Research motivation
International economic integration plays a crucial role in Vietnam's industrialization and modernization, significantly enhancing the country's ability to attract foreign direct investment (FDI) Over the past 25 years, FDI enterprises have substantially contributed to the economy by boosting capital inflow, accelerating economic growth, transforming the economic structure, improving labor productivity, and creating job opportunities through technology transfer Given its immense significance, the attraction of FDI has garnered increasing attention and strong promotion from the authorities.
The Vietnamese government is enhancing business environment reforms to boost economic competitiveness and attract investment across all sectors, while also fostering the growth of the domestic private enterprise sector This approach aims to create a more favorable landscape and provide local authorities with greater fiscal flexibility to implement policies that stimulate local economies Furthermore, the government is developing national strategies to align with the Industrial Revolution 4.0, facilitating significant advancements in the coming years To ensure effective integration, local authorities must acquire in-depth knowledge to align local policies and technological infrastructure with national objectives.
Bac Giang province, located in Northeast Vietnam, is strategically positioned near the North's key economic triangle of Hanoi, Hai Phong, and Quang Ninh, facilitating regional development Its advantageous geographical location, favorable natural conditions, and robust infrastructure, combined with effective investment policies and streamlined administrative procedures, have made Bac Giang an attractive destination for international investors.
2021, the FDI capital accounted for 21.9% of the total capital investment Despite the
In 2021, despite the challenges posed by the Covid-19 outbreak, Bac Giang province saw significant foreign direct investment (FDI) activity, with 22 projects receiving investment licenses totaling $640.9 million Additionally, 50 existing FDI projects adjusted their capital, increasing the total investment by $641,349.15 million.
Bac Giang province, despite notable achievements, faces challenges in attracting foreign direct investment (FDI) The strategies in place for FDI promotion have not reached their full potential, and support for businesses in overcoming obstacles has proven inadequate Additionally, the region struggles with a low number of permanent job opportunities, and many local manufacturers operate with only basic technology The social responsibility exhibited by enterprises is also lacking A significant incident in 2021 involved Viet Nam Evergreen Co., Ltd, which was fined for illegally burying 257 tons of industrial waste, raising serious concerns about environmental pollution.
In 2020, businesses expressed disappointment with the outcomes of administrative reforms, as reflected in the Provincial Competitiveness Index (PCI) results A significant 55.65% of enterprises reported encountering high levels of corruption in administrative procedures, while 46.15% acknowledged the prevalence of unofficial costs within their industry These challenges significantly hinder the attraction of foreign direct investment (FDI) to Bac Giang province, as highlighted in the 2021 project aimed at enhancing investment efficiency until 2030.
Despite numerous studies on foreign direct investment (FDI) attraction, such as Nguyen Thi Ai Lien's (2011) doctoral thesis on Vietnam's investment environment and Bui Huy Phuong's (2006) research on promoting FDI projects, there is a scarcity of research specifically addressing FDI attraction in Bac Giang province, compounded by outdated data This highlights the urgent need for updated analysis on this topic.
With the actual situations analyzed above, it is of great significance for the researcher to do research on “The attraction of foreign direct investment into Bac Giang province, Vietnam”.
Literature review
Foreign research
In Sasi Iamsiraroj's 2016 study titled "The Foreign Direct Investment–Economic Growth Nexus," a bi-directional relationship between foreign direct investment (FDI) and economic growth was identified The research indicates that the growth of a host country can influence FDI inflows, with factors such as labor force levels, trade restrictions, and a favorable investment climate playing crucial roles in attracting FDI.
In her 2016 study, Dennis Kimani Mururi explored the determinants of foreign direct investment (FDI) in Kenya, emphasizing the role of financial development alongside traditional FDI factors Utilizing the autoregressive distributed lag (ARDL) model for analysis, the research identified four key determinants of FDI: market size, infrastructure development, exchange rate, and financial development.
Besides, Khadaroo and Seetanah (2010) addressed mainly transport infrastructure along with some other variables of FDI and evidenced the positive significant contribution of infrastructure in captivating FDI
In their 2002 study, Zdenek Drabek and Warren Payne explored "The Impact of Transparency on Foreign Direct Investment," revealing that non-transparency significantly affects a nation's appeal to foreign investors They found that elevated levels of non-transparency can substantially hinder the potential for foreign investment that a country could otherwise attract.
The work of John Henley, Colin Kirkpatrick and Georgina Wilde was published in
The article titled "Foreign Direct Investment in China: Recent Trends and Current Policy Issues" explores the critical policy challenges surrounding the attraction of foreign direct investment (FDI) to China It emphasizes the potential benefits that FDI can bring to the host economy while addressing the necessity of creating policies that ensure mutual advantages for both foreign investors and the domestic economy The discussion highlights the importance of balancing investor interests with local economic growth to maximize the positive impact of FDI flows.
Research in Vietnam
There is much research related to this topic The majority of research has shown that the attraction of FDI is of profound importance
Le Hung Son's 2020 doctoral thesis investigates the dynamics of foreign direct investment (FDI) attraction in Quang Ninh province during the 2010-2019 period The study employs exploratory factor analysis (EFA) and partial least squares structural equation modeling (PLS-SEM) to identify and analyze the key factors influencing FDI inflows into the region.
In his 2019 doctoral thesis, Cao Tan Huy explores the factors influencing foreign direct investment (FDI) attraction within the Southeast Economic Zone The research aims to enhance both theoretical and practical understanding of these factors and offers strategic solutions to leverage positive influences, ensuring sustained FDI growth in the region through 2025.
In her 2011 doctoral thesis, Nguyen Thi Ai Lien explored the investment environment and the factors influencing foreign direct investment (FDI) in Vietnam Utilizing the Pareto methodology, she identified key determinants that impact FDI attraction and proposed a systematic evaluation process aimed at enhancing the investment climate in the country.
In his 2006 doctoral thesis, Bui Huy Phuong presents solutions to enhance the implementation of foreign direct investment (FDI) projects in Vietnam The author not only systematizes existing theories on FDI but also introduces innovative concepts aimed at effectively managing and promoting these projects, which are essential for state oversight of FDI initiatives Additionally, the thesis provides a comprehensive evaluation of the current landscape of FDI attraction in Vietnam, categorized by capital size.
The attraction of foreign direct investment (FDI) at the provincial level in Vietnam has become a prominent topic among researchers, economists, and scientists Numerous studies have explored both the theoretical and practical aspects of attracting FDI Recently, specific research has focused on the strategies and impacts of FDI attraction in Bac Giang province.
The vacant issues need further study
Through research, inheriting the results and overcoming the disadvantages of previous relevant studies, the thesis focuses on researching unresolved issues
This thesis aims to elucidate the complexities of attracting Foreign Direct Investment (FDI) at the provincial level It highlights the distinct challenges of local FDI attraction compared to national efforts, analyzes successful strategies from various localities to extract valuable lessons for Bac Giang province, and utilizes current data for comprehensive analysis.
Research scope
Object: Foreign direct investment into Bac Giang province
Content: Evaluating the situation of attracting FDI in Bac Giang province
This article examines the foreign direct investment landscape in Bac Giang province from 2017 to 2021, utilizing data from 2010 to 2016 for comparative analysis It highlights key trends and challenges faced during this period while offering strategic recommendations to enhance investment attraction in the coming years.
