Solutions to improve the efficiency in attracting FDI in nghe an province

ACADEMY OF POLICY AND DEVELOPMENT INTERNATIONAL SCHOOL OF ECONOMICS AND FINANCE GRADUATION THESIS Topic: SOLUTIONS TO IMPROVE THE EFFICIENCY IN ATTRACTING FDI IN NGHE AN PROVINCE Instructor: Msc Nguyen Thi Thuy Linh Student: Nguyen Anh Tu Student number: 5083106553 Class: CLC 8.2 Ha Noi, 5/2021 ACADEMY OF POLICY AND DEVELOPMENT INTERNATIONAL SCHOOL OF ECONOMICS AND FINANCE GRADUATION THESIS TOPIC: SOLUTIONS TO IMPROVE THE EFFICIENCY IN ATTRACTING FDI IN NGHE AN PROVINCE Ha Noi, 5/2021 TABLE OF CONTENTS LIST OF ABBREVIATIONS LIST OF TABLES AND FIGURES ACKNOWLEDGEMENT INTRODUCTION The need of the subject Objectives of the research Research method Scope of research Structure of the thesis CHAPTER 1: LITERATURE REVIEW OF FOREIGN DIRECT INVESTMENT 1.1 Overview of foreign direct investment 1.1.1 Foreign investment 1.1.2 Foreign direct investment 1.1.2.1 Definiton 1.1.2.2 Characteristics of foreign direct investment 1.1.2.3 Types of foreign direct investment 1.1.2.4 Forms of foreign direct investment 1.2 Impact of foreign direct investment 1.2.1 For home country 1.2.1.1 Benefits 1.2.1.2 Drawbacks 1.2.2 For host country 1.2.2.1 Benefits 1.2.2.2 Drawbacks 1.3 Factors affecting the ability to attract foreign direct investment 1.3.1 Policy factors 1.3.2 Economic factors 1.3.3 Resources factors 1.3.4 Infrastructure factors 1.4 Criteria for evaluating the effectiveness of FDI attraction 1.5 Experiences in attracting FDI 1.5.1 China's experiences in attracting FDI 1.5.2 Ha Tinh's experience in attracting FDI 1.5.3 Lessons for Nghe An Province CHAPTER 2: SITUATION OF ATTRACTING FDI IN NGHE AN PROVINCE 2.1 General overview of Nghe An province 2.1.1 Geographical location 2.1.2 Natural condition 2.1.2.1 Topographic 2.1.2.2 Climate 2.1.2.3 Natural resources 2.1.2.4 Transportation 2.1.3 Economic development situation of Nghe An province 2.1.3.1 Economic growth 2.1.3.2 The economic structure 2.1.4 Advantages and disadvantages of Nghe An province in attracting FDI 2.1.4.1 Advantages 2.1.4.2 Disavantages 2.2 Incentive policies to attract FDI 2.2.1 Incentive policies to attract FDI in Vietnam 2.2.2 Incentive policies to attract FDI in Nghe An province 2.3 The situation of attracting FDI in Nghe An 2.3.1 Total value of FDI 2.3.1.1 Accumulated FDI 2.3.1.2 Yearly attrated FDI 2.3.2 Foreign investment partners 2.3.3 Foreign dirrect investment forms 2.3.4 Structure of FDI attraction by economic sectors 2.3.5 New licensing situation 2.3.6 Total investment capital for implementation of foreign direct investment projects in Nghe An province 2.4 Overall assessment of the situation of attracting FDI in Nghe An province 2.4.1 Achievements 2.4.2 Limitations 2.4.3 Reasons of limitations CHAPTER 3: SOLUTIONS TO IMPROVE THE EFFICIENCY IN ATTRACTING FDI IN NGHE AN PROVINCE 3.1 Orientation of attracting FDI in Nghe An Province in the period of 2021- 2025 3.1.1 Development perspective 3.1.2 General orientation of attracting FDI capital of Nghe An province 3.2 Solutions to improve the efficiency in attraction FDI in Nghe An province 3.2.1 Reform administrative procedures to create attractive environment to foreign investors 3.2.2 Improve the efficiency of investment promotion 70 3.2.3 Strengthen the ability of investment management and investment supervision 71 3.2.4 Increasing the effectiveness of management, inspection, monitoring, and business assistance 72 3.2.5 Finalize the policy 73 3.2.6 Improve the quality of labour 74 3.3 Recommendations 75 3.3.1 For the state 75 3.3.2 For Nghe An province 75 CONCLUSION 78 REFERENCES 79 LIST OF ABBREVIATIONS LIST OF TABLES AND FIGURES Table 2.1: GRDP growth rate of Nghe An province in the period 2011-2020 41 Table 2.2: GRDP per capita of Nghe An province in the period 2010-2020 43 Table 2.3: The economic structure in 2010 and 2020 44 Table 2.4: Total accumulated FDI attraction in Nghe An province 50 Figure 2.1: GRDP growth rate of Nghe An province in the period 2011-2020 42 Figure 2.2: GRDP per capita of Nghe An province in the period 2010-2020 43 Figure 2.3: Total accumulated FDI attraction in Nghe An province in the period of 2017-2020 51 Figure 2.4: Total accumulated FDI in 2019 of Thanh Hoa, Nghe An, Ha Tinh provinces 52 Figure 2.5: New FDI attraction in Nghe An province from 2017 to 2020 53 Figure 2.6: Foreign direct investment capital in Nghe An province in 2020 by major investment partners 55 Figure 2.7: Structure of FDI attraction by economic sector in Nghe An province in 2019 57 Figure 2.8: New foreign direct investment projects licensed in Nghe An province in the period of 2017-2020 58 ACKNOWLEDGEMENT I would like to express my heartfelt gratitude to my instructor, Msc Nguyen Thi Thuy Linh - Academy of Policy and Development, for her assistance in completing my thesis The person who passionately led and advised me throughout the internship and thesis writing processes I would like to express my gratitude to all the teachers in the university, particularly the ISEF teachers, who have given me knowledge that will be my future luggage during my studies at the university Through this page, I would like to show my appreciation and gratitude to everyone who has assisted me during my time at university My sincere thanks! Student Nguyen Anh Tu Labor costs, on the other hand, vary greatly and are rising on a daily basis As a result, in order to attract adequate human resources to meet production goals, businesses must