Thu hút đầu tư trực tiếp nước ngoài vào phát triển các khu công nghiệp của tỉnh hưng yên theo hướng bền vững tt tiếng anh

VIETNAM ACADEMY OF SOCIAL SCIENCES
GRADUATE ACADEMY OF SOCIAL SCIENCES

KIM QUANG CHIEU

RESTRUCTURING THE AGRICULTURAL ECONOMICS
TOWARD MODERNIZATION IN HUNG YEN PROVINCE

Major: Development Economics
Code: 9.31.01.05

SUMMARY OF ECONOMIC DOTORATE’S THESIS

HANOI - 2019


THE THESIS IS COMPLETED AT
GRADUATE ACADEMY OF SOCIAL SCIENCES

Scientific Advisors: 1. Prof. Dr. Do Duc Binh
2. Assoc. Prof. Dr.Dang Thị Phuong Hoa

Counter-Argument No.1: Assoc. Prof; Dr. Ngo Quang Minh
Counter-Argument No.2: Assoc. Prof; Dr. Nguyen Trong Xuan
Counter-Argument No.3: Dr. Dinh Quang Ty

The thesis shall be defensed in front of Institute Examination Board
meeting held atAt…........Date…......Month….....…Year 2019

The thesis might be founded at the following labs :
- Laboratory ................................

- Laboratory................................


1

INTRODUCTION
1. Rationale
FDI companies in industrial zones have made great
contributions to socio-economic development of the country. FDI
enterprises not only bring a supplementary source of capital to total
capital of the society, contribute to economic development, increase
export turnover, contribute to the national budget revenue but also act
as a link between domestic firms and advanced technologies as well
as modern management skills from developed contries. At the same
time, they promote innovative technology, productivity enhancement,
business efficiency, create jobs and bring employees a stable income.
Over the past few years, industrial zones in Hung Yen province with
their own advantages and welcoming policies which encourage
investment projects into the province by the end of 2016 have attracted
2,800 million USD of FDI capital. Although the results of FDI attraction
to Hung Yen province are considerably positive, it does not mean that FDI
should be accepted at all costs especially in recent years when FDI waves
have been coming to Vietnam in general and Hung Yen in particular.
Instead, FDI attraction should be focused on the investment quality in the
way that FDI is strictly chosen with more attention to projects using high
technology and clean technology and projects that are able to create
competitive products and to participate in the global value chain. In
addition, policies to attract FDI into industrial zones as well as the
government administration of the province have posed several problems.
FDI attraction has only aimed at quantity and achievements and did not

pay attention to benefits in all three aspects: economic, social and
environmental. To solve the above-mentioned issues, the author chose
„FDI attraction for the sustainable development of industrial zones in
Hung Yen province’ as the topic for his dissertation.
2. Study aims and objectives
- Aims of the study
Overall, the study aims at examining theoretical and practical issues
of FDI attraction for the development of industrial zones in an area and
proposing solutions to increase FDI attraction to sustainably develop
industrial zones in Hung Yen province.
- Specific objectives of the study
The main objectives of the study are: Systemizing literature of
FDI, industrial zones, impacts of FDI on an economy in general and
on enterprises inside the industrial zones in particular, sustainable


2

development; Properly assessing the status of FDI attraction to
develop industrial zones in Hung Yen province; Giving researching
points of view, solutions and proposals to attract FDI in order to
sustainably develop industrial zones in the coming years.
3. Research subjects and scope
- Subjects of the research: Subject of the study is FDI attraction
to develop industrial zones of a locality (in three pespectives:
economic, social and environmental although more attention is paid
to the economic perspective).
- Research scope: FDI enterprises in industrial zones in Hung
Yen province in a five year period from 2011 to 2016.
4. Methodology

- Research and systemize theories: Systemizing the theories of
FDI attraction, sustainable development, industrial zones and making
assessment and analysis on orienting criteria to promote the
development of industrial parks in a sustainable way.
- Gather and analyze secondary data: The study collect
secondary data from government departments, boards, agencies and
annual abstracts of statistics of Hung Yen province. Synthesized and
analysed data can be used to compare Hung Yen industrial zones
with those of neighboring province to learn from their experience and
mistakes in FDI attraction into industrial zones.
- Method for primary data collection: The study uses survey
questionnaires to collect primary data. A survey was conducted in
172 FDI firms in industrial zones in Hung Yen province.
- Consultation method: The author interviewed with
administrators and directors of government department, board and
agencies and other experts to give solutions and proposal for the
research.
5. New contributions of the study
- Systemizing and contributing in clarification of several
theoretical problems in FDI attraction to develop a locality in
sustainable ways.
- Analyzing, properly and objectively assessing the current
status of FDI attraction into industrial zones in Hung Yen province to
point out advantages, main results, limitations and their causes,
which are the basis for the solutions of the study.
- Proposing 07 solutions to increase FDI attraction to
sustainably develop industrial parks in Hung Yen province by the end