Research objectives
This thesis seeks to elucidate the theoretical framework for assessing Foreign Direct Investment (FDI) attraction, highlighting its successes and shortcomings, as well as the underlying causes of these challenges Building on this analysis, the author offers strategic recommendations and solutions aimed at enhancing the effectiveness of FDI attraction in the upcoming years.
Research questions
Questions to clarify the aims of this thesis:
1 How has Bac Giang province attracted foreign direct investment and carried out these projects?
2 Which are situations of the attraction of FDI into Bac Giang province? Apart from these successes, which drawbacks did it have and the reasons for these drawbacks?
3 What should solutions and suggestions be developed to tackle these issues?
Research methodology
This study employs a statistical methodology, gathering data from various sources, including the curriculum of the Banking Academy of Vietnam, annual reports from the Ministry of Planning and Investment, and the Bac Giang Department of Planning and Investment, as well as articles and newspapers.
Besides, other methodologies are applied, including summary, comparison… with the illustration of the system of charts and graphs in the paper.
Research structure
Together with the introduction, the conclusion, references, the thesis includes three chapters:
Chapter 1: Theoretical and practical basis for the attraction of foreign direct investment
Chapter 2: Situations of the attraction of foreign direct investment into Bac Giang province between 2017 and 2021
Chapter 3: Orientations and solutions to increase the attraction of foreign direct investment into Bac Giang province from 2023 to 2027.
THEORETICAL AND PRACTICAL BASIS FOR THE ATTRACTION
An overview of foreign direct investment
Foreign investment occurs when an individual or company from one country invests in the assets or ownership of a business located in another country.
1.1.1.2 Definition of foreign direct investment
Foreign direct investment (FDI) involves individuals or entities from one country (the source country) obtaining ownership of assets to manage and control the operations of a business in another country (the host country).
According to the IMF’s Balance of Payments Manual, fifth edition (1993), Foreign Direct Investment (FDI) is defined as a type of international investment where a resident in one economy (the direct investor) seeks to acquire a lasting interest in an enterprise located in another economy (the direct investment enterprise).
The United Nations 1999 World Investment Report defines Foreign Direct Investment (FDI) as a long-term investment that signifies a lasting interest and control by a resident entity in one economy over an enterprise located in a different economy This relationship involves a foreign direct investor, also known as the parent enterprise, and its affiliate enterprise or foreign affiliate.
Foreign Direct Investment (FDI) is defined by the World Trade Organization (WTO, 1996) as the acquisition of assets in a host country by an investor from a home country, with the intention of managing those assets This management aspect is what sets FDI apart from portfolio investments in foreign financial instruments like stocks and bonds Typically, both the investor and the managed asset are business firms, with the investor known as the "parent firm" and the managed asset referred to as the "affiliate."
The similarities among these definitions are to “manage”, “take control of”, and
Foreign Direct Investment (FDI) is characterized by its long-term benefits, distinguishing it from Foreign Portfolio Investment (FPI), which lacks the intent for control or sustained advantages Currently, there is no formal consensus on control criteria, but foreign investors typically receive a minimum of 10 percent voting rights to ensure their ongoing interest FDI involves the transfer of capital, technology, and essential resources to the host country, enhancing production capabilities and maximizing profit potential.
1.1.2 Features of foreign direct investment
Foreign investors can engage in operating and managing business directly as well as the usage of capital They make decisions whether investing or not and bear responsibility by themselves
Foreign investors must meet a minimum capital requirement set by the host country's laws to gain the right to directly engage in the coordination and management of production and business activities This capital contribution is crucial as it influences the investors' level of control over foreign-invested enterprises.
In enterprises with 100% foreign investment, the management rights are exclusively held by foreign investors Conversely, in joint ventures, foreign investors engage in operations proportional to their capital contributions.
FDI paired with technology transfer can be beneficial for the host country It can absorb the valuable experiences of foreign cooperations in managing and operating
FDI is a long-term commitment whose period normally lasts for over 10 years, requiring not only capital investment but also technology and management Different currencies can measure FDI capital
1.1.3 The classification of foreign direct investment
1.1.3.1 From the perspective of the investor
According to the perspective of the investor, FDI can be classified into three main categories:
Horizontal Foreign Direct Investment (FDI) involves an investor setting up the same type of business in a foreign country as in their home country This strategy emphasizes product differentiation, which is crucial for the market structure in horizontal FDI The primary goal of this approach is to leverage specific monopolistic or oligopolistic advantages.
The second is vertical FDI, which is invested to exploit raw materials (backward vertical FDI) or be closer to customers through the acquisition of distribution channels (forward vertical FDI)
Conglomerate Foreign Direct Investment (FDI) involves a business engaging in unrelated activities in a foreign country This approach often faces challenges as companies strive to enter new markets and adapt to unfamiliar business environments.
1.1.3.2 From the perspective of the host country
Concerning the perspective of the host country, FDI can be classified into three primary categories:
Import-substituting foreign direct investment (FDI) focuses on producing goods that were previously imported by the host country, leading to a reduction in both imports for the host and exports from the investing country Key factors influencing import-substituting FDI include the market size of the host country, transportation costs, and existing trade barriers.
Foreign Direct Investment (FDI) aimed at increasing exports seeks new sources of inputs, including raw materials and intermediate goods This strategy allows the host country to enhance the promotion of its exported raw materials and intermediate products to both the investing country and other international markets.
Thirdly, government-initiated FDI occurs when a government provides incentives to overseas investors to make an effort to exclude a balance of payments deficit
There are three methods for FDI enterprises to engage in:
Greenfield investment involves an investing firm establishing new production, distribution, or other facilities in a host country This approach is preferred by the recipient economy as it has the potential to create job opportunities and generate value-added output.
Cross-border mergers and acquisitions (M&A) present significant advantages over greenfield investments, primarily due to their cost-effectiveness and the rapid market access they provide for investors However, businesses must carefully evaluate various factors before deciding between M&A and greenfield investment, including research and development intensity, diversification levels, business size, cultural and economic disparities, and advertising intensity.
Joint ventures offer a strategic approach by combining technical expertise with the ability to secure financing Additionally, they provide valuable insights into local bureaucracy, laws, and regulations, enhancing operational effectiveness.
Major issues of attracting foreign direct investment
1.2.1 The attraction of foreign direct investment
Attracting Foreign Direct Investment (FDI) involves implementing targeted measures and policies that encourage foreign investors to inject capital into a country This strategy aims to align the interests of both investors and the host locality, facilitating various investment forms that benefit all parties involved.
According to (Rajan, 2004), there are three measures to attract FDI:
Investment promotion plays a crucial role in enhancing foreign direct investment (FDI) by addressing information and perception gaps Effective strategies should focus on: (i) building a positive image of the country and its regions as attractive investment destinations; (ii) actively targeting specific sectors and industries to engage potential investors through personal outreach; (iii) providing tailored services that meet the needs of both prospective and existing investors; and (iv) improving the conversion rate of FDI approvals into actual investment flows.
Secondly, it is incentives Countries will increasingly compete with others to attract
Countries attract foreign direct investment (FDI) by providing various incentives, which can be categorized into fiscal and financial incentives Fiscal incentives aim to lower a firm's tax burden through measures such as reduced corporate income taxes, tax holidays, investment allowances, and tax credits Additionally, financial incentives include direct contributions from the government, such as capital subsidies, subsidized loans, and dedicated infrastructure support Other common incentives include export processing zones, exemptions from certain indirect taxes, and accelerated depreciation.
