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THAI NGUYEN UNIVERSITY UNIVERSITY OF ECONOMICS & BUSINESS ADMINISTRATION CAO PHUONG NGA RESEARCHING THE INVESTMENT ENVIRONMENT IN THAI NGUYEN PROVINCE Major: Economic management Code

THAI NGUYEN UNIVERSITY

UNIVERSITY OF ECONOMICS & BUSINESS ADMINISTRATION

CAO PHUONG NGA

RESEARCHING THE INVESTMENT ENVIRONMENT IN THAI NGUYEN PROVINCE

Major: Economic management

Code: 9.31.01.10

SUMMARY OF DOCTOR THESIS IN ECONOMICS

THAI NGUYEN – 2024

THE THESIS IS COMPILED AT:

UNIVERSITY OF ECONOMICS & BUSINESS ADMINISTRATION

THAI NGUYEN UNIVERSITY

Science Supervisor: Ass.Prof.Dr Hoang Thi Thu

Reviewer 1:

Reviewer 2:

Reviewer 3:

The Thesis will be defensed in front of the Committee at UNIVERSITY OF ECONOMICS & BUSINESS ADMINISTRATION

THAI NGUYEN UNIVERSITY

At (time & date) 2024

The Thesis can be referenced at:

Introduction

1 The necessity of the of the Research Topic

Development investment activities affect businesses and profoundly impact the overall economy Over the past years, investment activities have expanded significantly in scale and diversified across various types of capital, industries, and forms of ownership This growth has been a crucial driver of economic progress, creating employment opportunities and improving living standards

According to the World Bank, a country can increase its annual growth rate by 2.3% if it undertakes sufficient reforms to move from a low to a high ranking in the business investment environment Therefore, enhancing the investment environment is a crucial factor and a powerful motivator for economic growth and poverty reduction As a result, improving the investment environment has become

a top priority for policymakers

The investment environment is critical in influencing decisions related to investment location, project implementation, project operation, and eventual project termination for domestic and international investors Investors typically channel their resources into regions with favourable investment conditions, such as natural resources, strategic locations, robust infrastructure, and dynamic, innovative leadership These factors and attractive incentives can significantly draw in development investments The government's role is crucial in developing policies, managing, and administering society to create

a "fertile ground" that attracts and optimizes social resources Ideally, the government aims for investors

to achieve sustainable profits while safeguarding the interests of the state and the community

Thai Nguyen, a midland and mountainous province in northern Vietnam with a natural area of 3,527 km² and a population of over 1.33 million people has made considerable efforts to enhance its investment environment To foster rapid and sustainable economic development and to drive industrialization and modernization, the local government has focused on attracting domestic and foreign capital for production development, thereby generating employment and improving residents' living standards In recent years, the investment environment in Thai Nguyen has continuously improved, facilitating increased investment from both domestic and international sources

The province's economic development has demonstrated that as infrastructure, labour resources, and government support policies have improved, the capital inflow has increased significantly, leading to economic growth According to the 2022 report on the socio-economic development of Thai Nguyen

by the People's Committee, the province achieved an economic growth rate of 8.25%, with a GRDP per capita estimated at VND 106.6 million (approximately USD 4,560 per person per year) By the end of

2022, the province had 850 valid domestic projects with a registered capital of VND 149.3 trillion and

175 FDI projects with a total registered capital of USD 11.3 billion (equivalent to VND 237.3 trillion) Additionally, budget revenue reached VND 18.54 trillion

Thai Nguyen's investment environment has been highly regarded, especially for attracting foreign direct investment (FDI) However, between 2018 and 2022, the province's Provincial Competitiveness Index (PCI) ranking declined While Thai Nguyen ranked 7th nationwide in 2015, it fell to 18th in 2018 and dropped to 28th out of 63 provinces in 2021 The decline was particularly evident in four key component indicators: "market entry," "land access," "transparency," and "time costs." These limitations highlight the need for continued improvements to enhance the province's attractiveness to investors, particularly

in an increasingly competitive regional landscape

In the current context of decentralization, competition among local governments to attract investment

is intensifying Improving the business and investment environment in Thai Nguyen is vital to facilitating business operations and enhancing labour productivity, ultimately helping the province meet its growth targets Establishing a fair, transparent, and investor-friendly environment fosters enterprise

development and efficiently utilizes resources This approach aims to propel Thai Nguyen's comprehensive and sustainable growth while enhancing its competitiveness at the national level

To achieve these objectives, there is a need to study the investment environment in Thai Nguyen, identify its strengths and weaknesses, and propose improvement solutions The province can attract more capital for development investment, boost business performance, and increase labour productivity Given the theoretical and practical significance of these issues, the author has chosen the research topic:

"Researching the Investment Environment in Thai Nguyen Province" as the focus of this dissertation

2 Research Objectives

2.1 General Goals

Based on synthesizing theory and analyzing the investment environment in Thai Nguyen province, the dissertation proposes several solutions to enhance the investment environment in the region

2.2 Specific Goals

 Systematize and supplement the theoretical and practical basis for the investment environment, particularly at the provincial level

 Analyze the current status of investment activities and the investment environment in Thai Nguyen province

 Identify factors within the investment environment that affect investor satisfaction in Thai Nguyen

 Propose solutions to improve the investment environment of Thai Nguyen province based on evaluating of its advantages, limitations, and underlying causes

3 Research Subjects and Scope

3.1 Research Object

The research focuses on the investment environment of Thai Nguyen province, considering aspects such as politics, law, natural environment, economy, and socio-culture

3.2 Research Scope

 Time:

Secondary data used in the dissertation covers the period from 2018 to 2022 Primary data was collected from December 1 to 31, 2022

 Location:

The research was conducted in Thai Nguyen province

 Content:

The study examines various aspects of the investment environment in Thai Nguyen province, including policy and legal frameworks, political environment, cultural and social environment, natural environment, and economic environment (focusing on human resources, infrastructure, input costs, and the formation of industrial clusters) The research encompasses state-owned enterprises, non-state sectors, and foreign-invested sectors operating in Thai Nguyen province

4 New Contributions of the Dissertation

Firstly, the dissertation contributed to systematizing, clarifying, and supplementing the theoretical basis of the investment environment in general and the provincial investment environment

in particular, covering concepts, characteristics, and content related to the provincial investment environment

Secondly, the dissertation analyzed the investment environment in Thai Nguyen province from

2018 to 2022—a period marked by significant economic, political, and social fluctuations worldwide and in Vietnam, including the COVID pandemic and the Russia-Ukraine war By assessing the investment environment through political, legal, economic, cultural and social lenses, the dissertation highlighted the shortcomings and limitations of the investment environment and the causes of these limitations It then proposed several solutions to improve the investment environment in Thai Nguyen province

Thirdly, the dissertation is among the few studies that utilize business satisfaction to assess the investment environment of the Thai Nguyen province To evaluate investor satisfaction, the dissertation researched eight groups that best suit the socio-economic conditions of Thai Nguyen province: geographical location and resources (in the natural environment); local government management and support, investment policies (in the political-legal environment); infrastructure and services, human resources, input costs, the formation of industry clusters (in the economic environment); and living and working conditions (in the cultural and social environment)

Fourthly, in the context of Industry 4.0, Thai Nguyen province is known as a pioneer in digital transformation, and the inclusion of “information technology and communication infrastructure development synchronized for digital transformation” is a new variable introduced by the author in the survey, which investors have highly valued

Fifthly, the dissertation will serve as a scientific basis for local governments, scientists, and students as a reference for researching the investment environment and proposing solutions to improve the investment environment, thereby attracting both domestic and foreign investment capital

5 Structure of the Dissertation

In addition to the introduction and conclusion, the dissertation is structured into five chapters:

 Chapter 1: Overview of Research on the Investment Environment

 Chapter 2: Scientific Basis for Provincial Investment Environment

 Chapter 3: Research Methodology

 Chapter 4: Current Status of the Investment Environment in Thai Nguyen Province

 Chapter 5: Solutions to Improve the Investment Environment in Thai Nguyen Province Chapter 1 Overview of Research on the Investment Environment

1.1 Overview of Foreign Research

1.2 Overview of Domestic Research on Investment Environment at Various Levels

1.2.1 Domestic Research on National and Economic Investment Environment

1.2.2 Domestic Research on Provincial Investment Environment

1.2.3 Investment Studies in Thai Nguyen Province

1.3 General Assessment of the Research Findings

Based on surveys and analysis of the research overview, several conclusions can be drawn:

 Firstly, foreign studies and some domestic research focus on analyzing and evaluating factors

affecting the investment environment of a region or country These studies assess the impact of these factors on business investment decisions The research findings provide valuable information that helps countries enhance their investment environment to attract more investments

 Secondly, most studies on the provincial investment environment focus on examining the

impact of environmental factors on the investment decisions of specific business groups, such

as FDI enterprises, new businesses, and small non-state enterprises However, in these studies, factors affecting FDI attraction are often tied to local characteristics or specific industries Many factors, such as environmental conditions and policy influences, take time to quantify