3

of 2025 vision 2030. This is an important basis for the People‟s
Committee and other government departments and agencies in the
province to consider when issuing investment policies and solutions
in order to attract FDI in the coming years.
6. Structure of the study
Apart from the introduction and the conclusion, the
dissertation consists of 4 chapters:
Chapter 1: Literature review on FDI attraction for the
sustainable development of industrial zones.
Chapter 2: Theoretical and practical basis for foreign direct
investment attraction to sustainably develop industrial zones of a
locality.
Chapter 3: Current status of FDI attraction for the sustainable
development of industrial zones in Hung Yen province.
Chapter 4: Points of view and solutions to attract FDI in order
to sustainably develop industrial zones in Hung Yen province by the
end of 2025 vision 2030.
Chapter 1:
LITERATURE REVIEW ON FOREIGN DIRECT INVESTMENT
ATTRACTION FOR THE SUSTAINABLE DEVELOPMENT OF
INDUSTRIAL ZONES
1.1. International studies

Research by Alexis, Pafait, Normand (2015). The authors
proposed a comprehensive model of FDI attraction with two basic
elements: multinationals and host countries and analyzed Canada‟s
FDI attraction techniques: Excellent investor program; investment
promotion tools and post-investment services.
Study by Lix và Liu (2005). The researchers drew the

following conclusion: FDI itself not only directly but also indirectly
boosts economic growth via its interacting relationships.
Research by Xiaohui Liu, Chang Shu, Peter Sinclair (2009). the
authors found a cause and effect relationship among FDI, trade,
emerging and M&A acquisition and economic growth in most Asian
nations.
Study by Adam P. Balcerzak, Mirosława Żurek (2011). The
authors found that there is an interdependent relationship between
FDI and the labour market in the long term and that increase in FDI
can lead to a reduction of unemployment. Encouraging the inflows of
FDI can create positive influences on the market in the long run.


4

1.2. Domestic studies
Do Duc Binh (2013). The researcher focused on clarifying
major shortcomings and weaknesses in FDI attraction in Vietnam and
suggested a number of orientation solutions to improve the efficiency
of FDI attraction.
Do Duc Binh et al. (2014). The study outlined the factors
influencing FDI attraction to develop the economy, assessed the
current status of FDI attraction into the Northern mountainous
midland provinces to give their scientific views and solutions to
attract FDI for sustainable economic development. However, the
research was only engaged in the analysis and evaluation of FDI
attraction for economic development but not considered the impacts
of FDI in the perspectives of environmental and social issues.
Nguyen Mai (2013). The researcher examined the impacts of
FDI on economic growth in both scale and quality. According to the

author, FDI has positive effects on economic growth via investment
channels on a national level.
Nguyen Thi Tue Anh et al. (2006). The authors conducted
quantitative analysis to evaluate the impacts of FDI on economic
growth via capital asset acquisition and assess the spillover effect of
FDI on companies. The researchers claimed that FDI has positively
contributed to the economic growth in Vietnam and the amount of
contribution has jumped since Vietnam officially integrated into the
global economy.
Study by Pham Thi Tuyet Nhung (2013). The researcher
evaluated the relationship between FDI into Hung Yen province and
indicators: Gross regional product; Labor; Tax and Export. The
researching results show that FDI has an impact on gross regional
product in the first three years and on labor, import and tax in the first
two years.
Study by Do Minh Tri, Bui Bang Doan (2013). The researchers
pointed out causes, limitations of investment attraction in Hung Yen
province, proposed solutions to boost investment attraction as well as to
take advantage of its own strengths to establish and improve competitive
ability of Hung Yen province in the future.
Do Thi Hoa Lien (2016). The author analyzed and assessed the
current status of industrial development in Hung Yen province. Based
orientation and the status of industrial development in Hung Yen


5

province, the researcher proposed 7 major solutions to policies for the
industrial development in Hung Yen province.
1.3. Gaps to continue research

1.3.1. Theoretical gaps
So far there has no research thoroughly and systematically
examining and interpreting the literature of FDI attraction to develop
industrial zones in a particular local area in sustainable ways.
1.3.2. Practical gaps: Up to now, there has been little research
examining simultaneously factors effecting FDI attraction and the
impacts of each type of FDI on sustainable development in a
particular economic area, especially industrial zones in Hung Yen
province.
Chapter 2:
THEORETICAL AND PRACTICAL BASIS FOR FOREIGN DIRECT
INVESTMENT ATTRACTION TO SUSTAINABLY DEVELOP
INDUSTRIAL ZONES OF A LOCALITY
2.1. Concepts and theories of FDI
2.1.1. Concepts of FDI