Effective policy intervention should focus on broad measures that enhance the overall human capital and technical capabilities of the domestic economy This approach is more beneficial than selective interventions aimed at maximizing linkages between local firms and multinational subsidiaries or facilitating domestic technology transfer from foreign direct investment (FDI).
1.2.2 The process of attracting foreign direct investment into the provincial level
Chart 1.1: The process of attracting FDI into the provincial level
The initial phase involves identifying potential products or services to offer to investors, which is achieved through a thorough analysis of the country's business environment using the SWOT model to assess its appeal to prospective investors.
Understanding investor demands, including their nationality and financial capabilities, is crucial for attracting foreign direct investment (FDI) It's important to uncover the motivations behind their investments and to organize information from basic to specific details, which can enhance the appeal of FDI in the country.
The third step involves identifying the core elements of the plan, emphasizing the significance of investment attraction through a comprehensive understanding of location advantages These advantages must align with the specific location requirements of the targeted industry, which can differ based on the field in question.
To effectively attract investment, it is essential to select the right strategies, including advertising, public relations, and promotional trips, as well as creating impactful investment attraction materials An investment promotion campaign encompasses a variety of activities, from marketing communications to factory visits Investment promotion agencies have found that a more targeted approach leads to greater campaign effectiveness.
Determine potential products or services which can be sold to the investors
Focusing on the investor’s demands
Determine the basic content of plan
Choose the approach to attract investment
Determine the investment objectives and monitoring process
To effectively establish investment objectives, it's crucial to define the size and value of the investment, as well as the labor requirements Additionally, implementing a monitoring process is essential, which includes methods for tracking progress and a systematic policy to support investors throughout the investment journey.
1.2.3 Criteria for accessing the situation of attracting foreign direct investment
This thesis examines the impact of foreign direct investment (FDI) on provincial socio-economic development, focusing on the benefits that FDI projects bring to the region To evaluate the effectiveness of attracting FDI, five specific criteria will be utilized (Son, 2020).
1.2.3.1 The capital size and the number of FDI projects per year
Statistics on capital value, annual project numbers, and the growth rate of FDI capital, along with the fluctuation in project counts over the years, serve as initial indicators of the effectiveness of FDI attraction in a locality These metrics help assess whether the promotion of FDI is yielding positive results or not.
Foreign Direct Investment (FDI) businesses significantly contribute to provincial tax revenues, which are crucial for evaluating the impact of FDI projects on state budget collections A higher contribution rate indicates greater effectiveness of these projects, while a lower rate suggests the opposite.
1.2.3.3 The number of the workforce working for FDI companies
Foreign Direct Investment (FDI) enterprises aim to reduce manufacturing costs by leveraging local resources, which in turn leads to the creation of numerous job opportunities for local employees As more FDI businesses establish operations, they significantly contribute to employment growth in the region.
Workforce productivity is determined by the ratio of Gross Regional Domestic Product (GRDP) to the number of employees in Foreign Direct Investment (FDI) businesses, indicating the annual value added per employee in the economy Higher labor productivity correlates with increased project efficiency, while lower productivity reflects reduced efficiency.
1.2.3.4 The rate of projects revoked investment license
This indicator shows the amount of FDI capital declines as a result of the inefficiency of using capital or other causes leading to projects invoked investment license
Gross Regional Domestic Product (GRDP) is a key indicator of a region's economic performance, reflecting the total value of goods and services produced within that area Typically expressed in real terms or constant prices, GRDP is reported as a growth rate, which indicates whether the economy is expanding, contracting, or remaining stable compared to previous periods.
Factors affecting the attraction of foreign direct investment
1.3.1 Strategies of attracting capital for national socio-economic development
A country's socio-economic development strategy plays a crucial role in attracting Foreign Direct Investment (FDI) by determining its openness to foreign capital, the focus on domestic versus foreign investment, and the types of capital to prioritize, such as commercial loans, Official Development Assistance (ODA), or FDI These strategic orientations are vital for creating favorable conditions for attracting investment, with each locality developing its own policies and objectives tailored to enhance FDI for their socio-economic growth (Brainard, 1997).
1.3.2 The legal framework and institutional system
The host country's legal framework encompasses various laws governing investment activities, including the Law on Investment, the Law on Enterprises, and the Law on Environmental Protection, along with additional regulatory documents.
A robust and transparent legal system is essential for attracting foreign investors, as it ensures the protection of their investments, guarantees asset security, and outlines regulations for profit repatriation These factors significantly influence investment decisions Additionally, an effective legal framework plays a crucial role in mitigating potential negative impacts caused by investors who may intentionally violate regulations, thereby safeguarding public interests and national security.
A robust infrastructure system is essential for driving economic growth, enhancing productivity, and addressing social challenges, while inadequate infrastructure hinders development Effective infrastructure facilitates efficient transportation of goods, reduces transport costs, and boosts the competitive edge of products and services Therefore, investing in infrastructure is a strategic long-term initiative that significantly impacts investors' decisions.
Investing in technical infrastructure, such as transportation, energy supply systems for production and consumption, waste collection and treatment systems, and technical information systems, is essential for meeting the fundamental needs of investors This investment not only attracts foreign direct investment (FDI) but also enhances the overall efficiency of FDI attraction.
Investing in social infrastructure, such as schools, healthcare facilities, entertainment centers, banking, and security services, is essential for attracting skilled workers This investment not only enhances the quality of life but also creates a favorable environment for foreign direct investment (FDI) by fostering a motivated and skilled workforce.
Investing in foreign countries requires careful consideration of the macroeconomic environment, particularly the stability of political institutions and legal systems An unstable political landscape and frequent legal changes can pose significant risks for investors, leading to a natural inclination towards risk aversion and a preference to avoid such environments.
At the provincial level, a favorable macroeconomic environment reflects the commitment of authorities to foster the private sector, ensuring an open and transparent business climate that instills long-term investment confidence among investors.
1.3.5 Human resources and its quality
As the fourth industrial revolution unfolds, the competition for foreign direct investment (FDI) intensifies, with a notable shift in competitive advantage from quantity to the quality of high-skilled human resources This transition highlights the importance of a robust educational system that aligns with workforce training needs, making skilled workers a significant asset for attracting FDI To enhance their appeal, localities should implement supportive policies for human resource training and encourage workers to develop essential skills that are advantageous in the global job market.
Experiences of some provinces in attracting foreign direct investment and lessons
In 2021, 59 provinces and cities in Vietnam attracted significant foreign direct investment (FDI), with Hai Phong leading the way by surpassing Long An with over 5.26 billion USD, which accounted for 16.8% of the nation's total investment Long An followed in second place with more than 3.84 billion USD, representing 12.3%, while Ho Chi Minh City closely trailed with nearly 3.74 billion USD, nearly 12% of total investment capital These three regions exemplify successful FDI attraction strategies, providing valuable insights for Bac Giang province.