constantly change employee perks and compensation, which has a significant impact on their business and production strategies v Impact of the Covid-19 pandemic Facing the situation of the Covid-19 epidemic, which is becoming more and more complicated and spreading globally, it has significantly affected the production and business activities of businesses in the area Most enterprises have difficulties in importing raw materials and auxiliary materials for production and business, or slow in importing raw materials; orders decreased, export of goods also dropped sharply, leading to a decrease in revenue (mainly in enterprises that import raw materials from China and consume products mainly in China, Hong Kong, and Europe) Along with the garment, leather and footwear sectors, other fields such as assembling components, automobiles also faced many difficulties due to the epidemic The management and implementation of production and business activities are also difficult, some businesses are not allowed to come by foreign business owners, experts, managers, and technical staff Currently, some businesses have implemented plans to extend hours, extend shifts or reduce the number of working days in the week to prolong the time to maintain production activities as much as possible, to stabilize the psychology of workers and employees Besides, there are also a number of businesses that are not currently affected by the Covid-19 epidemic, or are insignificantly affected because they have a reserve of raw materials; import market and domestic consumption, independent of the Chinese market However, if the epidemic spreads and lasts for a long time, it will also affect production and business activities 66 CHAPTER 3: SOLUTIONS TO IMPROVE THE EFFICIENCY IN ATTRACTING FDI IN NGHE AN PROVINCE 3.1 Orientation of attracting FDI in Nghe An Province in the period of 2021- 2025 3.1.1 Development perspective (i) Nghe An province needs to focus on economic development, taking reasonable and sustainable growth as a pervasive viewpoint Economic development is associated with ensuring social progress and justice in each step of the development process; harmoniously combine economic development with environmental preservation, protection and improvement; ensure reasonable development between urban and rural areas (ii) Making the most of all resources for development investment, in which internal resources are the decisive factor, external forces play an important role in socio-economic development Economic growth is based on a strong breakthrough in human resources and science and technology level Improve the economy's ability to absorb capital, rapidly shift the structure of investment capital in the direction of rapidly increasing the proportion of mobilization from the non-state sector (iii) Creating a favorable and transparent environment, encouraging all economic sectors to develop equally, healthily, without limitation of size (iv) Promote socialization in the fields of public investment, culture, health, education - training, sports, urban development (v) Develop and improve the quality of human resources, accelerate the application of scientific, technical and technological advances to production and daily life 67 3.1.2 General orientation of attracting FDI capital of Nghe An province (i) Consistently the policy of attracting foreign investment capital in order to bring into full play internal resources, at the same time take advantage of external resources and actively integrate into the international economy to develop quickly, effectively and sustainably, in line with the requirements of the Government (ii) Attract investment in planned industrial zones, in order to ensure sustainable development, facilitate management, avoid the situation that investors choose the location by themselves, leading to unsatisfactory planning , lack of infrastructure (iii) To attract and promote investment must be selective and resolutely reject low-tech, outdated, energy-consuming, potential risk of environmental pollution, projects showing signs of hiding investment shadow to avoid origin, commercial fraud (iv) Prioritize attracting investment from countries of large economies with potentials in capital, technology and management level; multinational companies, large economic groups in the world Focus on attracting investment in fields and projects with high added value, creating a good source of revenue for the budget (v) In the field of agriculture, priority is given to attracting investment projects in the field of production of plants and seeds; application of biotechnology, preservation and processing of agricultural products; to build concentrated commodity production zones, associating agriculture with processing industry (vi) In the industrial sector, focus on attracting investment in planned industrial zones and clusters to ensure sustainable development In which, priority is given to attracting investment in the production of industrial products with high technology content, clean technology, information technology, supporting 68 industries, mechanical, electrical and electronic products such as: Manufacturing and assembling automobiles, steel structures, electronic equipment, refrigeration, telecommunications equipment, printers, fax machines, new building materials, medicines for people In the service sector, investment is encouraged in the following areas: commerce, supermarkets, restaurants, tourism, finance, transportation, telecommunications, insurance, consulting, science