As of August 2013, Vinh Phuc province licensed 129 foreign direct investment (FDI) projects with a total registered capital of nearly US$2.7 billion, attracted US$166.5 million and VND551 billion of non-refundable official development assistance (ODA) and VND354 billion of NGO aid (non-governmental projects). The province ranks 19th in the country by aid value disbursed. However, the outcome is below the province’s potential. Notably, investment inflows to Vinh Phuc province have declined sharply in the past 3-4 years.
The recent conference on “Cooperation to enhance the efficiency of promoting investment, trade, tourism and attracting ODA and NGO in Vinh Phuc” received valuable opinions and comments from experts and companies. Ms Duong Thi Tuyen, Vice Chairwoman of Vinh Phuc Provincial People’s Committee, said although Vinh Phuc province has as high as 16 percent of economic growth annually and houses some big Japanese investors like Toyota, Honda and Yamaha, it lacks driving projects to create local breakthrough development. Therefore, the province is seeking measures to boost promotion activities to leverage the next phase development.
Giving reasons for the decline in attracted investment capital in Vinh Phuc province in comparison with other northern provinces with similar competitive advantages, she said that apart from subjective factors of economic slowdown, the decline is also blamed on the underperformance of promotion agencies. Currently, the province has seven units responsible for this task, causing overlapping and inconsistency in administration and implementation. Investors do not know what units to work with before they invest in the province.
According to the Foreign Investment Agency (FIA), Vinh Phuc province has witnessed a sharp decline in investment attracted probably because land rentals at industrial parks in the province are higher than other localities in the region, thus causing investors to redirect their intention to other localities. Besides, the handling of administrative procedures in Vinh Phuc province is not as rapid as committed by local authorities. Vinh Phuc ranked 43rd in provincial competitiveness index (PCI) 2012 published by the Vietnam Chamber of Commerce and Industry (VCCI), a drop of more than 10 places. It seems to be clear that the administrative apparatus has problems in facilitating enterprises and investors. Hence, the solutions to increase investment capital into the province are to reorganise and perfect the administrative apparatus and adjust land rentals in industrial parks.
According to experts, Vinh Phuc province necessarily bases on its strengths to work out medium and long-term strategies to have specific promotion plans. The province should focus on some key fields like developing supporting industries, taking care of investors after granting investment licences, reforming administrative procedures towards one-stop source mechanism, and improving the quality of civil servants. Particularly, the province should pay attention to the implementation of FDI projects after they are licensed and enhance coordination of investment management authorities.
Mr Pham Hong Hai, Deputy Director of Propaganda Department affiliated to the Provincial Party Committee, underscored the important role of existing investors in Vinh Phuc province in attracting new investment capital as they are the most persuasive evidence to potential investors. With the motto “Investors in Vinh Phuc are Vinh Phuc citizens; local enterprises are rich, Vinh Phuc will be rich too,” province must take good care of existing investors, he added.
Hai also suggested attracting ODA and NGO aids. Previously, Vinh Phuc province also stood on the top of the most attractive localities to investors and international community based on that to brand Vinh Phuc as a rich and strong locality. They only support mountainous, far-lying and underdeveloped areas. Hence, to draw ODA and NGO aids to reduce budgetary burdens of the province, the promotion force must be really professional to convince businesses to make investments. Besides, the province also needs to advertise on mass media as this is the most effective promotion channel.