1.4.1 Experience of Hai Phong City
Despite the challenges posed by the Covid-19 pandemic, Hai Phong city has successfully attracted a significant number of foreign direct investment (FDI) projects, with an impressive inflow of approximately 5.26 billion USD in 2021, marking a 3.5-fold increase compared to the previous year The Ministry of Planning and Investment had initially set a target of 2.5 to 3 billion USD for FDI in 2021, and the actual results exceeded all expectations, highlighting Hai Phong's resilience and appeal as a destination for investment.
In the first nine months of 2021, Hai Phong city attracted over $2.84 billion in foreign direct investment (FDI), marking a threefold increase compared to 2020 and surpassing its target by 113.97% This total includes $8.56 million in registered capital from capital contributions and share purchases.
Hai Phong city has successfully attracted significant foreign direct investment (FDI) from major companies, including GE (USA), Bridgestone, LG, Hyundai, and several others from Korea, Japan, and Singapore Notable projects that have been licensed and rapidly implemented include LG Electronics, LG Display, LG Innotek, Bridgestone, Regina Miracle International, Nipro Pharma, and Kyocera Mita.
* Advantages of policies of Hai Phong city:
To effectively manage the Covid-19 pandemic, it is crucial to implement timely and coordinated measures, ensuring a swift response to complex situations while prioritizing safety This approach fosters confidence and trust among investors and businesses Notably, Hai Phong has distinguished itself as the only municipality that has successfully avoided the need for social distancing.
To attract investments compatible with the Covid-19 pandemic, on-site investment promotion has proven more effective than international outreach By providing active support during project implementation and business activities, the focus is on fostering a trustworthy and secure investment environment This approach aims to facilitate investment, while also maintaining and expanding production capabilities.
The Hai Phong Economic Zone Management Board, in collaboration with city agencies, successfully expedited administrative procedures, granting investment registration certificates for LG Display's capital increase in just 5 days for the first adjustment of $750 million and 3 days for the second adjustment of $1.4 billion This swift processing highlights the city's strong commitment to reforming administrative procedures and enhancing the business investment environment, positioning Hai Phong as a key destination for both domestic and foreign investors.
To enhance the business investment climate, several key transport infrastructures have been successfully completed and are now operational Notable projects include the Tan Vu-Lach Huyen Bridge, Bach Dang Bridge, and Hoang Van Thu Bridge, which provide vital connections to the VSIP Industrial Park and Vu Yen Island.
1.4.2 Experience of Long An province
By 2020, Long An province had successfully attracted approximately 1,059 foreign direct investment (FDI) projects, totaling around $3.624 billion in registered capital Investments came from about 40 countries and territories, with Taiwan leading in both the number of projects and capital invested, followed by Singapore, South Korea, Japan, the United States, and Thailand The most appealing sectors for investors included energy, textiles, leather and footwear, livestock feed processing, food and beverage processing, and manufacturing.
In the year 2021, Long An lured over 3.84 billion USD Regarding the industrial zone, there were 35 FDI projects with a total registered capital which was nearly 450 million USD
In October, Long An welcomed a resurgence in foreign direct investment (FDI) by issuing investment registration certificates for four projects totaling nearly $70 million Among these, Daiwahouse Group from Japan invested over $29.9 million, while a Chinese investor launched a yarn and fabric production project worth $20 million Additionally, two joint ventures from Singapore focused on infrastructure and plastic film production contributed nearly $20 million Notably, VinaCapital GS Energy Pte Ltd from Singapore registered a significant project with a capital of $3.1 billion, highlighting the region's growing appeal for international investors.
* Advantages of policies of Long An province
Attracting foreign direct investment (FDI) is facilitated by the abundance of available factories in industrial parks, which have drawn significant interest from investors in countries like Japan and Korea These ready-to-use factories enable investors to save time and commence manufacturing operations immediately, allowing them to conduct market research more efficiently compared to traditional methods that require securing land for development.
Investment registration certificates are issued within just one day of receiving the appropriate applications, exemplified by Lotte Eco Logis Long An Ltd.'s project, which has an initial capital of over $13 million, and Coca-Cola's project, with an investment of approximately $136 million.
To enhance the business investment environment, it is essential to ensure that processes are simple, timely, and compliant with regulations, aiming to elevate the provincial competitiveness index from "Good" to "Very Good." Additionally, prioritizing the training of human resources is crucial to support the ongoing industrialization and modernization efforts.
Supporting businesses through periodically holding dialogues with businesses and associations to solve difficulties and problems in the process of investment and business
1.4.3 Experience of Ho Chi Minh City
The Covid-19 pandemic and physical distancing measures significantly impacted foreign direct investment (FDI) in Ho Chi Minh City, with FDI capital reaching 3.74 billion USD by December 2021, representing 12% of Vietnam's total investment and a 14.2% decline from 2020 Newly licensed investments included 633 projects with a registered capital of 686.6 million USD, reflecting a 33.4% decrease in the number of licenses but a 7.7% increase in capital compared to the previous year The real estate sector dominated newly registered capital at 31.2% (214.1 million USD), followed closely by information and communications at 30.1% (206.6 million USD), and commerce at 17.9% (123.2 million USD).
Japan led in adjusted investments with 281 million USD, followed closely by Singapore at 263 million USD and the US at 237 million USD Notably, Singapore was the largest investor, executing 104 projects totaling 310 million USD, while the Republic of Korea followed with 80 projects worth 125.2 million USD The Netherlands and Japan contributed with 20 projects valued at 87.5 million USD and 55 projects worth 71.4 million USD, respectively According to the municipal Statistics Office, there are currently 10,441 valid foreign-invested projects with a registered capital of 49.47 billion USD.
* Advantages of policies of Ho Chi Minh city
SITUATIONS OF THE ATTRACTION OF FOREIGN DIRECT
An overview of the attraction of foreign direct investment into Bac Giang province
2.1.1 An overview of the socio-economic situation of Bac Giang province
2.1.1.1 The geographical location and terrain conditions
Bac Giang province, located in Northeastern Vietnam, spans 3,895 square kilometers and is strategically positioned along the Lang Son - Hanoi - Ho Chi Minh City - Moc Bai economic corridor, part of the Nanning - Singapore Corridor It shares borders with Hanoi, Bac Ninh, Hai Duong, Lang Son, Quang Ninh, and Thai Nguyen, and is near the Hanoi - Hai Phong - Quang Ninh economic triangle The province boasts a well-developed transportation system, including roads, waterways, and railways With 382,200 hectares of natural land, Bac Giang features 123,000 hectares of agricultural land, 110,000 hectares of forestry, and 66,500 hectares designated for urban use, alongside specialized and residential areas Additionally, it is home to three major rivers—Cau, Thuong, and Luc Nam—along with various ponds, lakes, lagoons, and substantial groundwater reserves.
Bac Giang province, located within the Hanoi - Hai Phong - Quang Ninh economic triangle, benefits from a dense population and a significant consumer market, creating favorable conditions for socio-economic growth The Prime Minister's Decision No 768/QD-TTg, issued on May 6, 2016, approved adjustments to the Provincial Planning for 2021-2030, with a vision extending to 2050, designating Bac Giang as one of the three provinces included in the Hanoi Capital Region Construction Plan This designation presents a substantial opportunity for the province's future socio-economic development.