and technology, education, training create, high quality medical 3.2 Solutions to improve the efficiency in attraction FDI in Nghe An province 3.2.1 Reform administrative procedures to create attractive environment to foreign investors (i) Continue to implement administrative reform in the mechanism of coordination to supervise and inspect investment activities, and the public duties of officials and employees in handling investment, land, construction, import and export procedures import, labor, environment , in order to eliminate troubles and facilitate the fastest time for investors when implementing projects At the same time, transparently and clearly about the focal point, the time to process the application, the title of the application for the issuance of the investment registration certificate, etc This is to facilitate foreign investment activities, thereby increasing further attractiveness of the investment environment in the area (ii) Develop regulations on coordination between relevant agencies and units to create consistency, convenience and speed in handling procedures Specifically, the following procedures for granting investment registration certificates, procedures for land allocation and land lease, procedures for 69 granting construction permits, environmental procedures and business investment conditions for enterprises (iii) Continue to review the issued legal documents to perfect the system of legal documents of the province, cancel the documents that are no longer suitable; building and perfecting the legal system to ensure consistency, transparency, accessibility and efficiency, meeting the requirements of sustainable development (iv) Paying attention to and creating more favorable conditions for investors in production and business activities, creating a close relationship between state management agencies and enterprises, building and consolidating trust for investors Foreign investors feel secure to business in Nghe An (v) Diversify and improve the quality of business support services, especially those that provide market information, search for business partners, labor information and support services job; financial support for training a team of highly skilled workers to meet the needs of enterprises; provide advice on legal issues and support the implementation of administrative procedures in areas such as land lease, site clearance, import and export, customs 3.2.2 Improve the efficiency of investment promotion (i) Continue to improve and develop infrastructure, serving as a foundation to attract investment projects in the province (ii) Renovate and improve the quality of foreign investment propaganda documents and publications in the province to create attractiveness for foreign investors Focusing on investment promotion in a key direction, strengthening investment promotion for large and multinational corporations; at the same time, develop specific promotion plans and coordinate with central ministries and sectors in participating in promotion 70 Appreciate the on-the-spot promotion, strengthen support for projects that (iii) have been granted investment certificates to deploy smoothly, remove difficulties and obstacles in time for investors, create trust for investors From there through investors propagate the local investment environment Continue to update and upgrade the website of the Department and the (iv) province to introduce foreign investment Actively approach and take advantage of attracting investment from large (v) corporations of Japan, the United States and European countries Regarding planning and attracting industrial park infrastructure investors: (vi) (vii) Continue to review and accelerate the detailed planning of industrial clusters in the whole province to attract infrastructure investors and investors (vii)Continue to review and accelerate detailed planning of some industrial parks to attract infrastructure investors 3.2.3 Strengthen the ability of investment management and investment supervision (i) Pay attention to the stage of investment verification and approval, carefully consider the factors of technology, environment, national defense and security, especially paying attention to the economical use of land resources; (ii) Focusing on accelerating the disbursement of registered capital of projects that have been granted investment registration certificates, creating favorable conditions for administrative procedures, site clearance General review projects that have been granted investment registration certificates, especially focusing on ongoing projects and large-scale projects Departments and sectors work together to monitor and promote projects according to the set schedule At the same time, resolutely handle violations 71 Resolutely put an end to the project's non-implementation, slow (iii) implementation, handling of environmental violations Promote control and prevent transfer pricing of enterprises (iv) Urging projects to implement the reporting regime on project (v) implementation on the National Foreign Investment Information System Organize the review of foreign investment projects that have been granted (vi) investment registration certificates in the province to have directions for handling and solving difficulties and problems in the implementation process Implement measures to strengthen post-inspection work, closely grasp the reality of business status of foreign