 Thirdly, several authors have evaluated the investment environment in Thai Nguyen province

and its influence on business investment decisions Some studies examine how environmental factors affect the investment choices of FDI, non-state, or private enterprises A few studies focus on assessing the impact of environmental factors on the satisfaction of private or FDI enterprises However, these evaluations are limited to periods before 2020

1.4 Issues for Further Research

 Firstly, previous studies have often concentrated on examining the investment environment of

countries within a region or a group of countries to determine which factors influence the choice

of investment location However, there still needs to be more comprehensive studies analyzing the investment environment of specific localities, especially in Thai Nguyen province

 Secondly, most prior research has focused mainly on non-state-owned or FDI enterprises

without providing a holistic analysis that includes businesses from all sectors Moreover, studies evaluating the impact of environmental factors on business satisfaction in Thai Nguyen province still need to be explored

 Thirdly, due to variations in natural and socio-economic conditions across localities, the

influence of environmental factors on business satisfaction or investment decisions may differ Building on the findings of previous studies, this dissertation aims to identify factors that best match the socio-economic conditions of Thai Nguyen province

 Fourthly, by using business satisfaction as a metric to evaluate the investment environment,

this dissertation will be one of the pioneering studies analyzing the effects of environmental factors on investor satisfaction in Thai Nguyen province It will also be the first to assess the investment environment during 2018-2022, a time characterized by significant socio-economic changes in Vietnam and globally By evaluating the current situation and analyzing the impact

of environmental factors on investor satisfaction, the dissertation aims to identify shortcomings and their causes and ultimately propose solutions to improve the investment environment in the Thai Nguyen province

CHAPTER 2: THEORETICAL AND PRACTICAL FOUNDATIONS OF THE PROVINCIAL INVESTMENT ENVIRONMENT

2.1 Theoretical foundations for the Provincial Investment environment

2.1.1 Concept, Characteristics, and Role of the Provincial Investment Environment

2.1.2 Intrinsic aspects of provincial investment environment

2.1.3 Relevant Theories on Investment and Investment Environment

2.2 Practical foundations for Improving the Investment environment to Attract Capital: Lessons for Thai Nguyen Province

2.2.1 Experience in Improving the Investment Environment Abroad

2.2.2 Experience in Improving the Investment Environment in Vietnamese Provinces

2.2.3 Lessons for Enhancing the Investment Environment in Thai Nguyen Province

Improving the investment environment in provinces is highly regarded in those that have effectively reformed administrative procedures at all stages and levels This includes streamlining processes for land allocation, compensation, site clearance, tax declarations, customs procedures, and licensing Administrative reforms must be accompanied by infrastructure support and modern technical facilities to enhance investor access to public services, creating favourable conditions and reducing time and unofficial costs for businesses

From the experiences of various localities in improving their investment environments, we can derive the following lessons to apply in the socio-economic development process of Thai Nguyen province:

1 Raise awareness and achieve consensus

First and foremost, raising awareness and building consensus among provincial leaders, departments, and People's Committees at all levels is essential to enhance the investment environment This consensus should extend from policy formulation to implementation, ensuring continuous support and engagement with investors from the initial contact to project execution

2 Identify local advantages and strategic Planning

Leaders should identify the local strengths and potential resources while examining external circumstances to develop an effective socio-economic strategy This strategy should outline the development structure of sectors and economic components to guide investment flows Leveraging local potentials, exploiting comparative advantages, and integrating into national and international labour markets are crucial to attracting investments

3 Focus on comprehensive Socio-Economic Planning

Effective socio-economic development planning, including master plans, regional planning, industry planning, land use planning, construction planning, urban planning, and detailed planning,

is crucial Particular emphasis should be placed on developing industrial parks and clusters to create

a "clean land fund" that attracts investment projects Planning should be forward-looking, serving

as a foundation for development investment plans that align with each period's goals, enabling the efficient use of resources

4 Ensure transparent compensation and site clearance

Successful compensation and site clearance are critical to creating an attractive investment environment Implementation must be public, transparent, and democratic, balancing the interests

of the state, businesses, and the community, particularly the people directly affected by land allocations Addressing housing needs, providing employment opportunities, and securing the livelihoods of affected residents should be prioritized

5 Improve the qualifications of cadres and civil servants

It is essential to enhance the skills of public officials and train human resources to meet the demands

of industrialization and modernization Developing a comprehensive human resource strategy that aligns with local socio-economic planning can create a skilled workforce for investment projects, meet business labour needs, and generate local employment opportunities Emphasizing vocational training and improving labour quality will help diversify training types and ensure sustainable development