2.1.1.2 The population and labor force
As of the 2019 national general census, Bac Giang province had a population exceeding 1.8 million, with males comprising 50.17% and females 49.83% The population density stood at 463 people per square kilometer, significantly higher than the national average of 315 Despite this density, only 11.4% of residents lived in urban areas, highlighting Bac Giang's status as a less urbanized region, with 88.6% of its population residing in rural areas The pace of urbanization and the transition of communes to towns and wards in Bac Giang is notably slower compared to the national trend.
Chart 2.1: The population of Bac Giang in terms of gender and age groups (%)
Source: (Report on the social-economic development of Bac Giang province, 2019)
In 2019, Bac Giang province boasted a working-age population exceeding 1.2 million, with over 60% of this workforce being trained professionals This demographic advantage facilitated enhanced vocational training initiatives, leading to a notable increase in job creation, as 30,600 individuals secured employment, reflecting a 3.3% rise compared to the previous year Despite these positive developments, employee income remained low, averaging around 3.8 million VND per person per month.
With cheap labor costs, Bac Giang has an advantage of attracting more investors, especially in the sectors that require unskilled labor
The Covid-19 pandemic prompted schools to adopt online learning methods, utilizing platforms like Microsoft Teams and Zoom to replace traditional in-person classes Additionally, Bac Giang province is home to 38 vocational education institutions, providing diverse educational opportunities.
2021, the vocational education institutions recruited 28,819 students, accounting for 101.1 percent of the year plan
In 2021, Bac Giang successfully organized various cultural activities to uplift the community's spirit amidst the challenges posed by Covid-19, including a "Happy New Year" event and a Chau Van ritual singing festival The provincial library issued nearly 1,000 reader cards, catering to approximately 9,500 readers, while also showcasing books and publications in celebration of Vietnamese Book Day on April 21 and World Book Day on April 23 Additionally, the museum held five exhibitions, drawing in around 3,500 visitors.
In Bac Giang, a total of 60 sports tournaments were organized by districts and the city, alongside over 850 events held by wards and towns Regular participation in sports stands at 35.7%, with 55,530 families engaged in athletic activities and 2,670 sports associations and clubs operating in the area To enhance tourism, the Bac Giang Tourism Promotion Information Center has launched a Travel Portal (https://mybacgiang.vn), which effectively showcases local tourist attractions and provides visitors with essential information about destinations, restaurants, hotels, and convenient services.
Residential life and social policies in Bac Giang have remained stable despite challenges, with timely distribution of monthly allowances to beneficiaries Recently, 195 individuals were newly recognized as recipients of social welfare services The Poverty Alleviation Programs (PAP) have been implemented effectively and with a long-term focus, while continued investments in infrastructure for impoverished communes have provided essential seeds and capital.
In 2021, there were 24,674 impoverished households, accounting for 5.28%; 24,531 near poor households, representing 5.25%
In 2021, Bac Giang province reported a Gross Regional Domestic Product (GRDP) at 2010 comparative prices of 86,471.1 billion VND, reflecting a 7.82% increase from 2020 The industrial and construction sectors experienced significant growth of 10.03%, while the service sector grew by 4.78%, and the agriculture, forestry, and fishery sector rose by 4.28%.
After a brief recovery early in the year, the construction industry has stalled, significantly impacting the province's growth targets The fourth outbreak of the Covid-19 epidemic forced many businesses to suspend operations Notably, the Gross Regional Domestic Product (GRDP) at 2010 comparative prices rose to 56,651.3 billion VND, with the industry-construction sector contributing 48,730.2 billion VND to this growth.
In 2021, the Gross Regional Domestic Product (GRDP) at current prices reached 129,836.9 billion VND, reflecting a significant shift in the economy's structure The industrial and construction sectors increased their share to 58.09%, while the agriculture, forestry, and fishery sectors decreased to 17.43% Additionally, the service sector accounted for 22.26% of the GRDP, indicating a trend towards industrialization and diversification in the regional economy.
In 2021, efforts were made to alleviate challenges and streamline administrative processes to attract foreign direct investment (FDI) As a result, total societal investment capital reached 61,282.6 billion VND, marking a 5.4% increase from 2020 State capital surged by 78.7% to 7,306.7 billion VND, while non-state capital rose by 12.9% to 40,540.1 billion VND Additionally, FDI amounted to 13,435.8 billion VND, reflecting a 3.7% growth.
The transportation system of the province is very convenient, including roads, waterways and railways, in which roads play a pivotal role
Roads: The total road length of Bac Giang province is 11,750 km, including 330.4 km of highways and national highways (Hanoi - Lang Son expressway is 39.40km long;
05 national highways with a total length of 290.60Km); 404.99km provincial road with 18 routes; 10,570.86 km of rural roads (excluding inland roads) and 442 km of urban roads
Railways: There are 3 national railway lines running through, including Hanoi - Dong Dang route, Kep - Ha Long route and Kep - Luu Xa route; in which the Kep - Luu
Xa route has not been restored In addition, there is a specialized railway for Habac Nitrogenous Fertilizer and Chemicals Joint Stock Company (HANICHEMCO)
The region features three primary river routes: the Cau River, Thuong River, and Luc Nam River, collectively spanning 354 km Of this, 222 km is under central government management, accommodating watercraft with a capacity of up to 500 tons, while the remaining 132 km is managed locally Additionally, there are three operational ports, 133 cargo terminals, and 41 river-crossing passenger terminals, facilitating efficient transportation and trade.
* The infrastructure of industrial parks
Bac Giang has successfully planned and developed six industrial zones covering a total area of 1,322 hectares These industrial zones are strategically located for optimal transportation access, with five zones situated along National Highway 1A and one zone adjacent to the Yen Phong Industrial Park in Bac Ninh.
Five industrial parks have been successfully launched, covering a total planning area of 1,272 hectares These include Dinh Tram Industrial Park, Song Khe - Noi Hoang Industrial Park, Van Trung Industrial Park, Quang Chau Industrial Park, and Hoa Phu Industrial Park.
IP is in the stage of investment preparation (Viet Han Industrial Park) At the same time, it was approved to establish 03 more industrial zones (Yen Son Industrial Park - Bac
Lung (300 hectares), Luc Nam district and Yen Lu Industrial Park (377 hectares) in Yen Dung district; Tan Hung Industrial Park (105 hectares), Lang Giang district
Situations attracting foreign direct investment into Bac Giang province between
2.2.1 The capital size and the number of FDI projects per year
Chart 2.2: The number of FDI projects and the registered capital (2017 – 2021)
Source: Department of Planning and Investment of Bac Giang Province
In 2017, the number of projects granted investment licenses stood at 69, with the registered capital of 764.9 million USD In 2018, there was a slight decline in the number
Vina Cell Technology Co., Ltd, licensed in 2016, has increased its registered capital by 100 million USD for its solar battery production project in Bac Giang province Additionally, the "Ja Solar PV Vietnam" project focuses on advancing photovoltaic cell technology.
Ja Solar Investment (Hong Kong) Limited has established operations in Quang Chau Industrial Park, focusing on the production of photovoltaic cell panels with an impressive capacity of 3.5 million GW per year The company has committed a total registered investment capital of approximately 210 million USD.
In 2019, Bac Giang issued licenses for 79 new projects and adjusted 35 existing ones, resulting in a total registered and additional capital of $1,092.2 million Newly registered capital accounted for 77.61%, while additional capital represented 22.39% During the first seven months of 2019, Bac Giang maintained its position among the top provinces in Vietnam for foreign direct investment (FDI), ranking 7th for the number of new projects and 9th for the total of new and additional capital.
