Summary of doctoral thesis: Investment capital for socio-economic development of Phu Quoc island

MINISTRY OF EDUCATION AND TRAINING

THE STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY

NGO VAN THIEN

INVESTMENT CAPITAL FOR SOCIO-ECONOMIC
DEVELOPMENT OF PHU QUOC ISLAND

SUMMARY OF DOCTORAL THESIS
Major: Finance - Banking
Code: 62.34.02.01
Academic advisor: Assoc. Prof. Dr. Le Thi Tuyet Hoa

HO CHI MINH CITY - 2017


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CHAPTER 1: INTRODUCTION
1.1. The urgency of the research topic
Phu Quoc, an island district of Kien Giang province in the Southwest of Viet
Nam, is considered as the center of the Southeast Asia. The master plan for accelerating socio-economic development in Phu Quoc island to 2020 aims to develop the island district into a special administrative-economic zone by 2020.
It is believed that investment capital plays a vital role in accelerating economic
development. In order to ensure the achievement of the aim of the master plan for
Phu Quoc island, efficient solutions to increasing investment capital are required. The
researcher, thus, is interested in conducting this study on “Investment capital for socio-economic development of Phu Quoc island”.
1.2. Research goal/ research objective
This study investigates solutions to increasing investment capital in accelerating

socio-economic development in Phu Quoc island in the future.
1.3. Research questions:
This study aims to explore the answers to the following research questions:
1) What is the current situation of investment capital in accelerating socioeconomic development in Phu Quoc island?
2) What is the impact of investment capital on socio-economic development in
Phu Quoc island?
3) What are factors influencing the attraction of investment capital in accelerating socio-economic development in Phu Quoc island?
4) What is the trend of the factors influencing the attraction of investment capital in Phu Quoc island? And what is the impact of the factors influencing the attraction of investment capital in Phu Quoc island?
5) What are solutions to increasing investment capital in accelerating socioeconomic development in Phu Quoc island in the future?
1.4. Research subject and scope
- Subject of the study: Investment capital in accelerating socio-economic development in Phu Quoc island
- Scope of the study: the research focuses on investment capital in
accelerating socio-economic development in Phu Quoc island in the period of 20112016, include mobilizing investment capital and investment capital utilization
1.5. Research method
- Data collection method: both primary data and secondary data were collected and analyzed through the SPSS 16.0 software. The secondary data was from
2011 to 2016 while the primary data was from 01/ 10/ 2016 to 31/12/2016.
- Research method: a mixed-method was employed in this study on Investment capital in accelerating socio-economic development in Phu Quoc island, which
could provide the researcher with a great opportunity to gain a more insightful look


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into the research topic under investigation when combining quantitative and qualitative methods of data collection and analysis including synthesis, analysis, comparison, inheritance, expert method, and quantitative method with the combination of exploration analysis and multivariate regression analysis.
1.6. Previous related studies
In the world, a great number of researchers have conducted studies on investment capital in accelerating socio-economic development as Robert Solow
(1956), Michael Regan (2016), Lin Xiong (2010), Dunning (1977), Kinda (2010),
Vidya Bhushan Rawat, Mamidi Bharath Bhushan, Sujatha Surepally (2011).
Numerous related studies were also conducted in Vietnamese context by
Nguyen Van Hung (2009), Nguyen Van Binh (2017), Nguyen Van Dung (2014),
Nguyen Hong Ha (2015), Bui Manh Cuong (2012), Mai Van Nam (2008), Le Vinh

Danh (2004), Phan Thanh Mao (2003), Nguyen Dau (2005), Nguyen Thi Giang
(2010), Dinh Van Phuong (1999).
Results of the literature review on previous related studies indicate that researches on investment capital in accelerating socio-economic development in Phu
Quoc, which is becoming the first special economic-administrative zone of Viet
Nam by 2020, have been limited.
New points of the research are as follows: (1) The study has a combination of
qualitative and quantitative research method with a particular scale of Phu Quoc island; (2) With abundant and authentic materials, the status and impact of investment
capital on socio-economic development of Phu Quoc Island in the period 2011-2016
has been clarified; (3) Detecting factors that affect socio-economic development;
(4) Proposing measures to increase investment capital for socioeconomic development of Phu Quoc island in the coming time.
1.7. The significance of the study
- Theoretical contributions: results of this present study could contribute
more insights into literature on the topic under investigation, investment capital in
accelerating socio-economic development.
- Practical contributions: results of this present study could also raise the
local authorities’ awareness of the significance of investment capital and of efficient
solutions to increasing investment capital in accelerating socio-economic development in potential areas, especially in Phu Quoc island.
1.8. The organization of the study
Chapter 1: Introduction
Chapter 2: Theoretical framework on Investment capital in Accelerating Socio-economic Development
Chapter 3: Current situation of investment capital in accelerating socioeconomic development in Phu Quoc island