FDI is an investment from a foreign investor to transfer
currency, assets, technology … from one country to the host country
and hold ownership, management and administration of an economic
unit in order to gain economic benefits from the host country.
Attracting FDI into a locality is the application of measures and
policies so that FDI investors come to invest directly in different
approaches in accordance with the common interests of the host
locality and the foreign investors.
2.1.2. Theories of FDI

- Theory of international trade
- Theory of industrial organization or monopoly advantage
- Theory of product life cycle
2.2. An overview of industrial zone

2.2.1. Concept and classification of industrial zone
2.2.1.1. Concept of industrial zone

An industrial zone is a part of a nation’s territory that is clearly
defined with geographical boundaries and appropriate infrastructure
constructed for the purpose of manufacturing industrial products and
providing services. An industrial zone must be established by the
government or under the permission of the government in accordance
with the laws, without residents living inside.
2.3.1.2. Classification of industrial zones


6

According to the scope and regulated subjects of Decree
29/2008/ND-CP dated March 14, 2008, industrial zones consists of
two categories: traditional industrial zones and export processing
zones which specialize in producing export goods, providing services
for exports and export activities with defined geographical
boundaries and are established under legal conditions and procedures
for industrial parks.
2.3.2. Requirements for developing local industrial zones
Industrial zones contribute to accelerate the industrialization and
modernization process of the nation.
- Industrial parks play an important role in changing economic
structure in a positive way.
- Industrial zones help to develop various types of services.
- Industrial zones help to restructure the workforce in favor of
non-agricultural labor, create new jobs and develop local human
resources.

- Industrial zones accelerate the modernization of infrastructure
and increase the rate of the urbanization process.
- Industrial zones promote global economic integration.
- Establishment of industrial zones does not germinate social
problems affecting the local community where industrial zones are
located.
- Development of industrial zones does not have negative effects
on the environment.
2.3. Factors affecting FDI attraction into a locality
2.2.1. Group of national factors
2.2.1.1. Strategies for capital attraction to develop the national socioeconomy

- How open the economy is
- The stability of social and political environment
- The stability of economic environment
- The national legal system.
2.2.2. Group of factors belonging to local government
- Perception of leaders at all levels is related to FDI attraction
into the locality.
- Plans for infrastructure development of local industrial zones.
- Comparative advantages of the locality.
2.2.2. Group of factors belonging to enterprises inside the
industrial zone
- Investment strategies of foreign investors


7

- Financial capacity of enterprises in the industrial zone
- Science, technology and management capability of enterprises

- Quality of organizational human resources in industrial zones.
2.3. FDI attraction for the sustainable development of industrial
zones

2.3.1. Concept of sustainable development of industrial zones
Sustainable development of industrial parks is the development
of enterprises and industrial parks themselves where the three major
objectives are harmoniously combined: economic growth, social
development, environmental preservation and protection in the
industrial parks and spreading positive effects outside the industrial
parks.
2.3.2. Concept of FDI attraction for the sustainable
development of industrial zones
According to the researcher, FDI attraction for the sustainable
development of industrial zones is application of measures and
policies for the FDI investors to invest in industrial zones under
different forms in accordance with general interests of the locality
which receives the investment with positive impacts on the
development of companies and industrial zones and the harmonious
combination of three major objectives: economic growth, social
development, environmental preservation and protection in industrial
zones and spreading positive effects outside industrial zones.
2.3.3. Requirements for FDI attraction to the sustainably develop
local industrial zones

- FDI attraction into industrial zones must be based on three
perspectives: economic, social and environmental development.
- FDI must be in line with the development planning of
industrial zones in the locality receiving investment.
- FDI attraction to develop industrial zones should promote the

potential and advantages of the locality.

- FDI projects must strictly follow the regulations and legal
system of the host country and the locality.
- FDI projects in industrial zones must have positive spreading
impacts on enterprises operating in other sectors and fields outside
industrial zones.


8

- FDI projects in industrial zones must use advanced technology
and establish plans for technological improvement and innovation
and implement such plans during the operation process.
- FDI projects operating in industrial zones must have periodic
employee training grograms.
- FDI enterprises‟ code of behavior must be consistent with local
standards and international practices.
2.4. Some criteria to evaluate FDI attraction for the sustainable
development of industrial zones

No.

