third, make it easy for companies to do well. An adequate water-land
transportation network is crucial to the growth of the economy and industry. The legal
and legislative frameworks under which businesses operate are also relatively open,
which encourages both local and international investment.
3.1.3 Attracting Foreign Direct Investment: What Hung Yen Can Learn?
Analyzing the experience of other provinces in acquiring and using FDI might
provide Hung Yen with valuable insights on how to acquire FDI money.
The first step is to establish a secure economic, political, and social climate
and to empower regional governments. Vinh Phuc, Hai Duong , and Bac Ninh, Vinh
Phuc, provinces have successfully executed inspection, monitoring, and
accompanying with international investors to guide and establish favorable
circumstances, To promote FDI recruitment and capital use efficiency, reduce hurdles
and challenges for investment projects to meet their obligations, and withdraw
projects that are behind schedule. Hung Yen has to improve its local government’s
ability to entice foreign direct investment in order to boost the city’s economy.
Second, work for a more investor-friendly regulatory climate. Successfully
recruiting FDI in Bac Ninh, Hai Duong, Vinh Phuc, and Dong Nai stems in large part
from the provinces’ concerted efforts to promote those regions’ respective main
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sectors. To encourage investment in emerging sectors, Hung Yen should provide
preferential treatment to investors.
In the third place, make sure that the strategy is well-organized and managed.
A road map to successfully attract and use FDI should be based on research and
appraisal of possible benefits in local socio-economic development. Lists of projects
seeking foreign direct investment (FDI) capital are compiled, investment promotion
is carried out in accordance with a suitable roadmap, project partners, goods, capacity,
progress, technological level, consumer market, project implementation region, and
required preferential policies are defined in details.
Make investments in the country’s physical and technological infrastructure
in order to entice international investors. Increases in foreign direct investment can
be seen in the provinces of Hai Duong, Vinh Phuc, Bac Ninh, and Dong Nai through
the implementation of infrastructure investment activities to attract Foreign Direct
Investment. This is due in large part to the development of the technical infrastructure
system, which has improved the provinces’ standings as investment destinations.
Hung Yen will require preferential policies that are both appealing and effective for
large-scale, ubiquitous socio-economic infrastructure projects in the near future.
Five, cultivate ancillary sectors. The four provinces mentioned about have
become regions that have a significant role in the exportation of electrical and
electronic, processing technology , advanced technology, and so on. It is due to
careful preparation, the highlighting of comparative advantages, and vigorous efforts
to entice foreign direct investment (FDI) funds. Therefore, Hung Yen province must
implement the following contents in the future: provide advantageous rules for
businesses making ancillary goods, improve the caliber of human resources, and
fortify ties between companies as part of the process of growing ancillary sectors. set
up cooperative manufacturing of ancillary goods.
Sixth, raise the bar on the caliber of your workforce to meet the standards set
by luring foreign direct investment. Bac Ninh, Hai Duong, Vinh Phuc, and Dong Nai
have all made strides in the past to improve and modernize their training and
vocational education systems to better meet the needs of the market and to bring them
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closer to international standards. As a result, the province’s workforce will be more
equipped and more qualified. Hung Yen province may learn from this example and
use the lessons learned to raise the standard of its workforce so that it better meets
the needs of the foreign direct investment (FDI) it hopes to entice.
Seventh, elevate the standard of investment marketing. The four provinces
mentioned about have all had success with this strategy to date in drawing FDI into
Vietnam. That’s why Hung Yen has to sell the province’s image and potential on the
worldwide market, organize activities appealing for investment via trade fairs and
exhibits, and zero in on the actual investment capability of prospective backers.
Eighth, improve the processes of monitoring and rating FDI projects. Bac
Ninh, Hai Duong, Vinh Phuc, and Dong Nai have strengthened state management
over FDI post-licensing investment activities by increasing inspection, examination,
and supervision of investment projects in accordance with the provisions of the law
on investment and specialized laws; reviewing, classifying, and handling projects in
accordance with the provisions of the law for projects that are not in compliance with
the law on investment. Hung Yen may use this knowledge to better carry out FDI
inspection, monitoring, and assessment processes.