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Chapter 4: The analysis of factors affecting the attraction of investment capital in Phu Quoc island
Chapter 5: Conclusions and solutions to boosting investment capital for socio-economic development in Phu Quoc island
1.9. Research process
In order to achieve the research objectives, from the theoretical framework
and previous researches, the author has proposed the appropriate research method,

then analysis of the situation, Assess the impact of investment capital on socioeconomic development, identifying factors affecting on the attraction of investment
capital to Phu Quoc Island, from which draws the successes, limitations and causes
as the basis for proposing solutions to increase investment capital for socioeconomic development in Phu Quoc Island.


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CHAPTER 2: THEORETICAL FRAMEWORK ON INVESMENT
CAPITAL FOR SOCIO-ECONOMIC DEVELOPMENT
2.1. Investment and development investment
Investment could be defined as the current consumption savings as a portion of
the social wealth which is utilized in a new process of social production to make
more wealth for the society in the future. It is believed that investment is the key to
economic growth.
Tinh (2009) proposed that development investment is investing assets and labor
force, in which investors spend their savings on activities with the intention of making future profit or more assets for themselves and the social economy.
2.2. Investment capital
2.2.1. Concept
Investment capital could be considered as all expenses utilized to increase or
maintain assets in a specific period of time.
2.2.2. Investment capital sources
Investment capital sources include state investment capital, private sector investment capital and foreign investment capital.
2.2.3. Mobilizing investment capital
 Concept of mobilizing investment capital
According to Kham (2001), mobilizing investment capital could be seen as a
process of determining and searching for financial sources for investment activities.
In order to carry out any investment activities, questions of capital including amount
of required capital, sources of that amount of capital, the potentiality of the capital
sources, ability of participating of each source and how to take advantage of the investment capital must be handled appropriately.
 Indicators of level of investment capital mobilization

The level of investment capital mobilization is frequently calculated based on
the following indicators: total mobilization, the ratio of the mobilized investment capital to the expected investment capital, capital growth rate, the proportion of implemented investment capital to the investment capital of the whole country and of the
other regions, and investment capital structure.
 Factors affecting the mobilization of investment capital for socioeconomic development
Attracting investment capital to a country or a locality could be influenced by
the following factors: (1) For state capital, which is often influenced by local economic planning, budget revenues, central interest, state enterprise development policies; (2) Non-state capital is often influenced by factors such asinfrastructure, invest-


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ment policies, living environment, natural resources, local trade promotion and marketing, human resources, credit support and input cost.
2.2.4. The efficiency of investment capital
The coefficient ICOR, which reflects the relationship between investment capital and economic growth (Harrod-Domar model), was employed in order to examining the efficiency of the utilization of investment capital.
Investment Capital efficiency is influenced by factors such as natural conditions; economic policy; factors of politics, culture, historical society, customs; and
investor capacity factors.
2.3. Socio-economic development and the role of investment capital in
accelerating socio-economic development
2.3.1. Socio-economic development
Huan (2006) defined socio-economic development as a process of economic increment in all aspects over a specific period of time.
Socio-economic development encompasses economic growth including the increase in volume of output, and progress in economic structure and the society.
2.3.2. The role of investment capital in accelerating socio-economic development
Investment capital plays the following significant roles in accelerating socioeconomic development:
- First, investment capital accelerates economic growth.
- Second, investment capital accelerates applying science and technology in order to boost labor productivity, product quality and competitiveness of the economy.
- Third, investment capital boosts the efficiency of the utilization of absolute
and comparative advantages of a economy to shift the economic structure in the direction of modernization.
- Fourth, investment capital facilitates the process of solving social problems.
2.3.3. Indicators of socio-economic development
In order to assess the level of socio-economic development, three main clusters
of indicators are employed: (1) economic growth indicators, (2) economic structural

indicators and (3) social development indicators.
2.4. Special economic zone and role for socio-economic development
Dobrogonov and Farole (2012), ‘Special economic zone’ (SEZ) to cover all
forms of a geographically demarcated area within a country, which functions with
different administrative, regulatory and fiscal regimes to the rest of the country.
Under the criteria of the United Nations Development Program (UNDP), the
Special Economic Zones are divided into three main categories: Free Trade Zones
(FTZ), Export Processing Zones (EPZ) and Multi-purpose zones (MPZ).
According to Ge (1999), the creation of special economic zones has the following benefits: creating jobs for workers, increasing exports and diversifying products