Criteria

Current status of FDI attraction into industrial zones in Hung
I
Yen province
1
Current number of registered and implemented FDI

2
Current number of FDI projects
3
Current scope of FDI projects
4
Current status of investment forms and partners
5
Current status of invested industries
Evaluation of the current status of FDI attraction for the
II
sustainable development of Hung Yen province
1. Criteria for assessing FDI attraction for the economic development of
industrial zones
1.1. Criteria for assessing internal economic status of industrial zones
1 Evaluation of investment scale
2 Operational efficiency of FDI enterprises in industrial zones
3 Satisfaction level of investors
4 Ability to connect between enterprises in industrial zones.
1.2. Criteria for assessing the spreading economic effects of industrial
zones
1 Contribution level to export value
2 Level of contribution to industrial production value
3 Level of contribution to provincial budget
4 Ability to boost economic growth
1 Level of contribution to labor productivity increase
2. Criteria for evaluating FDI attraction for the social development of
industrial zones
2.1. Criteria for assessing the sustainability level of the environment inside
the industrial zones
1 Relationship between employers and employees

2 Capacity to create jobs for the locality
3 Increase in employees’ income
2.2. Criteria for assessing the sustainability level of the environment


9
outside the industrial zones
1 Level of labor restructuring by sectors in the province
2 Level of improvement of local people’s life
3 Ability to impact local security
3. Criteria for evaluating FDI attraction for the environmental development
of industrial zones.
3.1. Criteria for the environment inside industrial zones
1 Criteria for assessing wastewater treatment in industrial zones
2 Criteria for evaluating solid waste treatment
3 Criteria for assessing air pollution and noise pollution
3.2. Criteria for the impacts on external environment of industrial zones
Impacts of industrial zones on water source in the vicinity of
1
industrial zones
Impacts of industrial zones on living environment of residents
2
living outside industrial zones
2.6. Lessons learned for FDI attraction to sustainably develop
industrial zones in Hung Yen

Firstly, legal system must be stable and consistent with
international practices
Secondly, economic, social and political environment must be
stable and the role of local authority must be strengthened.

Thirdly, attention should be paid to investment promotion.
Fourthly, construction of infrastructure needs to be focused.
Finally, there should be high quality training for human resource
in the locality.
Chapter 3
CURRENT STATUS OF FOREIGN DIRECT INVESTMENT
ATTRACTION IN SUSTAINABLY DEVELOPING INDUSTRIAL
ZONES IN HUNG YEN PROVINCE
3.1. Advantages and disadvantages of Hung Yen in FDI
attraction in developing industrial zones in sustainable ways

- Advantages: The location is in the center of the Northern
Delta, adjacent to Hanoi, next to Hai Phong and Quang Ninh. Hung
Yen province is located on two important economic corridors of the
country, where there is an abundant traditional workforce who is able
to quickly acquire modern technology.
- Disadvantages: Hung Yen is a geographically small area with
high population density, industries has not well developed, low per
capita income, scare natural mineral resources and low proportions of
technical and scientific skilled workers who are able to learn modern


10

technology and meet the requirements for economic development in
the province.
3.2. An overview of foreign direct investment in industrial
zones in Hung Yen province
Scale and filling rate
N

o

Name of
industrial
zone

Plan
ned
area

1
2
3
4

Pho Noi A
Det may PN
Thang Long II
Minh Đuc

596.4
121.8
345.2
198

Area for rent
2014
422
92.8
257

136

2015
422
92.8
257
136

Area leased

2016
422
92.8
257
136

2014
276
22.8
150
38.4

2015
289
39.5
174
39.8

2016
316

49.2
213
39.8

Filling rate (%)
2014
65.6
24.6
58.3
28.3

2015
68.5
42.6
67.6
29.3

2016
75.0
53.0
82.9
29.3

Number of foreign direct investment enterprises
Số lượng DN FDI vào các KCN từ năm 2008
200
150
100
50
0

s ố DN FDI

Trước
2008

2008

2009

2010

2011

2012

2013

2014

2015

2016

29

43

46

56

72

89

103

129

144

172

In 2008, in the all the industrial zones of the whole province,
there were 99 enterprises, including 70 domestic companies and 29
FDI firms, which accounted for 29% of enterprises in industrial
zones. After 10 years of operation, the number of enterprises in the
industrial zones of the province has reached 310, including 138
domestic companies and 172 FDI companies, presenting 55% of
enterprises in all the industrial zones.
A mount of direct investment attracted
Số vốn FDI vào các KCN từ năm 2008
3.000.000
2.500.000
2.000.000
1.500.000
1.000.000
500.000
-

Số vốn FDI

Trước
2008

2008

356.550

977.004

2009

2010

2011

2012

2013

2014

2015

2016

1.033.56 1.227.26 1.586.71 1.807.90 1.932.19 2.299.44 2.506.03 2.800.02

In 2003, there were 10 FDI companies in the provincial
industrial zones with a registered capital amount of 75,702 million