Nineth, create a better atmosphere for investing. Bac Ninh, Hai Duong, Vinh
Phuc, and Dong Nai have been successful in attracting FDI capital in part because of
their laser-like concentration on strengthening the investment climate of the
provinces.
3.1.4 Industrial development directions
Improve quality, competitiveness, and modernity in the industrial sector by
hastening its growth. Leverage the influence of all sizes and types of businesses to
create a market with a structure that makes the most of available resources and
capitalizes on opportunities in a wide variety of geographic areas. The ratio of
domestic value to total value produced should be increased, the scientific and
technological content of manufactured goods should be increased, and the
international competitiveness of manufactured building goods should be enhanced.
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The expansion of services, the improvement of cities, and the protection of natural
resources are all intertwined with the development of the manufacturing sector. To
strive for a rate of 10–10.2% in yearly value-added growth in manufacturing and
building.
Contribute to the development of an industrialized nation and greater
economic independence by simultaneously expanding the processing, high
technology, manufacture of essential means of production, and military industries.
Conceive of and efficiently carry out a plan for industrial growth to aid in the
modernisation of agriculture and rural areas.
Industries such as agro-forestry-fisheries processing, apparel and footwear
production, plastics processing, furniture making, ship mechanics, production of
computer technology, synchronous equipment, electrical machinery, construction
machinery, farm machinery, transportation machinery, mechatronics, and computer
technology.
Support should be prioritized for development and improvement. A rise in the
proportion of processed industrial exports is being pursued. bolstering the
development of the energy sector by incorporating energy-saving technology, the
materials sector by doing the same, the pharmaceutical and biological product sector
by doing the same, and the environmental protection sector by doing the same, etc.
Resources from all economic sectors, especially FDI, are crucial to the
development of enterprises producing large means of production. Prioritizing
investment or assistance for investment in critical economic sectors including
refining and petrochemicals, mining ore and steelmaking, fertilizers, and chemicals
is necessary based on available resources and efficiency. Industries such as chemical,
cement, bauxite mining and alumina production, afforestation pulp, a few
manufacturers, and mechanical are all present.
Full-scale preparation for the growth of the country’s most important
industrial hubs and clusters. There should be more concentrated industrial zones or
less populated regions for industries that do not fulfill environmental criteria to
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operate in the city core or near residential areas. Partner and collaborate more closely
by actively seeking investment and technology from international companies
interested in contributing to Vietnam’s economic development.
3.2 Hung Yen province innovations to entice Foreign Direct Investment in the
Industrial Sector
3.2.1 Methods for Improving Infrastructure
a. Rationale behind the proposed solutions
Since it has not played a significant role in luring FDI to the province,
investors are especially curious in the infrastructure component. The economy will
suffer greatly if the infrastructure is inadequate, especially the roads and the power
grid.
Municipalities with weak infrastructure have found it difficult to attract
foreign investors in recent years, despite attractive investment promotion
measuresRoads, storage facilities, yards, and modes of transportation are inadequate
in certain areas that have been neglected., and power have not yet satisfied the
demands of international investors despite Hung Yen’s improvements, but these
issues are slowly being addressed.
b. Content of solutions
Prioritizing the development of synchronous traffic infrastructure, such as
traffic works linked to highways, national highways, and traffic works outside
industrial zones, is important for attracting investors and improving the efficiency of
transportation, trade, and logistics.
Spending a lot of money on infrastructure development; putting more money
into developing in unserved regions and industries; repairing and modernizing vital
transportation corridors; Avoid investing in too many different areas, since this
reduces investment efficiency and makes it harder to build the necessary
infrastructure to attract foreign direct investment to the province.
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Building new cities faster to better the material and spiritual lives of
employees, especially those from other countries, and to boost local service sector
growth and employment opportunities.