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of the economy, increase foreign exchange, increase local budget revenue, stimulate
businesses outside the economic zone to develop and receive advanced technology
from abroad.
2.5. Experience in enhancing investment capital for socio-economic development
Considering experience in enhancing investment capital mobilization in several
countries and provinces, some precious experience for enhancing investment capital
in Phu Quoc island could be concluded below:
- Establishing a unique mechanism
- Applying models of public-private partnerships (PPPs)
- Intensifying administrative reforms
- Developing vocational training
- Promulgating more preferential tax policies
- Appreciating investors
Conclusion of chapter 2
A detailed theoretical background of investment capital for socio-economic development was presented in chapter 2, which is considered as the significant framework for the subsequent chapters.

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CHAPTER 3: CURRENT SITUATION OF INVESTMENT CAPITAL
FOR SOCIO-ECONOMIC DEVELOPMENT IN PHU QUOC
3.1. Analyzing the natural and socio-economic conditions of Phu Quoc island
Phu Quoc is naturally gifted with priceless assets including mountains, forests,
and seas, which facilitates its development of the sea-island tourism, eco-tourism ans
resort tourism as one of the top brands in the region and the world. The social economy of Phu Quoc island has been recently flourished with high economic growth
rate, the highest per capita income of Viet Nam, and the significant improvement on
educational level of its citizens.
3.2. Current situation of investment capital mobilization for socioeconomic development in Phu Quoc island
3.2.1. Investment capital mobilization policies in Phu Quoc Island
The government and local authorities have promulgated a number of policies
to increase the effectiveness of mobilizing investment capital in Phu Quoc island including the establishment of the developmental plan until 2030, the establishment of
Phu Quoc Economic Zone Management Board aiming to solve several urgent missions in the locality and manage some special mechanisms such as preferential mechanisms accelerating socio-economic development in Phu Quoc. However, some
other preferential mechanisms on taxation, land-rent, and special business types (e.g.
casino…) has not been innovated.
3.2.2. Situation of the number of investment enterprises and registered
projects
3.2.2.1. The number of investment enterprises
According to data from the Department of Planning and Investment of Kien Giang
province, the number of investment enterprises in Phu Quoc have rapidly increased
every year with the average increase of 6.9% per year. Non-state-owned enterprises
have made up the fastest increase in investment capital, accounting for the most proportion of 99% of the average increase in the total number of investment enterprises
in Phu Quoc island.
3.2.2.2. The number of registered projects
Thanks to its great potential for attracting investment capital, Phu Quoc attracted a total investment capital of 215.194 billion, which was mainly invested in
tourism promotion; and 193 investment projects were approved in the period from
2011 to 2016.
3.2.3. The scale of investment capital mobilization in Phu Quoc Island

Total investment capital in Phu Quoc from 2011 to 2016 had an average annual growth rate of 41.2% and accounted for an average proportion of 44.2% of the
total investment capital of the province. The total mobilized investment capital


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reached 117% of the plan of capital mobilization in Phu Quoc in the period of 20112016.
It is obvious that two significant sources of the total investment capital of the
whole society are state investment capital and non-state investment capital. The proportion of investment capital mobilized from foreign and other sources is insignificant.
Table 3.4. Total investment in Phu Quoc period 2011-2016
Unit: billions VND
Year
Content
2011
Kien Giang investment capital

2012

2013

20.150 24.407 28.289

2014

2015

2016

33.438 40.517 46.850

Mobilization plan

4.000

4.800

5.700

6.912 10.000 15.000

Phu Quoc island investment capital

3.697

3.178

3.456

7.435 15.933 20.720

- Compared with Kien Giang (%)

18,3

13,0

12,2

22,2

39,3

44,2

- Compared with mobilization plan (%)

92,4

66,2

60

107,6

159,3

138,2

8,4

-14

8,7

115,1

114

30

- Capital growth rate(%)

