The secret of Vinh Phuc’s FDI success

Key to economic growth

Speaking with Vietnam Economic News reporters, provincial people’s committee vice chairman Le Duy Thanh said the FDI sector significantly contributed to Vinh Phuc’s economic growth over the past two decades, creating opportunities to boost foreign trade, generate jobs, and promote economic restructuring and international economic integration.

Thanh noted that the two provinces of Vinh Phuc and Phu Tho were separated from Vinh Phu Province in 1997. At that time, Vinh Phuc had only one industrial zone and 91 companies, and the provincial economy was based mostly on agriculture. Annual revenue was low, VND100 billion, and the province was dependent on allowances from the state budget.

Appropriate FDI attraction policies changed that picture. World-leading groups, such as Honda, Toyota, Sumitomo (Japan), Piaggio (Italy), Sindoh (Republic of Korea), and Prime Group (Thailand) have successfully invested in Vinh Phuc, contributing to its socioeconomic development.

According to Thanh, the FDI sector currently accounts for nearly 20 percent of total investment in Vinh Phuc Province’s development and creates about 95 percent of its foreign trade value. It has generated jobs for about 75,000 workers, with Vinh Phuc residents making up 73 percent of the workforce and workers from neighboring localities constituting 27 percent.

The industrial and construction sector’s contribution to the provincial gross domestic product (GDP) increased from 18.4 percent in 1997 to 61.9 percent in 2016; per capita income from US$140 in 1997, equivalent to 48 percent of the country’s average, to nearly US$3,000 in 2016, higher than the country’s average. Vinh Phuc currently ranks second among northern localities and sixth nationwide in terms of budgetary revenue.

The FDI sector has also helped local businesses access modern technologies and management skills, as well as advanced marketing strategies, Thanh said. The sector has helped the province expand external relations, leading to cooperation agreements with Chungcheobuk Province (Republic of Korea) and Akita Prefecture (Japan) on additional investment from these localities.

Respect for investors

Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said Vinh Phuc’s success is all the more impressive given that it lacks airports and seaports, as well as other advantages in terms of area and population. Japanese Ambassador to Vietnam Hiroshi Fukada has praised the investment environment in the province and ranked it among the Vietnamese localities with the best FDI attraction policies. Japanese investors in this province have no complaints about the investment environment there, unlike those in some other provinces, he said.

According to Vinh Phuc Province People’s Committee Chairman Nguyen Van Tri, a major draw for foreign investors is the improved investment environment that facilitates business operations. He said Vinh Phuc considers foreign investors its citizens and their success as its own.

In 2016, Vinh Phuc issued two resolutions on improving the local investment environment, enhancing the province’s competitiveness in the 2016-2020 period, and encouraging investment in high quality service projects in areas facing difficulties in economic restructuring. These resolutions underline the importance of efforts to improve the business environment and promote administrative reforms to facilitate business operations.

Vinh Phuc Province plans to focus on attracting investment in industrial zones and gradually forming industrial centers, prioritizing support industry projects catering for the manufacture/assembly of automobiles and manufacture of auto and motorbike spare parts. Vinh Phuc will also seek to attract FDI from multinational groups, small and medium enterprises from Japan, the Republic of Korea, Chinese Taipei, and potential investors from the EU and the US.