Create conditions in which businesses may construct worker housing by
establishing a residential land fund tied to industrial zones and clusters. Make it
possible for workers, especially those with technical degrees who want to settle in the
region for the long haul, to acquire reasonably priced houses. High-caliber mechanics
from Hanoi City and the surrounding provinces who are relocating to Hung Yen need
the implementation of travel aid measures.
Spending on utilities outside of industrial zones; making industrial zones more
amenable to infrastructure investment by improving access to power, water, and
roads.; active mobilization of qualified domestic and foreign investors in
infrastructure business within industrial zones that currently lack investors.
3.2.2 Policy and mechanism improvements
a. Rationale behind the proposed solutions
This policy is helpful since it facilitates manufacturing and business operations
for investors. Capitalists have an eye on customs tax rules and procedures, as well as
tax policies in general and administrative reform policies (one-stop shop). This is a
significant component determining investor pleasure, thus it’s crucial to put effort
into growing import and export activity in favor of investors.
b. Solutions’ contents
Tien Lu, Kim Dong, An Thi, Khoai Chau need the province’s help to attract
foreign direct investment, hence the province’s incentive mechanisms must be
tailored to the specifics of the projects involved. Despite the land and human
resources available in these areas, few FDI projects are presently under construction.
Put into action the plan to lower corporate income taxes on FDI companies.
Industry-specific tax exemptions for businesses; Income tax cuts tailored to the
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specific needs of FDI enterprises operating in various sectors of the economy are
essential if the province is to attract FDI.
The local government mandates that investment management agencies review
tax and customs policies, administrative reform policies, land policies, and so on, as
well as other policies promulgated by the local government, on a regular basis to
identify any gaps in the implementation process and provide advice to competent
authorities on how to fill those gaps through the promulgation of new legal
documents.
3.2.3 Reforms to administrative processes
a. Rationale behind the proposed solutions
When it comes to the current scenario of changing administrative operations
of departments and branches, it is clear that coordination and information exchange
across government entities are not in sync and rhythm in handling procedures for
enterprises and investors, such as issuing building licenses, issuing land use and
property ownership certificates, etc., all of which delay the actual execution of the
project.
At this time, Hung Yen province does not have a centralized service center
connecting its many branches and departments; rather, there is a centralized service
center housed inside each branch and department. Many governmental services are
made available online, but relatively few transactions take place at the third and fourth
levels of online government.
b. Content of solutions
Continuing administrative reform, with the following specific measures, is a
key step in improving the investment environment to attract FDI capital.
In order to simplify administrative processes, it is important to examine and
streamline them, doing away with anything redundant, unnecessary, troublesome, or
otherwise improper. Streamlining the length of time it takes to finish each
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administrative operation for things like investing, registering a firm, building, buying
property, and hiring workers.
Establishing a direct channel of communication between firms and the
Provincial Party Secretary and the Provincial People’s Committee would allow for
faster investment, building, and land use approvals, as well as other economic
activity.
Providing online public services at levels 3 and 4 for the following enterpriserelated domains, and continuing to foster innovation and the use of IT in management,
especially in the processing of administrative processes.
Investors will appreciate the time and effort savings from reduced
administrative processes that this provides.
The province’s many departments and agencies share data in a centralized
database to lessen the burden of mandatory statistical reporting on businesses,
especially those with foreign direct investment. Reduce business waiting times by
performing annual general inspections and examinations.
3.2.4 Methods for bettering human resource standards
a. Rationale behind the proposed solutions
In Hung Yen province, FDI businesses are struggling due to a lack of trained
laborers, technical employees, and management. satisfy the standards of international
investors; most FDI management staff lack the necessary qualifications, therefore
FDI businesses must either hire personnel from outside the area or engage in
retraining existing employees. business; The labor force is in a position of excess of
teachers, shortage of employees, etc., creating numerous challenges for FDI firms in
terms of workforce recruiting.
b. Content of solutions
It’s important to invest in developing a highly trained technical staff and a
team of internationally certified managers. To achieve this goal, the Province of
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Ontario will need to implement improvement of its training institutions;
implementation of a long-term plan for education and training; make enough
investments in its material and technological resources; and staff its training program
with qualified instructors. In order to assemble this human resources group, it is
important to encourage collaboration and partnership with reputable domestic and
foreign training institutes. In order to provide vital professional abilities, the
workforce must be educated to become dynamic, vibrant, steady, and successful in
all situations. There is an immediate need for managers who are fluent in other
languages, particularly English, Japanese, Chinese, and Korean. Courses should
encourage creative building practices and open communication among staff
members. together and in close cooperation to achieve optimal results.