(Source: Kien Giang Statistical Office)
3.2.4. The structure of investment capital mobilization of Phu Quoc Island
From 2011 to 2016, a contrast between state investment capital sector and
non-state investment capital sector in the structure of investment capital of Phu Quoc
island was observed. The proportion of state investment capital sector decreased from
71.2% in 2011 to 13.4% in 2016 while that of non-state investment sector increased
from 28.5% in 2011 to 86.06% in 2016.
3.2.4.1. Structure of investment capital from state sector
- Investment capital sources
Although state investment capital increased in the period from 2011 to 2016,
its proportion significantly decreased in comparison to the proportion of investment
capital mobilized from private sector. It is transparent that Phu Quoc is currently being planned to develop into an economic zone which is expected to become a special
economic zone by 2020. Administratively, Phu Quoc is, however, currently still an
island district of Kien Giang province. Therefore, state-owned investment capital in
Phu Quoc island remains under the control of the provincial administration of Kien
Giang.
- Management levels
Considering the management levels of investment capital, investment capital
from state budget tends to gradually decrease in the period from 2011 to 2016. Local
budgets, in contrast, gradually increase in the same period of time.
3.2.4.2. Structure of investment capital from non-state sector


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According to results of data analysis, investment capital from non-state sector
has steadily increased each year with an average annual growth rate of 76.2%. The
proportion of the total investment capital from non-state sector made up 28.4 % in

2011 and grew up to 86.12% in 2016 in comparison to the total investment capital of
the whole society. In terms of non-state capital structure, investment capital from
both enterprises and residential sector has rapidly increased; investment capital from
enterprises increased faster than that from the residential sector.
3.2.4.3. Structure of foreign investment capital
In general, foreign investment capital in Phu Quoc has been at really low proportion.
Statistically, there have been only 3 registered foreign enterprises accounting for
0.46% of the total investment capital in 2016.
3.2.4.4. Structure of investment capital from other sources
Statistically, the total investment capital from other sources such as socialization
capital and residents’ funds for expenditure for public works like improving rural
roads and other social welfare projects was 9 billion, accounting for about 0.04% of
total investment in 2016.
3.3. The situation of the utilization of investment capital for socio-economic
development in Phu Quoc island
3.3.1. Structure of the utilization of investment capital in Phu Quoc Island
Services and some other outperformed sectors has been supposed to have extremely great growth rates of all. In 2016, the investment capital increased by 8 times
in comparison to the investment capital in 2011, accounting for 85.5% of the total
investment. In terms of structure of investment capital in services and other sectors,
the total investment capital of Phu Quoc island portioning in food and accommodation services, real estate businesses, transport services, and entertainment was
54.96%, 9%, 6% and 4% respectively. It could be concluded that the majority of mobilized capital in Phu Quoc was invested in tourism.
Table 3.9. Structure of investment capital in Phu Quoc
period 2011-2016
Unit: billions VND
Year
Content

2011

2012

2013

2014

3.697

3.178

3.456

7.435

1. Agriculture-Forestry-Seafood

97

145

158

170

364

518

2. Industry - Construction

814

1.079

1.271

974

1.977

2.493

2.786

1.954

2.027

6.291

100

100

100

100

100

100

2,6

4,5

4,5

2,3

2,3

2,5

Total

3. Services and other sectors
Capital structure(%)
1. Agriculture-Forestry-Seafood (%)

2015

2016

15.933 20.720

13.592 17.709


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2. Industry - Construction (%)
3. Services and other sectors (%)

22

34

36,8

13,1

12,4

12

75,4

61,5

58,7

84,6

85,3

85,5

(Source: Kien Giang Statistical Office)
3.3.2. The efficiency of investment capital utilization in Phu Quoc
The Incremental Capital Output Ratio (ICOR) in Phu Quoc was 5.9 in the period from 2011 to 2016, which significantly increased from 3.1 in 2011 to 7.2 in