enterprises (vii) Continue to organize dialogues between enterprises and departments, agencies and localities in order to promptly solve and remove difficulties and problems of enterprises; accompanies enterprises to build and implement well the mechanism of dialogue and consultation with enterprises 3.2.4 Increasing the effectiveness of management, inspection, monitoring, and business assistance (i) Strengthening business connection, diversifying and improving the quality of business support services, especially services providing information on the market, finding business partners, information on labor employment and employment support services; financial support for training highly skilled workers to meet the needs of enterprises; support and advise on legal issues, administrative procedures in areas such as land lease, site clearance, import and export, customs, tax (ii) Strengthen cooperation between sectors, between sectors and local authorities in the management and supervision of enterprises Focus on implementing measures, removing difficulties and obstacles in the process of project implementation 72 (iii) Set up and publicize the "hotline" of the Office of the Provincial People's Committee and departments and branches to promptly receive feedbacks from businesses (iv) Every months and year organize meetings and dialogues between provincial leaders, state management agencies and the business community and associations in order to grasp and promptly handle difficulties and obstacles of enterprises 3.2.5 Finalize the policy (i) Strengthen regional linkages, promote advantages to optimize resources in development, participate more deeply in "production chain", "value chain" (ii) To encourage and prioritize enterprises to invest in the agricultural sector; implement an effective production model support mechanism Gradually shifting from support through intermediaries to direct support to producers, associated with completing, publicizing and transparentizing processes and procedures; implementation monitoring and control mechanism (iii) Pilot implementation of regulations on public-private partnership, especially in the field of technical infrastructure investment Promote investment attraction in the form of: Build - Operate - Transfer (BOT) (iv) Continue to research, have policies to support job creation for workers in areas where land must be acquired Pay attention to the planning and construction of resettlement areas; there are incentives and incentives to invest in the construction of apartments and houses for workers in industrial zones; develop social security services in areas with industrial parks and industrial clusters such as cultural houses, sports areas, service areas for investors and foreign experts living and working in Nghe An province 73 3.2.6 Improve the quality of labour (i) The era of the advantage of "abundant and cheap labor" is passing, so it is necessary to have a strategy to train human resources methodically in terms of both knowledge and skills and modern industrial working style This will be a decisive comparative advantage in attracting FDI in the new period Some solutions to take are: (ii) For officials and civil servants related to the investment field, they must regularly foster and improve their qualifications, and have preferential policies on salary, recruitment, and housing to attract high-quality human resources to work in the Province Regularly conduct advanced training or fostering for staff in charge of project appraisal, project management On the other hand, it is necessary to have a housing policy and foreign language training for workers in the FDI sector so that they can rest assured and work stably Encourage foreign investors with training experience to set up branches or joint training in the province with the aim of creating human resources for foreign projects, gradually improving the quality of human resources (iii) Firmly grasp the development situation and human resource requirements of the foreign-invested economy in order to have appropriate programs and plans to take the lead in human resource training From there, as a basis for strategic planning close to the actual situation, ensuring human resources for the foreign-invested economy to catch up with development needs In order to implement this solution well, economic demand with FDI capital must be taken as a criterion in ensuring human resources (quantity, quality and structure) and must be based on signals of the labor market and labor market level responsiveness of current human resources for policy making and resource generation 74 (iv) Training and developing high-quality human resources to access modern technology, meeting the labor recruitment needs of investors Research and adjust labor restructuring according to the speed of economic restructuring (v) Improve labor skills, especially for farmers whose agricultural land has been acquired 3.3 Recommendations 3.3.1 For the state (i) The Ministry of Planning and Investment should continue to issue legal documents guiding the implementation of the Investment Law, the Enterprise Law, the coordination mechanism between the investment management agency and the business registration agency as well as the implementation of the Law on Enterprises (ii) The Government and the Ministry of Planning and Investment should continue to pay attention to and develop national or regional investment promotion programs in order to promote key investment