11

USD. By 2015, the number of projects rose to 262, including 144
FDI projects with total registered capital of 2,506 million USD.
During 2016, 28 FDI firms were newly registered with total
registered capital of 293.9 million USD, the increase in the capital of
24 FDI projects were approved with total increased capital of 78.4
million USD.
3.3. Current status of FDI attraction into industrial zones in Hung
Yen province in sustainable ways

3.3.1. Current status of FDI attraction into industrial zones
FDI attracted by the amount of registered and implemented
capital
During the period from 2006 to 2016, the amount of registered
capital rose by 37 times, from 75,702 million USD to 2,800,019
USD in 2016, especially in only 3 years from 2014 to 2016 the
amount of registered capital reached 867,822 million USD,
accounting for 31% of total capital registered by 2016.
Criteria for attracting FDI into industrial zones by the number
of projects

Before 2008, there were only 29 FDI projects in all the
industrial zones of the province. After 10 years, the number increased
to 172 FDI projects by 2016 (up 5.9 times compared to that before
2008), the average increase rate is 22.3% compared to the previous

year.
Criteria for FDI attraction into industrial zones by scale of the
projects
Year

Numbe
r of
enterpr
ises

A

(1)

Numbe
r of ongoing
enterpr
ises
(2)

Area
leased
(hectare)
(3)

Average
FDI capital
per project
(million
USD)

(7)=(4)/(1)

Average FDI
capital per
hectare
(million USD)
(8)=(4)/(3)


2011
2012
2013
2014
2015
2016

72
89
103
129

60
77
94
111

12
199,85
214,69
221,34

256,77

18,90
18,68
16,96
16,89

6,81
7,74
7,89
8,49

144
172

132
145

283,1
341,41

17,43
16,28

8,86
8,20

The results of attracting FDI enterprises into industrial parks
in the province have been relatively stable, about 18 projects per
year. Besides, the amount of FDI attracted has been also stable,

above 16 million USD per project. Thang Long II industrial park has
the highest average amount of invested capital, reaching
approximately 25.8 million USD per project while the figure for
Minh Duc industrial park is only 1.7 million USD per project. With
the stable amount FDI attracted per hectare over the past years, the
figure for all industrial zones in the region was 8 million USD per
hectare. The figure for Thang Long II was the highest among all
industrial parks (0.06 million USD per hectare) while the figure for
Minh Duc was only 3 million USD per hectare.
During the period between 2006 and 2010, with “spreading
red carpet” policies to welcome foreign investors, industrial parks in
Hung Yen have become the ideal destination for foreign investors.
Total registered capital for this period was 1.115 million USD, up 4.7
times compared to 2000-2005 period. The period from 2011 to 2015
continued to attract 88 more FDI enterprises with total registered
capital of 1,148.18 million USD.
In the other hand, implemented capital has followed a
downward trend in recent years, especially in 2016, when this
number was only 68.7% and the scale of capital was small, 10.39
million USD per enterprise in comparison with 13 million USD per
FDI enterprise in the whole country. In addition, there is a large
number of small sized projects like Glory Labelvina limited company
with the registered capital of 0.13 million USD and a considerable
number of FDI projects did not have financial capacity to hire land
and build factories but have to rent workshops to manufacture their
products.
FDI attracted into industrial zones by investment forms and
partners

13

With investment structure dependent on investment partners and
most of projects come from Japan (96 projects with total capital of
1,985,216 million USD or 20,466 million USD per project), Thang
Long II industrial park mainly attracts Japanese investment projects.
The number of Japanese projects is 72 out of 77 projects in the entire
industrial park.
FDI attracted into industrial parks by invested fields

Co-operation activities in production
Although FDI attraction in developing industrial parks in the
province has constructive influences on the economic connection
between FDI enterprises and the provincial economy and among FDI
companies themselves, these influences have not been as good as
expected. The companies only make use of low-cost labor and
majority of the workers‟ jobs involve indirectly controlling the
technology chain. Moreover, these enterprises are oriented to focus
on export or importing inputs, processing then exporting the outputs
to gain high profit margin.