2016. The average ICOR of 5.9 shows that every 5.9 VND invested in Phu Quoc in
the period from 2011 to 2016 could enable the investors to gain 1VND of additional
GDP. Considering the efficiency of investment capital utilization of some calculateable sectors, the agriculture, forestry and fisheries sector had the lowest ICOR of 0.6;
the industry and construction sector had the ICOR of 3. 8; and the service sector had
the ICOR of 9.4.
3.3.3. Impact of investment capital on socio-economic development in Phu
Quoc Island
3.3.3.1. Impact of investment capital on economic growth
Thanks to the increase in investment capital, GDP growth rate in Phu Quoc island
has increased each year. The average increase of the whole period from 2011 to 2016
was 26.4%.
3.3.3.2. Impact of investment capital on economic restructuring
The economic restructuring in Phu Quoc has happened in a positive direction
with a gradual increase in services, industry and construction and a gradual decrease
in agriculture, forestry and aquaculture. The proportion of service sector in 2011 was
38.4%, which grew up to 47% in 2016.
3.3.3.3. Impact of investment capital on the average income of the locals in
Phu Quoc island
Average income of the locals in Phu Quoc island has been increasing. The average income was $ 2.145 in 2011 and $ 6.063 in 2016. It is obvious that the average
income of the locals in Phu Quoc island was 3 times higher than that of the country.
3.3.3.4. Impact of investment capital on other social indicators
Investment capital increase not only contributed to a significant improvement in
the living standards of the locals but also boosted other social indicators such as employment, poverty reduction and better access to qualified education and health services for the locals. It is evident that thanks to the investment capital increase in the
period of 2011-2016, the economy of Phu Quoc island gained a remarkable growth
rate, which facilitated the improvement in some indicators of socio-economic development.
3.4. Assessment of current situation of investment capital for socioeconomic development in Phu Quoc island
3.4.1. Achievements


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- Investment capital mobilization: In the period of 2011-2016, Phu Quoc was
really successful in mobilizing investment capital. Numerous achievements in investment capital mobilization included enhancing the scale of capital mobilization,
increase in local budgets, attracting more and more private investment capital, and
increase in both quantity and quality of the registered projects.
- Investment capital utilization: Numerous achievements in investment capital
utilization included great contribution to local economic growth; boosting the economic restructuring in a positive direction; increasing labor productivity and improving living standards of the locals; better access to qualified education and health services for the locals; and reducing the local unemployment and poverty rate.
3.4.2. Limitations
- Limitations on investment capital mobilization: Mobilizing capital for infrastructure development was still limited; there were insufficient breakthrough policies;
and the inefficiency in taking advantage of local potential for attracting foreign investment capital was also revealed with a limited rate of mobilized foreign investment capital.
- Limitations on investment capital utilization: There was no attention to the
balanced development among economic sectors; the efficiency level of investment
capital utilization was still low, which did not correspond to the scale of investment;
investment capital for education and health services development remained low proportions; there was lack of attention to environmental protection; and social unrest
still occurred.
3.4.3. Causes of the limitations
- Causes of limitations on investment capital mobilization: there were two
significant causes of limitations on investment capital mobilization including (1) the
limited state budget and (2) the limited ability to attract investment capital which will
be analyzed and clarified in Chapter 4.
- Causes of limitations on investment capital utilization: local authorities did
not pay sufficient attention to planning for the balanced development among
economic sectors; investment capital was allocated for education and health
development insufficiently; there was lack of awareness of relation among economic
development and social issues and environmental protection; and the implementation
of approved projects was still slow.
Conclusion of Chapter 3
In chapter 3, the author has analyzed carefully the current situation of investment capital for socio-economic development in Phu Quoc Island in the period of
2011-2016 based on both mobilization of investment capital and utilization of investment capital. The results revealed the achievements, limitations, and causes of the
limitations on the topic under investigation.

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CHAPTER 4: THE ANALYSIS OF FACTORS AFFECTING
THE ATTRACTION OF INVESTMENT CAPITAL IN PHU QUOC
4.1. Theoretical background
A great number of researchers have conducted studies on attracting investment
capital in a locality or a nation, which have contributed significant findings on the
topic under investigation. Several influential studies were conducted by Ha (2016),
Giao and ctg (2015), Loc and Tuyet (2013), Xu (2010), Tho (2005).
4.2. Research model and hypothesis
4.2.1. Proposed research model
- Proposed research model: according to results of the literature review, the researcher of this present study proposed the following research model:
SAT = f(F1, F2, F3, F4, F5, F6, F7, F8)
In order to investigate which factors (the factors from F1 to F8) directly affect
the attraction of investment capital in Phu Quoc, the linear regression was employed
as presented below:
SAT = β0 + β1F1 + β2F2 + β3F3 + β4F4 + β5F5 + β6F6 + β7F7 + β8F8 + ei
The variables used in the regression analysis were determined by Factor Score.
4.2.2. Research hypothesis
Research hypothesis: according to the researcher of this present study, the variables of infrastructure, living environment, investment policies, natural resources,
local trade promotion and marketing , human resources, input costs and credit support
have positive correlations to the level of satisfaction of investors.
4.3. Research Method
4.3.1. Research process
The research process includes 2 stages:
Stage 1: Qualitative research was employed to establish and develop a conceptual system /scale and research variables, which were utilized to design a survey
questionnaire.
Stage 2: The SPSS 16.0 software was employed in the process of analyzing and