In 2020, despite the challenges posed by the Covid-19 pandemic, Bac Giang province demonstrated resilience by approving investment licenses for 32 projects totaling 388.11 million USD and attracting 67 foreign direct investment (FDI) projects with an additional 577.12 million USD This resulted in a total capital inflow of 945.23 million USD, representing 83.75% of the previous year's total and securing the province's eighth position in FDI attraction Notably, newly registered projects exhibited larger scales, with an average investment of 12.12 million USD per project, including significant ventures such as the Shunsin Vietnam factory, which received 100 million USD, and the Powerway Vietnam alloy factory, with an investment of 50 million USD, focusing on advanced materials for aviation and aerospace applications.
In 2021, foreign direct investment (FDI) capital represented 21.9% of total capital in Bac Giang, despite a general hesitance among investors due to the Covid-19 pandemic, which slowed capital growth The province implemented favorable policies to attract FDI, including land clearance and workforce recruitment regulations, resulting in 22 new investment licenses totaling $640.9 million Additionally, Bac Giang increased capital for 50 existing projects, with an additional registered capital of $641.4 million Notably, the Fukang Technology Factory Project by Foxconn Singapore Pte., Ltd contributed $453 million to the province's FDI landscape By the end of 2021, Bac Giang had attracted a total of 486 FDI projects, amassing a cumulative registered capital of $6.84 billion.
In particular, when it comes to analyze the capital size and the number of FDI projects in terms of areas invested, there is a table below:
Chart 2.3: The number of FDI projects of IPs and outside IPs
Source: The Department of Planning and Investment of Bac Giang province
By the June of 2021, Bac Giang granted investment license for 318 projects of IPs with the total registered capital of 5,685.91 million USD, accounting for 65.97% of FDI
Bac Giang has attracted a significant amount of foreign direct investment (FDI), with 83.6% of the total capital amounting to 1,136.14 million USD concentrated in industrial parks (IPs) This indicates that the majority of FDI projects in Bac Giang are situated in areas with established infrastructure, while other projects face delays in completing investment procedures.
Table 2.4: The attraction of FDI to three sectors (cumulatively to 6/2021)
The agro- forestry-fishery sector
Source: The Department of Planning and Investment of Bac Giang province
As of June 2021, the industry and construction sector in Bac Giang has seen significant foreign direct investment (FDI), with 452 projects totaling approximately 6.45 billion USD This represents 44.44% of the region's investment projects Notably, 314 of these projects are located in industrial parks (IPs), accounting for about 5.66 billion USD, while the remaining 138 projects, with a capital of 786.7 million USD, fall outside of IPs.
In Bac Giang, the service sector stands as the second most prominent, featuring 30 projects with a total investment of 375 million USD Conversely, the agro-forestry-fishery sector has attracted no foreign direct investment (FDI) projects, although it has seen 113 domestic investments amounting to 3,135.47 million USD.
Foreign Direct Investment (FDI) enterprises significantly boost local budget revenues From 2017 to 2021, the annual revenue generated by these enterprises consistently rose, highlighting their positive impact on the local economy through FDI projects.
Table 2.5: The contribution of FDI sector to state budget (billion VND)
Source: Department of Planning and Investment of Bac Giang Province
From 2017 to 2021, the provincial state budget saw significant growth, increasing from 6,330.4 billion VND to 12,051.3 billion VND, with FDI firms contributing an increasing share In 2018, FDI enterprises added 833.4 billion VND, and by 2021, their contribution rose to 8.29% of the total budget Notably, 2019 marked the peak for FDI contributions at 10.24%, driven by the completion of large-scale projects and the expiration of tax incentives for certain businesses, leading to enhanced tax payments, such as Fuhong Co., Ltd contributing 13.5 billion VND.
2.2.3 The number of the workforce working for FDI companies
The number of workers in FDI companies fluctuated over the 2017-2021 period:
Table 2.6: The number of workers in FDI sector (2017-2021)
Source: Department of Planning and Investment of Bac Giang Province
In 2017, foreign direct investment (FDI) businesses generated over 100,000 job opportunities, marking a steady increase of more than 20,000 jobs in 2018, reaching 121,000 This growth remained relatively stable in 2019 with 123,000 jobs By 2020, employment in FDI enterprises rose significantly to 160,992, and in 2021, it peaked at 192,000, representing the highest employment level recorded in this sector.
Chart 2.7: The comparison in terms of the number of workers between FDI businesses and domestic businesses
Source: Department of Planning and Investment of Bac Giang Province
Chart 2.8: The comparison in terms of work productivity between FDI businesses and domestic businesses
Source: Department of Planning and Investment of Bac Giang Province
Chart 2.9: The comparison in terms of salary of workers between FDI and domestic businesses (million VND)
Source: Department of Planning and Investment of Bac Giang Province
State-owned enterprisesPrivate enterprisesFDI enterprises
Chart 2.7 indicates that foreign direct investment (FDI) projects tend to employ a greater labor force compared to domestic projects This trend highlights that most FDI initiatives are predominantly labor-intensive, focusing on processing and assembly, with a limited number of capital-intensive projects that utilize advanced technology.
In 2020, there were 160,992 workers in FDI projects, compared to 112,983 in domestic ones
In 2015, domestic projects in Bac Giang province exhibited a work productivity of 282.2, nearly double that of FDI projects However, by 2020, FDI project productivity increased to 245.7, surpassing the domestic projects' productivity of 244.5 While FDI projects provide employment opportunities and positively impact the economy's overall productivity, they primarily focus on processing and assembly, leading to lower value-added outputs Despite this, the rising work productivity indicates an improvement in the quality of these projects over the years.
According to Chart 2.9, a comparison of average incomes among employees in state-owned enterprises and foreign direct investment (FDI) businesses reveals a significant trend Starting from the lowest point in 2010, the average income of employees in FDI businesses experienced a dramatic increase, reaching the highest level in the chart by 2020 and surpassing the income of those in state-owned firms.
2.2.4 The rate of projects revoked investment license
From 2017 to 2021, the Department of Planning and Investment in Bac Giang province conducted inspections and examinations of foreign direct investment (FDI) enterprises, addressing various administrative violations by investors For those firms that failed to adhere to the inspection conclusions, the department took decisive action by terminating and revoking investment licenses for projects, including Cometech Company Limited and Paka & DW Company Limited.
Table 2.10: The number of projects revoked investment license (2017 – 2021) The number of projects The registered capital (million USD)
Source: Department of Planning and Investment of Bac Giang Province
The evaluation of the approach to encourage foreign direct investment in Bac
The economic restructuring in Bac Giang is positively influenced by a growing number of large-scale projects in the processing and manufacturing sectors, which enhance industrial capacity This shift has resulted in a rising share of the industry and construction sectors, alongside the service sector, while gradually decreasing the agriculture sector's contribution to the economy Consequently, Bac Giang is successfully advancing its industrialization and modernization policies.