14

In the past years the level of connection between FDI firms and
the local enterprises has been very limited, the influence and
spreading power of FDI firms has still been inadequate.
- Evaluation of invested capital scale
By the end of 2016, there were 396 ongoing valid FDI
enterprises in the whole province with total registered capital of

3,610.56 million USD. Total valid FDI enterprises in the provincial
industrial zones by the end of 2016 were 172 with total capital of
2,008.02 million USD. Although the number of projects in industrial
zones only accounted for 43.4% of all enterprises in the province,
their proportion of registered capital was 55.6%. Among all industrial
parks in the province, Thang Long II industrial park has the largest
number of FDI projects, representing 44.8%, but its amount of capital
accounted for 66% of the industrial park and 51.2% of the whole
province. In comparison with domestic companies in the industrial
park, the number of FDI companies made up 55.5% of total
companies in the industrial park. However the percentage of their
capital was about 80% of total capital of the entire industrial park.
3.2.1.2 Criteria for evaluating spreading economic effects of
industrial zones
- Evaluation of export value

The export value of FDI enterprises in industrial zones in Hung
Yen province accounts for 70% and their annual growth rate was
relatively steady. However these figures were not remarkable
because FDI enterprises always had a large proportion of export
value, at 89.8%. Compared with the amount of capital of FDI
companies in the province, the figure for FDI companies was 55.6%
of the whole province but export value accounted for 89.9%. This
means FDI enterprises in industrial zones operated more efficiently.
In addition, the export value increase rate of FDI firms in the whole
province was only 32.8% on average while that of FDI firms in
industrial zones was 47.5%.


15

Assessment of industrial production value

The amount and proportion of industrial production value and
the growth rate of FDI enterprises in industrial parks often reached
great value. In the following years, the annual growth rate slowed
down but still accounted for 27% of the whole province.
Assessment of contribution to the provincial budget

Although the proportion of contributions of FDI enterprises
in the industrial zones to provincial budget was high compared to that
of FDI firms in the whole province, the contributions of all
enterprises in industrial parks in general and FDI enterprises in
industrial parks in particular to the provincial budget still represented
a small percentage.
Assessment of contribution to the economic growth


16

In 2010, GDP of the whole province was 25,675.28 billion
VND, with annual increase rate was 12.95% a year. By 2015, the
provincial GDP reached 47,053.91 billion VND. The growth rate of
the provincial GDP in 2015 was 145.9% compared with 2010 and
this rate was relatively steady over years. Similarly, the proportion of
GDP of FDI sector in 2010 was 2,465.17 billion VND, only
accounting for 9.6% compared to the whole province. This figure for
2015 was 6.964,77 billion VND, accounting for 14.8% of the whole
province. However, the contribution of FDI sector was still
considerably small compared to that of other sectors in the whole

province.
Consideration of the structure of gross product

Although FDI enterprises in the provincial industrial parks had a
limited contribution to GDP of the province, these firms made a great
contribution to the economic growth rate and the economic
restructuring of the province.
In comparison to the product restructuring of Bac Ninh province and
Hai Duong province, the proportion of gross product of the industry of
Hung Yen was the lowest while the figure for Bac Ninh province was
92.2% in 2016, increasing by 15.8% from 2010 to 2016, and that of Hai
Duong province was 68.9%, increasing by 6.4% compared to 2010.


17

In perspective of impacts of industrial zones on the economic
structure of the province, the provincial economy did grow and have
positive changes in recent years although this was not adequate for
the potential and advantages of the province.
Evaluation of contributions to increase labor productivity
Compared with the average labor productivity of the whole
province, the average labor productivity of FDI companies was still
lower, at 208.44 million VND per person a year. The labor
productivity increase rate from 2011 to 2016 was also smaller
compared to that of the whole province, at 4%. Although labor
productivity of FDI enterprises increased, the value and the increase
rate was not higher that that of the whole province. This means that
FDI enterprises hired a great number of unskilled and low
technological skill workers.

In comparison with working productivity of other other
neighboring province with similar conditions, it showed that there
was a rise in working productitivy of Hung Yen province although
the rise was inadequate for its advantages. The figure only increased
by 91.68 million VND in a five year period and the increase rate was
not steady, peaking at 597.67 million per person a year in 2013.
3.2.2. Criteria for evaluating the social sustainability of industrial
parks
Relationship between employers and employees
Work pressure of time and working intensity led to the fact that
a number of workers made mistakes in their work or failed to fulfill
their task and then had a salary deduction or was fired, some workers
had voluntary resignation. Moreover, there have been complaints and
workers stopped work as a strike in the industrial parks. All of the
cases were belong to FDI enterprises. This has made a destructive
impact on the process of resolving conflicts arising in the field of
rights and benefits of employees and negative impacts on business