identifying the influential factors.
4.3.2. Research data and method of data collection
- Sample size
It is believed that the larger the sample size is, the more reliable the results are.
Tho (2011) proposed that the minimum sample size is 50 participants for a study employing exploratory factor analysis (EFA); the preferable sample size is 100 participants; and the ratio of respondents to variables should be 5:1. The ratio could be interpreted that the investigation of 1 variable requires at least 5 respondents/observations. In fact, the researcher of this present study has investigated 230
enterprises located in Phu Quoc, including all existing types of enterprises.


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- Method of data collection
Data was collected from 01/10/2016 to 31/12/2016; the population of the survey
included directors, deputy directors, and representatives of the board of directors of
enterprises in Phu Quoc island. A face-to-face interview with a designed 5-levellikert-scale questionnaire was conducted with the eligible respondents.
4.4. Exploratory Factor Analysis (EFA) on the level of satisfaction of investors in Phu Quoc
A scale test was run in order to check the reliability of the research model. The
result shows that the reliability was high enough (Cronbach Alpha > 6). It could be
seen that the proposed research model of 8 scales with 37 variables was reliable.
4.5.1. Results of regression analysis
The SPSS 16.0 software was employed for multivariate regression analysis.
Results of the analysis were reported below in table 4.11.
Table 4.11. Results of multivariate regression analysis

Model

1

Unstandardized Coefficients

Standardized

Coefficients

t

Sig

VIF

B

Std. Error

Beta

(Con-

0

0,030

F1

0,180

0,030

0,180

6,011

0,000

1,15

F2
F3

0,082
0,848

0,030
0,030

0,082
0,848

2,755
8,376

0,006
0,000

1,32
1,05

F4
F5

0,101
0,065

0,030
0,030

0,101
0,065

3,387
2,171

0,001
0,031

1,56
1,43

F6
F7

0,107
0,069

0,030
0,030

0,107
0,069

3,569
2,301

0,000
0,022

1,61
1,01

F8

0,118

0,015

0,030
0,118
3,939
0,000
1,32
(Source: Author's calculations based on SPSS 16.0)
4.5.2. Verification analysis
- Verification analysis of regression coefficients
It could be seen in table 4.11 that variables F1, F2, F3, F4, F5, F6, F7, F8 are
significant with high reliability of 95%. After analyzing Multi-collinearity (Vif <10),
self-correlation, and variance, no violations were observed.
- Verification analysis of the appropriateness of the model
The appropriateness of the model: Results of the data analysis by the ANOVA
software show that the proposed model corresponded to the actual data (Sig <0.01).
In other words, the independent variables correlated with the dependent variable with
the reliability of 99%.
4.6. Discussion on research results

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- Infrastructure: When investors add 1 point for this factor, the investors’ level
of satisfaction of investing in Phu Quoc increases by 0.180 point.
- Living environment: When investors add 1 point for this factor, the investors’ level of satisfaction of investing in Phu Quoc increases by 0.105 point.
- Investment policies: When investors add 1 point for this factor, the investors’
level of satisfaction of investing in Phu Quoc increases by 0.848 point.
- Natural resources: When investors add 1 point for this factor, the investors’
level of satisfaction of investing in Phu Quoc increases by 0.101 point.
- Local trade promotion and marketing: When investors add 1 point for this
factor, the investors’ level of satisfaction of investing in Phu Quoc increases by
0.065 point.
- Human resources: When investors add 1 point for this factor, the investors’
level of satisfaction of investing in Phu Quoc increases by 0.107 point.
- Input costs: When investors add 1 point for this factor, the investors’ level of
satisfaction of investing in Phu Quoc increases by 0.069 point.
- Credit support: When investors add 1 point for this factor, the investors’ level
of satisfaction of investing in Phu Quoc increases by 0.118 point.
Conclusion of Chapter 4
After analyzing factors influencing the investment capital attraction for socioeconomic development in Phu Quoc island, the researcher has explored 8 influential
factors including investment policies, infrastructure, credit support, quality of human
resources, natural resources, living environment, input costs, and local trade promotion and marketing.