Secondly, FDI businesses in Bac Giang have had an enormous impact on local exports While domestic businesses' export turnover has shown some fluctuations, the
The Foreign Direct Investment (FDI) sector demonstrates strong export performance, with FDI enterprises contributing significantly to Bac Giang province's economy In 2017, FDI businesses achieved an export turnover of $5.067 billion, representing 81.73% of the province's total exports By 2019, the total export turnover increased to $9.18 billion, with FDI enterprises accounting for 69.04% of this amount.
In 2021, FDI businesses achieved an export turnover of 3.17 billion USD, significantly contributing to the overall export performance of the province.
The influx of Foreign Direct Investment (FDI) has significantly boosted Bac Giang province's economy, leading to a consistent rise in both the province's overall Gross Regional Domestic Product (GRDP) and the GRDP generated by FDI enterprises over the years.
From 2017 to 2021, foreign direct investment (FDI) businesses have significantly contributed to the state budget, with local revenue from FDI firms showing consistent annual growth.
Foreign Direct Investment (FDI) firms have significantly addressed the job shortage in Bac Giang province by steadily attracting a large workforce over time Currently, employees in FDI firms represent the majority of the total workforce in the region.
Besides, a large number of employees have been trained to develop their abilities and the quality of being professional, and gradually adjust to the industrial environment
Foreign Direct Investment (FDI) businesses significantly boost local employment by generating numerous job opportunities for residents Notably, the proportion of employees receiving social insurance benefits from FDI firms surpasses that of local companies, highlighting the positive impact of FDI on worker welfare.
As of June 2021, there is a significant imbalance in sector investment, with the industrial sector dominating the landscape Out of the total accepted projects, 452 are in the industrial sector, making up an overwhelming 93.78% In contrast, service projects are scarce, comprising only 30 projects or 6.22%, while there are no recorded investments in the agricultural sector.
The management of environmental preservation, security, salary debts, and housing issues is increasingly pressured due to the lack of investment in remote areas with inadequate infrastructure and challenging geographical conditions For instance, while Viet Yen, Yen Dung, and Hiep Hoa districts attract the majority of investment projects, Son Dong, Yen The, and Luc Nam districts receive significantly fewer projects, highlighting the disparity in development opportunities.
Approximately 50% of foreign direct investment (FDI) projects have a capital scale of under 2 million USD, indicating that many of these initiatives are relatively small This trend highlights that a significant portion of FDI is focused on processing and assembling electronic components for Samsung Group, particularly in Bac Ninh and Thai Nguyen.
The technology utilized by foreign direct investment (FDI) enterprises has fallen short of expectations, as even though they employ more advanced systems than domestic companies, their technology remains less modern than anticipated Many large corporations in this sector are subsidiaries rather than parent companies, leading to lower technology quality, as exemplified by Wintex Corporation, a Taiwanese investor Additionally, the weak connections between domestic and FDI enterprises hinder efficient access to and transfer of technology.
Additionally, the investment environment has improved, but it is not quite open
The process for issuing investment certificates, construction licenses, and environmental approvals remains sluggish, especially when compared to cities like Ho Chi Minh City, Binh Duong, and Dong Nai Additionally, the administrative procedures are often inflexible and insufficient.
Certain foreign direct investment (FDI) enterprises are contributing to environmental pollution, often neglecting their obligations to report on environmental impact assessments and adhere to environmental protection commitments These violations have been identified and addressed through administrative actions, as exemplified by Sinhan Eng Vina Co., Ltd.
2.3.3 Primary reasons for these drawbacks
The provincial budget remains constrained, making it difficult to allocate sufficient funds for the construction of industrial zone infrastructure and social facilities While there has been some focus on enhancing transportation and industrial zone infrastructure, the overall investment in infrastructure projects aimed at attracting investment continues to be significantly limited.
The emphasis on the quantity of projects rather than their quality results in low-quality and inefficient outcomes Additionally, the lack of clear regulations for selecting high-quality, effective projects contributes to a vague investment attraction strategy.
ORIENTATIONS AND SOLUTIONS TO INCREASE THE
Orientations of attracting foreign direct investment into Bac Giang province from
The strategic focus is on the comprehensive development of economic sectors, emphasizing that industry serves as the primary driving force, agriculture provides a foundational guarantee, and services create essential promotional conditions The restructuring of these sectors will prioritize their scale in the following order: Industry, Service, and Agriculture Additionally, there will be a commitment to synchronous and harmonious development across the economy, culture, society, and environment.
The primary objective is to achieve a positive economic restructuring, aiming for the industry and service sectors to represent approximately 89% of the economy by 2027, and 90-92% by 2030 Additionally, the goal is to increase the Gross Regional Domestic Product (GRDP) by 16-17% annually, with foreign direct investment (FDI) projects contributing around 35% to this growth.
The industry sector: the Plan No 54-KH/TU dated 09/10/2018 of the Provincial Standing Committee on “The industrial development strategy of Bac Giang province to
By 2030, the focus of industrial development will transition from broad expansion to a more in-depth approach aimed at enhancing productivity, quality, and efficiency while minimizing resource use and promoting environmentally-friendly energy solutions From now until 2025, this shift will begin, with a strong emphasis on depth post-2025 The policy will strictly enforce the approval of projects within industrial parks (IPs) as planned, while only considering large-scale projects with significant socio-economic benefits outside of IPs Additionally, projects with unique characteristics, such as those related to building materials or mineral mining and processing, will also be evaluated for approval.
To enhance the service sector, it is essential to develop a diverse range of high-quality services and adaptively grow service industries in both urban and rural areas, while also establishing several tourist attractions In the agricultural sector, it is crucial to effectively implement the guidelines of Resolution No 401-NQ/TU dated March 4, 2019, from the Provincial Standing Committee, which outlines the agricultural development strategy for Bac Giang province aimed at 2030, with a vision extending to 2035, emphasizing cultivation as the primary focus.
To optimize Foreign Direct Investment (FDI) projects, it is essential to focus on attracting investors with strong international brands and substantial financial resources capable of long-term investments Conversely, short-term and unstable investment projects should be discouraged Additionally, it is important to avoid projects that rely heavily on labor-intensive practices with simplistic technology, as these can disrupt the balance of labor supply and demand, potentially impacting other initiatives.
Solutions to raise the attraction of foreign direct investment into Bac Giang
To enhance the effectiveness of state management in attracting foreign direct investment (FDI) and promoting industrial development, local departments and agencies must closely collaborate with enterprises throughout the investment approval process and the fulfillment of financial obligations Additionally, it is crucial to enforce strict compliance from foreign investors regarding environmental protection standards, financial responsibilities to the state, and the provision of fair salaries, insurance benefits, and occupational safety for workers.
Leaders across all sectors, including civil servants, must take the initiative in enhancing the investment and business landscape, implementing strategies to boost the effectiveness of foreign direct investment (FDI) attraction.
Annual surveys should be conducted to assess the satisfaction of FDI enterprises with state management agencies, aiming for a satisfaction level of 80% or higher It is essential to hold regular meetings to gather feedback and address the challenges faced by foreign investors Enhancing the quality of dialogues with FDI enterprises, publishing the results, and strictly supervising the resolution process for FDI business difficulties are crucial for improving overall satisfaction.
3.2.2 Continue to develop and improve policies on investment attraction
To enhance the selection of Foreign Direct Investment (FDI) projects in the province, it is essential to establish additional criteria that align with local conditions, ensuring the selection of high-quality and effective projects Furthermore, regulations should be updated to enforce stricter management of project transfers, capital contributions, and share purchases Additionally, a mechanism must be introduced to foster collaboration between foreign and domestic investors, aimed at improving technology absorption and enhancing management experience.