18

operation of the enterprises and the sustainable development of the
province in social aspect.
- Creation of jobs and income for employees in the
industrial parks
+ Creation of jobs
In the whole province, there was 2,631 ongoing enterprises
with 153,596 workers while the number of enterprises in industrial
parks was only 310, accounting for 11.8%, the number of

employees was 42,500, accounting for 27.7%. This shows
industrial zones have attracted a great number of workers in the
province. the number of FDI companies in industrial parks was
only 172, accounting for 6.5% of the whole province while there
were 30,114 employees working in those companies, accounting
for 70.9% of the industrial zones or 19.6% of the whole province.
+ Evaluation of employees’ income
FDI enterprises had higher per capita income than domestic
enterprises in the industrial parks.
- Evaluation of labor structure by sector
Labor structure by sector of the province fluctuated considerably
over the past years. Although workers in agriculture sector fell, there
was also a drop in the number of workers in industry sector.
Workforce in the industrial zones only had minor positive impacts on
industrial economic structure and moderate impacts on industrial
structure of the province.
- Evaluation of improvement in local people’s life
The data collected from a survey of residents‟ living standards
showed that the proportion of poor families has declined. Per capita
income of the province rose 1.5 times from 2010 to 2015. In 2011,
per capita income was 1,590 million VND per month. This reached
2,352 million VND per month in 2015.
3.2.3. Criteria for evaluation of environmental sustainability of
industrial parks
- Evaluation of the scale and quality of wastewater from
industrial parks
+ Evaluation of the scale of wastewater
With the number of ongoing companies was 255 out of 310, the
total amount of wastewater (including domestic wastewater and
industrial wastewater) was approximately 25,407 m3 a day.

+ Evaluation of the quality of wastewater


19

Indicators of treated wastewater peaked in 2014 although
those indicators did not exceed the allowable limits before the
wastewater was discharged to the outside environment and there
was an increase in the volume of production. This means
wastewater treatment system of the enterprises functioned well,
meeting the efficiency requirements for wastewater treatment.
- Criteria for evaluating solid waste from industrial parks
Up to now, all industrial parks have not established their
planning for the construction of a centralized waste treatment system,
the industrial parks themselves did not have a optimum measure.
Companies temporarily kept their own waste and signed contracts
with collection units themselves to collect and process the waste.
Therefore, the problem of solid waste treatment, especially harmful
waste need a more rigorous control system to be thoroughly solved to
avoid negative impacts on the environment and the sustainable
development of industrial parks.
- Criteria for air and noise treatment in industrial parks
In general, the quality of air environment in the industrial zones
was relatively stable. Levels of indicators in the atmosphere in
industrial zones were still with allowable limits.
3.3. General evaluation of FDI attraction to sustainably
develop industrial parks in Hung Yen province
3.3.1. Limitations
From economic perspective
First, FDI projects into industrial parks in Hung Yen province

had unequal and unstable capital scale.
Second, capital structure of FDI attracted into industrial zones in
Hung Yen province was unbalanced.
Third, there were no large projects investing in technical
infrastructure to create revolutionary breakthroughs when the
infrastructure of the industrial zones has hindered investors in their
business activities.
Fourth, shift in economic structure has not been created.
Fifth, there has not been a remarkable change in technology
transfer and endogenous technological capacity.
Sixth, supporting industries have not been a driving force in the
industrial development of the province.
From social perspective


20

First, the contribution of FDI enterprises to social development
in Hung yen was small.
Second, human resource has not been developed to adapt to the
requirements for sustainable development of industrial zones.
From environmental perspective
First, the unbalanced attention to the relationship between FDI
attraction and environment protection.
Second, there was no thorough treatment of hazardous waste
and solid waste.
Third, environmental monitoring activities were not taken
thoroughly.
3.3.2. Causes of the limitations
- Limited understanding about developing industrial zones

- Inadequate technical infrastructure system
- Some requirements from FDI enterprises have not been met
- Inefficient promotion activities for FDI attraction
- Attetion has not been paid to supervision of FDI attraction into
industrial parks.
- Low quality workforce and ineffective government and local
management for FDI.
Chapter 4
SOLUTIONS FOR FOREIGN DIRECT INVESTMENT TO
SUSTAINABLY DEVELOP INDUSTRIAL ZONES IN HUNG YEN
PROVINCE BY 2025 VISION 2030
4.1. Orientation and viewpoints about increase FDI attraction to
sustainably develop industrial parks in Hung Yen province

- FDI attraction to develop industrial zones should be adequate
for the advantages and potential of Hung Yen province.
- To attract FDI into industrial zones in a sustainable way,
enterprises in industrial parks should be oriented to environmental
friendly production.
- FDI companies with high technology and FDI companies with
large added value and ability to create a great number of jobs for the
locals should be encouraged.
- In order to sustainably develop industrial zones, priority should
be put on production projects which can create preading effects on
other enterprises inside industrial zones and among enterprises.
4.2. Points of view about FDI attraction to sustainably develop
industrial parks in Hung Yen province