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CHAPTER 5: CONCLUSIONS AND SOLUTIONS TO BOOSTING INVESTMENT CAPITAL FOR SOCIO-ECONOMIC DEVELOPMENT
IN PHU QUOC ISLAND

5.1. Conclusion
By analyzing the situation of investment capital for socio-economic
development of Phu Quoc Island in the period 2011-2016, the factors influencing the
attraction of investment capital, the thesis has drawn the following conclusions:
- In terms of capital mobilization:
Recently, the capital mobilization of Phu Quoc Island has achieved certain
successes such as the capital mobilization has continuously increased over the years;
state budget revenues are increasing; private investment and the number of registered
projects increased; investment policy has been improved. In addition to the success,
the mobilization of capital also revealed some limitations such as capital mobilization
for infrastructure development has not met the requirements; there are not many
breakthrough policies on capital mobilization and finally the attraction of foreign
capital is far below the potential. The above limitations on the author's side of the
state budget is due to the planning of socio-economic development of Phu Quoc
island has many changes, budget revenue is not commensurate with the potential of
the local and finally The investment capital from the central government is reduced.
Analyzing the factors influencing the attraction of investment capital in Phu
Quoc Island, the thesis has concluded the factors affecting the attraction of
investment capital in Phu Quoc including investment policy, infrastructure, quality of
human resources, natural resources, living environment, input costs, trade promotion
and local marketing, of which investment policy is influencing factor strongest.
- On the use of investment capital for socio-economic development:
There are positive changes in the use of investment capital as the economic
growth rate is increasing; the economic structure shifted in a good direction; the life
and living standards of the people have been raised. In addition to the success, the use
of capital also shows many limitations such as the efficiency of capital use is not
commensurate with the scale of investment; the rate of investment capital for health
and education is still low; the rate of environmental pollution and social unrest is
increasing. Some reasons for these limitations are that local authorities have not paid
much attention to the balanced development of economic sectors; the allocation of

funds for education and health remains low; restrictions on inspection and
supervision of the use of investment capital, and finally, the problem of economic
development combined with solving social problems has not been well implemented.
5.2. Solutions to boosting investment capital for social- economic
development in Phu Quoc island
5.2.1. Development orientation of Phu Quoc island to 2020, vision to 2030


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It is crucial to attempt to develop Phu Quoc island into an administrativeeconomic zone by 2020; the significant goal is to mobilize VND 90.000 billion for
the whole period of 2016-2020, and VND 440.000 billion for the whole period of
2021-2030. Compared to the figures that have been made over time, this is a very difficult indicator.
5.2.2. Solution to mobilizing investment capital
5.2.2.1. Mobilizing capital from the state capital
In order to ensure the achievement of the master plan for socio-economic development in Phu Quoc island, the following solutions are worth-considering.
- Thoroughly exploit local revenues for investment capital;
- Utilize the capital effectively and increase the internal accumulation rate;
- Allocate an amount of annual budget of Kien Giang province to investment
capital in Phu Quoc;
- Take advantage of the central budget support.
5.2.2.2. Attracting investment capital
 Solutions to infrastructure improvement
In order to improve the current infrastructure of Phu Quoc, the following
solutions are recommended: traffic routes should be completed; infrastructure for
electricity supply should be invested in the whole island to reduce costs and improve
living standards of the locals; The international airports and seaports should be
expanded quickly to meet the demand; Local government should investigate the
amount of available clean land to regulate projects and call for investment.
 Solutions to living environment improvement

In order to improve the quality of living environment in Phu Quoc, the researcher suggested some solutions below: Taking environmental protection and waste
treatment measures; improving the school and health systems to meet the demand of
the locals; building and upgrading recreation and entertainment areas; maintaining
social security and order and national defense.
 Solutions to improving investment policies
Investment policies are considered influential factors affecting investment attraction in Phu Quoc. In order to improve investment policies, there are some solutions:
- Land policies: a particular separate mechanism should be applied in Phu
Quoc island to reduce the land rents in comparison to the price prescribed by the government; the rights and benefits of organizations and individuals running businesses
in Vietnam should be specifically prescribed; the duration of land rental should be
expanded.
- Tax policies: There should be more preferential policies on CIT such as CIT
exemption and greater reduction in CIT. In addition to CIT, there should be policies