Capable and experienced investors with publicity, transparency and economic efficiency should be selected, focusing on the auction of land use rights and bidding to select investors according to regulations
Researching and implementing effective mechanisms and policies is crucial for land accumulation, fostering favorable conditions for foreign direct investment (FDI) in high-tech agriculture and large-scale commodity production Additionally, attracting and utilizing highly qualified human resources, including skilled engineers and technology professionals, is essential for advancing key industries and products.
Amending and supplementing regulations on construction permits is essential to foster a favorable environment for foreign investors while enhancing the accountability of management agencies Additionally, it is crucial to review the procedures for land allocation and leasing to ensure a seamless connection from the commune level to the provincial level.
3.2.3 Build and improve the infrastructure to attract FDI
It is of great significance to put more resources to construct essential socio- economic infrastructure to attract FDI:
Investing in modern transport infrastructure is crucial for fostering industrial and service development Key projects include the construction of the Dong Viet Bridge, which connects to Hai Duong province, and the completion of provincial roads 293 and 295 These initiatives aim to create new development opportunities and enhance connectivity in the region.
The second is making refurbishment in district roads to provincial roads: Bo Ha – Hong Ky – Mo Trang route; Diem Tong – Que Nham – Phuc Son route…
The next is expanding important routes, including highway 17 and 31 and 37
The infrastructure of industrial parks
The first is speeding up the projects of constructing residential areas for workers which were approved
The second is to collect waste around IPs reasonably, increase investment in garbage collection and transportation vehicles
The next is building more commercial and social centers around IPs such as schools, markets, household areas, hospitals, hotels…
The People's Committee and Department of Planning and Investment of Bac Giang province must review administrative procedures and publicly announce associated fees and charges on their website, ensuring easy access and implementation for foreign investors.
It is essential to publish the contact information of individuals responsible for managing administrative procedures and who possess the expertise to assist investors effectively Simultaneously, it is crucial to eliminate those who create obstacles for investors, ensuring a smoother process for all parties involved.
Improving the quality of administrative procedures for foreign direct investment (FDI) businesses is essential Civil servants in one-stop-shop and inter-agency departments require training in communication and related skills to enhance their effectiveness.
Regular surveys assessing FDI enterprises and foreign investors are essential for evaluating the implementation of administrative procedures The Department of Planning and Investment, in collaboration with the Department of Home Affairs, oversees the execution of these procedures by state agencies to ensure efficient handling of administrative tasks related to FDI enterprises and foreign investors.
3.2.5 Renovate and improve the efficiency of investment mobilization and promotion and attract FDI projects in a selective manner
Investment promotion needs to be encouraged to attract potential investor with a good financial resource, high technology and using less labor force, contributing much money to state budget
Periodic reviews of investment incentives are essential to ensure they remain effective It is crucial to provide foreign investors with opportunities to explore investment prospects in Bac Giang province, with relevant information prominently displayed on the websites of the Provincial People's Committee and the Department of Planning and Investment Additionally, a thorough assessment of available land resources is necessary to attract more investors to industrial parks (IPs).
Civil servants in Bac Giang province must develop strong foreign language skills, particularly in English, Chinese, Japanese, and Korean, to effectively engage with foreign investors Proficiency in these languages is essential to ensure that investors receive comprehensive information about investment opportunities Additionally, translating investment promotion documents and administrative procedure guidelines into these foreign languages will enhance communication and provide accurate information to potential investors.
To enhance the disbursement of registered capital for approved projects, it is crucial to support foreign investors in overcoming business challenges within the province Improving the effectiveness of on-site investment promotion is essential, alongside encouraging FDI enterprises and foreign investors to expand their investments and innovate their technologies Additionally, organizing quarterly meetings to recognize significant foreign direct investors who contribute to the province's socio-economic development will foster a positive investment environment.
3.2.6 Strengthen the state management of investment projects in the locality; actively support investors to overcome difficulties
The Department of Planning and Investment of Bac Giang province must enhance its oversight and management of foreign direct investment (FDI) projects, ensuring timely identification and strict enforcement against violations by both state management agencies and foreign investors.
Recommendations
Ensuring a stable economic and political environment is crucial for attracting foreign investors, as trade sanctions and trade wars can create significant barriers that deter investment and hinder business operations in host countries.
The government must implement measures to help businesses reduce the spread of Covid-19, as a significant number of infected workers can severely disrupt operations, potentially leading to temporary closures For example, during the Covid-19 outbreak in Bac Giang province in May and June 2021, the closure of four industrial parks affected over 360 businesses and nearly 300,000 employees, resulting in daily losses of approximately 2,000 billion VND To support businesses in navigating these challenges and to encourage continued investment, it is crucial to establish policies such as extending deadlines for value-added tax, corporate income tax, and land rent payments, as well as implementing tax exemptions and reductions.
Effective pandemic containment relies on 5K protocols, vaccines, technology, and heightened public awareness Regular testing for workers and residential communities is essential Additionally, mobilizing all available resources is crucial to safeguard public health, reduce fatality rates, and decrease the number of severe cases.
The mass media and agencies play a crucial role in promoting the investment and business landscape of Vietnam and Bac Giang province to attract more investors Additionally, effectively communicating the province's policies to officials at all levels fosters consensus and enhances awareness regarding strategies aimed at improving investment attraction efficiency.
Chapter 3 analyzes the current landscape of foreign direct investment (FDI), highlighting both its positive and negative impacts It outlines strategic directions for enhancing FDI attraction in the future while also offering solutions and recommendations to improve the efficiency of FDI initiatives.
The thesis titled "The Attraction of Foreign Direct Investment into Bac Giang Province, Vietnam" examines the dynamics of FDI attraction in the region It provides a comprehensive analysis of the fundamental aspects of FDI, highlighting both its positive and negative impacts on Bac Giang's economy and society The research evaluates the current state of foreign direct investment in the province over recent years and identifies shortcomings in the local government's strategies for attracting and developing FDI Additionally, it addresses issues related to the formulation and implementation of policies, administrative procedures, and the oversight of FDI enterprise activities.
This thesis presents targeted solutions to boost foreign direct investment (FDI) in Bac Giang province, ensuring that FDI enterprises comply with legal and regulatory frameworks These initiatives are crucial for the province's socio-economic development during a time of rapid industrialization and modernization, as well as in response to the growing trend of global economic integration.
Despite significant efforts, the complexities surrounding foreign direct investment (FDI) remain extensive, and this thesis may still have several shortcomings I welcome feedback from my professors to enhance the quality of the work.
(n.d.) Retrieved from https://skhdt.bacgiang.gov.vn/
What is a Foreign Investment? - Definition & Examples (2015, October 22) Retrieved from https://study.com/academy/lesson/what-is-a-foreign-investment-definition- examples.html
(2017) Report on the social-economic development of Bac Giang province
(2018) Report on the social-economic development of Bac Giang province
(2019) Report on the social-economic development of Bac Giang province
(2020) Report on the social-economic development of Bac Giang province
(2021) Project on improving the efficiency of investment attraction of Bac Giang province until 2030
(2021) Report on the social-economic development of Bac Giang province
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