- FDI attraction to sustainably develop industrial parks in the

21

province must ensure the sustainability in all three aspects: economy,
society and especially environment.
- FDI attraction to sustainably develop industrial zones in the
province must
have a selective orientation.
- The admistration and management must be transparent and
systematic to creat trust and liability for investors.
- FDI attraction to sustainably develop industrial zones in the
province should be focused on investment effectiveness. FDI
attraction to develop industrial zones must not be exchanged for the
destruction of the environment, unstable politics and society.
- All mechanism and policies related to FDI attraction to
develop industrial zones should ensure long-term benefits of
the parties involved.
- Development of industrial zones must go hand in hand with
improving local people‟s social life where the industrial zones are
located, especially the people directly affected by land acquisition
for the construction of industrial parks. Development of industrial
parks must be associated with solutions to create jobs and improve
the life of the people living in the area.
- FDI attraction to develop industrial parks should be associated
with strengthening and improving the efficiency and effectiveness of
government administration system for industrial zones.
4.3. Solutions to increase FDi attraction to sustainably develop
industrial zones in Hung Yen province by 2025 vision 2030
4.3.1. Substantial change in understanding of FDI attraction to
sustainably develop industrial zones

Economic regulating policies should be aimed at sustainable
development. Issuance of policies must be systematic in viewpoint,
orientation but flexible and sensitive to the reality of socio-economic
development. In fact, understanding and perception of viewpoints,
regulations and policies encouring FDI attraction is still limited.
Therefore:
- Filling rate need to increase to 100% for the three ongoing
industrial zones so that their operation is increasingly effective,
substantially benefiting industrial zones themselves and the province
of Hung Yen.
- The quality of FDI attraction into industrial parks should be
improved in a sustainable way
- There should be employee training policies and policies to


22

attract local human resource to work for FDI enterprises.
- Policies to attract FDI and use FDI must be inline with the
strategic goal and create equality between FDI and domestic
enterprises in the province.
4.3.2. Completing the planning of infrastructure and develop
infrastructure for FDI attraction to sustainably develop industrial zones

- Concentrating on building infrastructure inside approved
industrial zones to create equality among foreign and domestic
project invested in industrial zones.
- Planned policies to develop sectors and industries must create
the connection among regions and sectors such as supply of material,

workers in industrial zones.
- Priority must be put on enterprises located inside industrial
zones. This would be a great advantage to help industries develop,
creating convenience in labor management and ensuring services to
meet the need of workers‟ lives.
- Constructing infrastructure outside industrial zones such as
feeder road system, rational highways, provincial roads, inter-distric
and commune roads.
- Establishing plans to attract enterprises into industrial zones.
4.3.3. Completing the mechanism, policies and administrative
procedures for FDI attraction into industrial zones

- Policies for FDI attraction to develop industrial zones must be
considered for the consistency in the long term.
- Concentrating on comprehensive review of administrative
procedures in all fields, promptly gathering uniformly necessary
steps in the book of administrative procedure issued for the province.
- Reducing tax preferential policies to encourage supporting
industries which manufacture high added value products using
modern technology and biotechnology…
- Discipline must be strengthened in order to increase the
responsibility of government officers directly dealing with
administrative procedures related to appraisal and monitoring of FDI
projects in industrial zones.
- Conducting periodic supervision and investigation of FDI
projects‟ observance of environmental, waste and food safety laws.
- Concentrating on improving and enhancing managing skills
and professional skills in environment protection for officers in
provincial agencies.
- Rigorous and careful approval of FDI projects are needed to

23

attract high and clean technology projects for the sustainable
development.
- Supporting approved FDI projects.
4.3.5. Strengthening investment promoting and supporting activities
to attract FDI to sustainably develop industrial zones

- Renew approaches and programs for investment promotion on
a regular basis.
- Based on bilateral agreements among countries, appropriate
policies for promoting investment should be issued to make use FDI
inflows from other countries and potential partners taking part in
aggreements.
- Implementing programs to promote business environment in
Hung Yen in several popular reliable international media channels
combined with programs to promote trade,tourism and the provincial
images.
- Chosing investment promoting tools such as conferences on
investment opportunities, advertising, campaigns, Internet … to
convey positive messages to investors
- establishing representative offices and investment
promoting centers in targeted countries such as the United States,
EU countries and other developed countries in order to develop
industrial parks in a sustainable way
4.3.6. Enhancing management efficiency of the province and the
management board of the industrial zones to sustainably develop
industrial zones

- Investment activities and FDI projects must be carefully managed,
monitored and investigated in accordance with the laws.

- Holding regular talks, seminars to communicate with FDI
companies to promptly answer and handle difficulties in the process
of implementing prolicies.
- Technology advancement, information and technology
tranferance must be periodically assessed and monitored to perform
the inspection and supervision functions of FDI projects on
machinery, equipment, production line and technolody transference.
- It is necessary to develop model policies for the management
board in industrial zones to promote the “one door, on the spot”
mechanism which is both open and tight.
- Holding regular meetings with FDI enterprises to receive their
feedback.