Leaders in each province should coordinate and foster ties between their
jurisdiction’s training institutions and the FDI businesses that are hiring. To develop
an effective training strategy, it is necessary to assess the demand of businesses in
various occupations. Career-focused education that includes on-the-job training at
foreign direct investment businesses (FDIs) to prepare graduates for immediate
employment. Facilitating faster and cheaper retraining for foreign direct investment
businesses... It is important for companies to have access to qualified workers, hence
it is important to foster partnerships between local firms and local training institutions
to address this need.
To recruit and offer a favorable treatment for specialists and highly trained and
experienced individuals from other regions and outside who relocate automatically to
work locally.
To guarantee a high quality of human resource, local training organizations
need to do research, analyze the market, and refresh their thinking via measures like
connecting, partnerships devoted to training and the development of innovative
educational facilities, methods, and courses
3.2.5 Solutions for gaining access to land
a. The rationale behind the proposed solutions
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In Hung Yen province, FDI businesses are struggling due to a lack of trained
laborers, technical employees, and management. satisfy the standards of international
investors; most FDI management staff lack the necessary qualifications, therefore
FDI businesses must either hire personnel from outside the area or engage in
retraining existing employees. business; The labor force is in a position of excess of
teachers, shortage of employees, etc., creating numerous challenges for FDI firms in
terms of workforce recruiting.
b. Content of solutions
It’s important to invest in developing a highly trained technical staff and a
team of internationally certified managers. To achieve this goal, the Province of
Ontario will need to implement improvement of its training institutions;
implementation of a long-term plan for education and training; make enough
investments in its material and technological resources; and staff its training program
with qualified instructors. In order to assemble this human resources group, it is
important to encourage collaboration and partnership with reputable domestic and
foreign training institutes. In order to provide vital professional abilities, the
workforce must be educated to become dynamic, vibrant, steady, and successful in
all situations. There is an immediate need for managers who are fluent in other
languages, particularly English, Japanese, Chinese, and Korean. Courses should
encourage creative building practices and open communication among staff
members. together and in close cooperation to achieve optimal results.
Leaders in each province should coordinate and foster ties between their
jurisdiction’s training institutions and the FDI businesses that are hiring. To develop
an effective training strategy, it is necessary to assess the demand of businesses in
various occupations. Career-focused education that includes on-the-job training at
foreign direct investment businesses (FDIs) to prepare graduates for immediate
employment. Facilitating faster and cheaper retraining for foreign direct investment
businesses... It is important for companies to have access to qualified workers, hence
it is important to foster partnerships between local firms and local training institutions
to address this need.
65
To recruit and offer a favorable treatment for specialists and highly trained and
experienced individuals from other regions and outside who relocate automatically to
work locally.
To guarantee a high quality of human resource, local training organizations
need to do research, analyze the market, and refresh their thinking via measures like
connecting, partnerships devoted to training and the development of innovative
educational facilities, methods, and courses.
3.2.6 Methods to increase investment activity
a. The rationale behind the proposed solutions
The investor has not received the information they were hoping to find on
investment promotion. In many cases, efforts to attract investment have petered out
after the first contact and introduction; as a result, prospective investors have been
left in the dark about the opportunities and economic rewards that would be theirs if
they chose to put their money in the region. Neither the number of employees nor
their level of expertise in the field of investment promotion are up to par with the
needs of the mission, and funding for investment promotion has not been proportional
to needs.
b. Content of solutions
There has to be a system in place for the province to identify, court, and
negotiate with prospective investors (partner-based promotion). The province’s
officials must reach out to and meet with each Group and Company in which the
province is interested in investing to learn more about their specific requirements. As
a result, there exist investment promotion efforts that are both fitting and effective.
