Developing IPs, EZs to attract more FDI

These areas play an important role in socio-economic development by creating jobs, increasing budget revenues and export earnings, and expanding markets.

 Attractive but not meeting demand

More than 280 IPs and IZs have been established in Vietnam as of early 2013, attracting more than 4,300 FDI projects with total registered capital of US$64.8 billion, of which 51 percent has been disbursed.

Annual FDI capital poured into IPs and IZs accounts for 40-45 percent of the country’s total increased registered capital.

Positive results have also been recorded in attracting FDI attraction to coastal IPs, attracting, to date, 144 FDI projects with a total capitalization of US$38.4 billion.  Forty percent of the total land fund for industrial production, tourism and services is covered by these projects.

According to economic experts, the foreign-invested sector at IPs and EZs has made significant contributions to raising the added value of the industrial sector. FDI capital invested in IPs and EZs constitutes up to 80 percent of the FDI capital for Vietnam’s entire industrial sector.

Exports produced in IPs and EZs grew by 20 percent in 2005 and by 20-30 percent in recent years.

In addition, businesses in IPs and EZs have generated jobs for two million workers, including 1.2 million that are employed by FDI businesses.

However, IPs and EZs have revealed some weaknesses in attracting FDI.

Professor Dr. Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises, attributes the limitations to imperfect legal frameworks for controlling IP and EZ operations.

Continually changing incentive investment policies have also caused many problems for investors, he added.

National and local investment promotions for IPz and EZs have failed to attract projects with high technological value, while poor infrastructure, low quality human resources, weak connectivity between businesses and unimproved environmental protection are also a major obstacles to attracting FDI.

Greater efforts needed to attract investment

Head of the Overseas Investment Department, Do Nhat Hoang, says many domestic and foreign investors are currently seeking investment opportunities in IPs and EZs that will create a strong inflow of revenue.

Thorough preparations are necessary to seize these major opportunities by developing IPs and EZs in parallel with socio-economic development and improving the quality of their technical infrastructure and public amenities.

Proper mechanisms should also be adopted to facilitate EZ operations based on different investment models such as Build-Transfer (BT), Build-Operate-Transfer (BOT) and Public-Private-Partnership (PPP).

All ODA, FDI, State budget and government bond capital resources should be mobilized to build key infrastructure projects in EZs in order to stimulate more investment, Hoang said.

Agreeing with Hoang’s views, Vu Dai Thang, head of the EZ Management Department, argues that IPs and EZs should prioritize attracting investment for sectors and areas that promote advanced and environmentally friendly technologies, in addition to strengthening connectivity to sharpen the competitive edge and improve operational efficiency.

It is also imperative to supervise adherence to legal regulations on environmental protection and revamp policies and laws to improve working conditions and the lives of employees at IPz and EZs.

Streamlining administrative procedures, fine-tuning mechanisms and policies for IPs and EZs, and enhancing State management is another solution for developing IPz and EZs in the future, Thang adds.