6 Promote administrative reform and maintain security

Promoting administrative reform, particularly in procedures, is vital Ensuring political stability, social order, and safety creates a favourable environment for attracting investment Reducing unnecessary procedures that hinder investment project timelines, especially in areas such as land leasing, allocation, investment licensing, and tax and credit services, is crucial Clearly defining responsibilities and powers at all levels can prevent overlaps and address inefficiencies Strengthening accountability among public officials and addressing bureaucratic practices and corruption within the state apparatus is necessary for improving the investment environment

In summary, the focus should be on creating a transparent, efficient, and investor-friendly environment, facilitated by streamlined administrative processes, improved human resource quality, and strategic planning, to attract and sustain domestic and foreign investments in Thai Nguyen province Authorities at all levels actively participate in removing difficulties for businesses The project must be considered not only to belong to the enterprises but also the joint responsibility of the industry and the locality

CHAPTER 3: RESEARCH METHOD 3.1 Research questions

Following the overview and scientific foundation of the research issue, the author has formulated the following research questions:

 What is the current state of co-investment in Thai Nguyen province's economic development during 2018-2022?

 How has the investment environment of Thai Nguyen province (including geographical location, natural resources, local authority management and support, preferential investment policies, human resources, infrastructure, input costs, industry cluster formation, and living and working environments) evolved during 2018-2022?

 How does exploring the investment environment in Thai Nguyen province impact investor satisfaction among businesses in the area?

 What solutions can be proposed to improve the investment environment of Thai Nguyen province from 2025-2030, with a vision extending to 2050?

3.2 Analytical Framework for Research on the Investment Environment in Thai Nguyen Province

The analytical framework is designed to provide a logical and systematic structure for analysis The dissertation uses business development and investment capital indicators to reflect the outcomes of improvements in the investment environment and the satisfaction of businesses with the province's investment environment (dependent variables) This framework assesses the investment environment

of the Thai Nguyen province, as illustrated in Figure 3.1

Figure 3.1 Framework for analyzing the investment environment of Thai Nguyen province

3.3 Research Process

The research process follows the diagram presented in Figure 3.2

Figure 3.2 Investment environment research process of Thai Nguyen province

3.4 Data Collection and Analysis Methods

3.4.1 Information Collection Methods

The research utilizes both primary and secondary data sources

3.4.1.1 Secondary Data Collection Methods

The dissertation gathers and uses the following documents:

 Information on investment and the investment environment from laws, decrees, circulars, and directives issued by the government, as well as official notifications and dispatches on improving the business investment environment in Vietnam and Thai Nguyen province

 Investment and investment environment data from reports and publications by the General Statistics Office, the Ministry of Planning and Investment, the Statistical Office of Thai Nguyen province, and the Department of Planning and Investment of Thai Nguyen province

 Data from official websites, including the General Statistics Office, the Ministry of Planning and Investment, the Statistical Office of Thai Nguyen Province, and the Provincial Competitiveness Index (PCI)

 Relevant articles and publications from both domestic and international sources

3.4.1.2 Primary Data Collection Methods

a Expert Interviews

b Business Surveys:

Table 3.1 Statistical table of the number of survey forms

3.4.2 Data Analysis Methods

3.4.2.1 Descriptive Statistics Method

3.4.2.2 Comparative Method

3.4.2.3 Exploratory Factor Analysis (EFA) Method

Table 3.6 Focused interview questions

Group factors “Infrastructure and services that have the same impact

on investors' satisfaction”

Group factors “The policy regime”

Group factors “The living and working environment”

Group factors “Management and support of local governments”

Group factors “Human resources”

Group factors “Competitive input costs”

Group factors “Geographic location and resources”

Group factors “Establishing an industry cluster”

3.4.2.4 Multivariate Regression Analysis Method

Figure 3 3 Investment environment factors affecting business satisfaction

3.5 Research Target System

3.5.1 Indicators Reflecting the Technical Development in the Province

 GRDP scale and economic structure by industry in Thai Nguyen province

 Economic growth rate of Thai Nguyen province

3.5.2 Indicators Reflecting Business Development and Investment Capital in Thai Nguyen Province

3.5.3 Indicators Reflecting the Current Situation in Thai Nguyen Province

 Provincial Competitiveness Index (PCI) of Thai Nguyen province for 2018-2022

 The percentage of the trained labour force in Thai Nguyen province

 Infrastructure quality indicators are assessed by the Vietnam Chamber of Commerce and Industry (VCCI)

 Statistics on healthcare and educational indicators in Thai Nguyen province

3.5.4 Research Criteria on Investor Satisfaction with the Investment Environment in Thai Nguyen Province

 Satisfaction with the province's investment incentive policies