So that FDI firms and foreign investors may rapidly reflect and resolve
concerns and problems, it is important to strengthen contact and create internet-based
lines of communication between provincial bureaucrats, industry leaders, and
municipal officials.
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Fortify collaborations with the investment community and the research
market. The investment potential and trends of multi-national firms from strategic
partners must be studied and evaluated, therefore proper organization is essential. To
support the manufacturing and commercial operations of one of a big corporation’s
massive investment projects, a number of smaller satellite projects will be launched.
Establish a system of recognition and reward for those who take the initiative
and succeed in investment promotion endeavors.
Encourage and beckon multi-national corporations equipped with deep
pockets and cutting-edge equipment to set up shop in the province.
To ensure that Hung Yen province needs a propaganda plan to introduce the
benefits of Hung Yen province in particular and of Vietnam in general on foreign
television channels and online newspapers because corporations and companies
around the world are aware of and exploring investment opportunities in Hung Yen
province..
3.2.7 Methods for fostering the growth of ancillary businesses
a. The rationale behind the proposed solutions
Hung Yen province’s supporting industry for FDI enterprises is still
underdeveloped It has not been able to meet the demand for raw materials for
production of firms, notably FDI enterprises; this has had a significant effect on the
province’s ability to attract FDI and on the performance of FDI businesses.
The absence of a reliable supply of raw materials and components in the
province was cited as a major challenge for FDI businesses. In many industries, FDI
firms rely heavily on imported raw materials to keep production, commerce, and
exports going strong.
b. Content of solutions
Motivating the development of industrial zones and clusters for the production
of components, spare parts, and auxiliary materials for industries, where many private
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businesses can become suppliers to FDI enterprises, is a constructive and practically
useful strategy for fostering the growth of supporting industries.
Adopt measures to entice both international and local businesses to invest in
the sector, and assist industries.
The foundation of industrial development is enticing domestic and foreign
direct investment (FDI) corporations to invest, thus it’s important to have regulations
in place to foster the growth of supporting sectors by providing tax benefits and
physical space for businesses. Auxiliary Industry - Linking Foreign Direct Investment
(FDI) Businesses with Domestic Businesses to Foster Supportive Production via
Programs to Introduce the Need to Develop and Use Auxiliary Products and
Economic Contracts Between These Businesses.
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CONCLUSION
Hung Yen province’s ability to attract FDI capital shows how the presence of
FDI in the industrial sector has ushered in a new transition and served as a watershed
moment in the province’s economic and social development. It promotes growth,
creates jobs, and boosts state revenues, all while aiding in the transition to a more
industrialized, modern economic structure. Drawing on the available literature and
the present status of attracting FDI capital to Hung Yen province’s industrial sector,
the author has addressed the following key difficulties.
This subject has allowed for the methodical organization of the many
theoretical and practical issues related to FDI. The importance of foreign direct
investment (FDI) to the development of certain sectors within Vietnam’s economy
and the nation as a whole is discussed, as are some of the most basic concerns
surrounding FDI. This paper examines the factors influencing the allure of foreign
direct investment (FDI) capital in different countries and regions, as well as the
current system of policies in Vietnam. Hung Yen may learn a lot from surrounding
provinces and municipalities about how to entice foreign direct investment (FDI) in
the industrial sector.