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on exemption or reduction of PIT, excise tax, and import tax in some particular cases;
it is important to improve the quality of tax propaganda and of tax officials.
- Foreign exchange policies: a parallel circulation of two types of currencies,
Vietnamese currency (VND) and dollars, should be approved.
- Reforming administrative procedures and improving the investment environment: it is important to accelerate administrative reforms, especially in investment license procedures, land rental procedures, business certification procedures,
and so on. Legal service organizations should be established to provide the locals and
businesses with legal support.
 Solutions to enhancing the protection of natural resources
In order to protect the natural resources of Phu Quoc, some following solutions
should be implemented: maintaining forest cover rate as committed; enhancing the
protection of marine resources; and banning exploitation of sand and stones for businesses because the exploitation could destroy the pristine beauty of Phu Quoc.
 Solutions to local trade promotion
In order to promote local trade effectively, the following measures should be
implemented in Phu Quoc: Continuing to investigate and develop a system of detailed

information on the projects calling for investment; establishing a separate trade
promotion center for Phu Quoc which focuses on investment promotion in Phu Quoc
island; branding local businesses by registering the copyright and logo; marketing
images of the business brands on some websites, international or local television
channels, and on social-network to more clients; Sending staff members to training
courses on trade promotion.
 Solutions to improving the quality of human resources
The local government should establish plans for human resources development
to basically satisfy the demand for labor in all sectors, and ensure the rational connection between the training and the supply of human resources for the local businesses.
It is also important to focus on the training, fostering, planning and arranging labors,
especially those working in the management and foster young talents in the contingent of cadres, civil servants and technical managers.
 Solutions to input costs
- Raw material cost: raw material costs in Phu Quoc have increased mainly
due to the transportation fee (by sea-way and air-way). Therefore, to stabilize and
even reduce this cost, spot production is considered the only measure.
- Land costs: Local authorities must elaborate project land and private land. In
addition, There must be an annual transparent announcement on the framework of
land price to facilitate the process of compensation and clearance, and to avoid unreasonable price increases.


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- Labor costs: Phu Quoc should develop a system of vocational schools in order to train local labor to improve the quality of local human resources, so that enterprises can access cheaper trained labor.
 Solutions to credit support
- Plan and complete the financial banking system in the locality;
- Expand, consolidate and rectify the operation of the people's credit funds
system;
- Introduce to businesses/ enterprises with preferential loan packages from the
government, so that they can access capital with low cost of capital.
5.2.3. Solutions to enhancing the effectiveness of investment capital

utilization
To improve the efficiency of capital utilization, it is necessary to have some
solutions such as organizing the implementation of plans in accordance with the
approved scheme; being aware of the compatibility between economic growth and
sustainable development; carrying out the appraisal before project licensing and
supervising the project after licensing; allocating more capital for education and
health.
5.3. Recommendations
5.3.1. Recommendations for the central government
- The central Government should have policies to support Phu Quoc to build
more infrastructure that local resources have not yet satisfied.
- It is necessary to establish a separate unique policy for accelerating the development of Phu Quoc .
- It is important to quickly get the plan for establishing Phu Quoc island as a
Special Economic Zone approved.
5.3.2. Recommendations for Kien Giang Province
- The People's Committee of Kien Giang province should direct the relevant
units to accelerate the master plan for Phu Quoc to develop a further vision;
- Investment in infrastructure in Phu Quoc should be emphasized;
- Qualified officers should be appointed to take responsibilities in management;
-There should be a separate administrative management decentralization for
Phu Quoc;
- It is necessary to consider carefully when allocating annual investment capital.
5.4. Limitations of the research and recommendations for further research
It is unavoidable that the present study remains some limitations such as the
number of new specific factors explored in the study was still limited, which hindered
the researcher from recommending more effective solutions. The scope of the study


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just investigated the current situation of investment capital in Phu Quoc; the study did
not examine the case in which Phu Quoc as a special economic zone.
The further research should investigate factors affecting the attraction of foreign
investment into Phu Quoc - a special economic zone.
Conclusion of Chapter 5
Some basic solutions were proposed by the researcher to increase investment
capital in Phu Quoc such as making use of state budget, taking into consideration factors affecting the attraction of investment capital, and improving the effectiveness of
the utilization of the mobilized capital. Some recommendations for authorities at all
levels were also mentioned in this chapter, in which the most important recommendation was quickly getting the master plan approved to develop Phu Quoc into a special
zone.