promotion channels and objects for each period, especially especially investment projects with large investment capital scale, high technology content, effective land use, environmentally friendly, positively affecting the development of other industries and fields 3.3.2 For Nghe An province (i) Requesting People's Committees of districts, cities, towns and competent authorities to review all projects that still have problems with land clearance compensation, focus on solving difficulties and obstacles, speeding up compensation for site clearance for projects creates favorable conditions for investors to implement projects Coordinating to solve difficulties in planning and construction in handling procedures for granting certificates of land use 75 rights and property ownership to investors This will facilitate investors to access capital sources to accelerate investment progress (ii) Proposing the province to continue updating and publicizing information on policies and planning such as: Planning of sectors and fields, planning of some key products of the province, detailed construction planning, industrial park planning, programs and plans for investment promotion, trade and tourism, priority areas to attract investment, planned land areas for investment in sectors and fields (iii) Continue to reform administrative procedures, shorten the time to settle procedures for investors, which has been signed by the Chairman of the Provincial People's Committee with the Chairman of the Vietnam Chamber of Commerce and Industry Continue to review, publicize and transparently timely administrative procedures related to the settlement of documents and procedures for investors All receipt and settlement of administrative procedures for organizations and individuals must be done according to the one-stop-shop mechanism at agencies and units Agencies and units should strengthen inspection and urge the implementation of one-stop shops, departments and divisions that directly handle administrative procedures for organizations and individuals (iv) Requesting departments, branches, People's Committees of districts and cities to continue to study and propose projects and works, especially land use projects, traffic projects for public announcement and continue to call for investment Strengthening the relationship between the Departments in which to innovate the process and improve the quality of appraisal of investor's documents and projects; implementing the integration in the appraisal of investor's documents and procedures, such as: linking the appraisal of investment projects with the appraisal of land use needs; linking the appraisal of environmental procedures 76 with fire prevention and control procedures ; carry out appraisal forms suitable to each project, mainly in the form of written opinions 77 CONCLUSION After studying, I have a more general view of the situation of attracting FDI capital It can be seen that foreign direct investment capital has been making great contributions to the economic development of Nghe An province as well as the whole country The management and attraction of foreign direct investment capital has been focused by the province, the investment environment has been improved to find and attract more potential investors in the future Through research at the Department, my report clarified the following issues: Assess the status of attracting foreign direct investment in the province Propose measures to improve and enhance the investment environment of the province to enhance investment attraction I tried my best to complete the report but inevitably limited knowledge I look forward to receiving suggestions from teachers to prepare the best for my thesis My sincere thanks! 78 REFERENCES ICC, Incoterm (2010) Luật Đầu tư (2014) OECD (1996), Benchmark difinition of foriegn direct investment Ngọc Thi (2017), Kinh nghiệm Trung Quốc thu hút vốn đầu tư trực tiếp nước ngoài, Luanantiensi.com Sở Kế Hoạch Đầu Tư tỉnh Nghệ An (2020), Báo cáo tình hình kinh tế xã hội 2020 Sở Kế Hoạch Đầu Tư tỉnh Nghệ An (2019), Báo cáo tình hình kinh tế xã hội 2019 Sở Kế Hoạch Đầu Tư tỉnh Nghệ An (2018), Báo cáo tình hình kinh tế xã hội 2018 Sở Kế Hoạch Đầu Tư tỉnh Nghệ An (2020), Báo cáo tình hình kinh tế xã hội 2019-2020 Tổng cục thống kê (2019), Niên giám thống kê 2019 10 Tổng cục thống kê (2018), Niên giám thống kê 2018 11 Tổng cục thống kê (2017), Niên giám thống kê 2017 Thanh Le (2019), 26/27 tiêu KT-XH năm 2019 Nghệ An ước thực đạt vượt, NXB Báo Nghệ An 12 13 UNCTAD (1999), World Investment Report 14 Văn Cương (2021), Nghệ An: Hồn thành quy hoạch 10/11 Khu cơng nghiệp, Báo Doanh nghiệp hội nhập 15 Việt Hương (2020), Hà Tĩnh: Chọn lối riêng thu hút đầu tư trước ảnh hưởng dịch nCovid-19, NXB Báo đầu tư 79 16 Website: http://www.nghean.gov.vn ; https://vi.wikipedia.org/ ; nhiều trang web Bộ, Ngành, tỉnh Nghệ An khác 80 ... potential of the province Realizing the importance of attracting FDI in Nghe An province, I decided to choose the topic: "Solutions to improve the efficiency in attracting FDI in Nghe An province" Objectives... Objectives of the research Research and evaluate the situation of attracting FDI in Nghe An province From there, propose solutions to improve the outstanding problems in the process of attracting FDI capital... CHAPTER 3: SOLUTIONS TO IMPROVE THE EFFICIENCY IN ATTRACTING FDI IN NGHE AN PROVINCE 3.1 Orientation of attracting FDI in Nghe An Province in the period of 2021- 2025 3.1.1