Second, this research is helpful for presenting an overall picture of the success
or failure of Hung Yen province’s industrial sector in luring FDI during the last
several years. Thanks to the advantages provided, policies to support investment
projects of the province, and the efforts of important sectors and units, Hung Yen
province has witnessed extraordinary success, with the amount of FDI in the province
expanding rapidly. In spite of the global economic crisis and the local economic
collapse, the number of newly financed FDI projects in Hung Yen provinces has
constantly decreased over the previous few years. Hung Yen province remains a
favorite amongst overseas investors for the site of their province’s industrialization
endeavors. After more than 17 years of implementation of policies to attract local and
foreign investment capital, FDI investment capital into Hung Yen province has
increased rapidly (from 2005). Attracting projects backed by FDI in the industrial
sector has helped the province’s economy develop at an average rate of 11.02%
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during the previous several years. By 2025, Hung Yen will have a solid basis thanks
to these accomplishments, allowing it to become primarily an industrial province.
Ultimately, this subject analyzes the factors that affect Hung Yen’s potential
to entice FDI in its manufacturing sector. Hung Yen province has been successful in
attracting FDI capital due to its open business environment and superior technical
infrastructure, especially its planned and operating industrial zones and industrial
clusters. In recent years, Hung Yen province has been a popular “destination” for
many international investors due to its numerous helpful solutions to allow local and
foreign corporations to do business, especially policies to encourage investment for
businesses.
Unfortunately, Hung Yen province does not have a comprehensive plan or
strategy to direct investment and economic growth toward the most important
regions. More precisely, we should encourage FDI projects that are large in scale,
technologically sophisticated, environmentally benign, and capable of creating
competitive commodities so that they may more easily integrate into global value
chains. ….
Offer strategies for attracting foreign direct investment (FDI) to Hung Yen
province’s industrial sector. To overcome the shortcomings and limitations in the
work of attracting FDI capital to the industrial sector of Hung Yen province recently,
synchronous solutions are needed from all levels of government to improve
infrastructure, complete appropriate mechanisms and policies, and reform
administrative procedures.
Nonetheless, problems in the recruitment and usage of FDI capital in the
industrial sector impede the province's industrial growth in particular and its
socioeconomic development in general. This is mostly due to poor FDI capital
mobilization and inefficient utilization. Improving the province's capacity to attract
and utilize Foreign Direct Investment (FDI) capital, particularly FDI capital for the
industrial sector, will be a critical step in the province's socioeconomic development
strategy in the near future.
70
Another point worth noticing is, the local work force was still quite restricted.
Commonplace is the scarcity of trained workers, technical labor, capable of running
contemporary technology. Therefore, the province has steadily lost its labor
advantages. Moreover, workers operating in joint-venture firms and management in
FDI enterprises lacked market economics understanding, legal expertise, and foreign
language proficiency.
Furthermore, there are still gaps in the province’s capacity to attract and
deploy Foreign Direct Investment (FDI) capital in its industrial sector, which impedes
industrial and societal growth. The fundamental cause is the inefficiency and
difficulty of utilizing FDI funds. Finding ways to boost the attraction and efficient
use of FDI capital, especially FDI capital for the industrial sector, will be a pressing
need in the near future if the province is to carry out its strategy for social and
economic growth.
Although there is still drawbacks of policy, as part of their attempts to develop
the province into an industrial center by 2030, the Party Committee's leader board
and the inhabitants of Hung Yen province have emphasized attracting foreign
investment to industrial growth.
However, the successful implementation of investment promotion policies has
a major impact on FDI. Investment incentive schemes in the province, such as
financial aid for vocational training, reimbursement for infrastructure projects, and
an extended exemption and reduction term for land leasing, were highly valued by
investors. Foreign investors often select the province with the most favorable land
investment policy, which creates new production and commercial facilities. Foreign
investors’ selection of Hung Yen is predicated mostly on the firm’s relative success.
In general, FDI companies evaluated the province’s FDI attraction policies positively.
However, these regulations had numerous flaws and were difficult to apply since the
province aimed to attract businesses with high brain content and current technology,
yet many registered projects did not match the policies’ standards, therefore
discouraging investors.
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To sum up, as a result of the foregoing, the thesis "Suggestions to attract more
Foreign Direct Investment to the Industrial Sector in Hung Yen Province" helps bring
about the necessary influx of funds to finance the province's manufacturing sector
expansion and achieve the socioeconomic development goals outlined in the
province's long-term master plan.
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