Committed to a stronger environment for investment

Top provincial leaders have reiterated that while successes are welcome, there is still much room for improvement across the board, Photo: Thanh Chung

Foreign investment has become a key pillar for Hai Duong’s economy in recent years. Compared to even surrounding localities, the province has outstanding geographical location being near Hanoi, having convenient traffic with the National Highway No.5 running through its heart, as well as having large land fund and abundant human resources to attract investment.

Since 2016, the province welcomed over 200 newly-registered foreign-invested projects while about the same number of foreign projects registered for capital expansion to ramp up production. The total foreign investment in the province during the period reached nearly $2.8 billion, as the number of new foreign-invested projects increased 1.7 times and the total added capital increased nearly 1.5 times compared to the previous 5-year period.

Hai Duong now has 478 valid projects in total, with the registered capital pushing $8.8 billion.

The foreign-invested projects in the province are mostly of a medium size, not enough to engineer significant breakthroughs in development. Specifically, the average capital scale of a project is only $17.9 million, ranking 27th out of the 63 cities and provinces in the country.

Meanwhile, in the adjacent Haiphong city, LG’s project in Trang Due Industrial Park alone accounts for two-thirds of the total foreign capital committed to Hai Duong.

“This shows how much more Hai Duong needs to do to boost its appeal to investors, particularly international ones,” said Le Hong Dien, director of Hai Duong Department of Planning and Investment.

Dien also noted that factors like transport infrastructure as well as abundant and suitable human resources are no longer a particular advantage of Hai Duong after neighbouring localities like Haiphong and Quang Ninh province are now starting to enjoy the fruits of investment in transport infrastructure such as airports, highways, and international ports. In addition, these two localities also host coastal economic zones offering incentives far better than regular industrial zones.

Unsynchronised local infrastructure has long been a bottleneck, hampering investment into infrastructure for industrial clusters and leaving the traffic system connecting to Hanoi-Haiphong Expressway and intra-provincial traffic routes overloaded.

These factors have turned Hai Duong’s great location between Hanoi and Haiphong into an advantage. In the past, Hai Duong was a top destination, but with the expressway system stretching from Hanoi, passing through Haiphong, and stretching to Mong Cai city of Quang Ninh that would be completed by the end of this year, Hai Duong might be rendered as little more than a convenient stop over.

Hai Duong has, however, reported slow improvements in its investment and business environment. It has been slipping lower on the Provincial Competitiveness Index (PCI) since 2006, often ranking among the group with low management quality. In 2019, despite moving up eight ranks on the PCI, Hai Duong still ranked 47th in the country, and ranked 10th out of the 11 localities in the Red River Delta region, higher than only Hung Yen.

Dau Anh Tuan, head of the Legal Department under the Vietnam Chamber of Commerce and Industry (VCCI) and PCI project manager, has warned the province that if it could not renew its mindset on the management of the private sector, its geographical location, infrastructure, and labour quality would not save it from growing obsolete. This was also a key consideration for Hai Duong Party Committee for the 2020-2025 term.

Drastic improvements

To realise the province’s socioeconomic development goals for the 2020-2025 period, the 17th Hai Duong Party Congress set out three major breakthroughs. The first involves strongly improving the investment and business environment, attracting large enterprises to invest in the province, and supporting the development of small- and medium-sized enterprises, startups, and innovative digital technology enterprises.

Dien from Hai Duong Department of Planning and Investment said only if it can effectively implement this strategy can Hai Duong step to implement the second breakthrough: mobilising resources to develop seamless and modern infrastructure. To reach these goals, the province must improve the quality of human resources and make strong changes in the mindset of leaders and managerial cadre – the third breakthrough.

Hai Duong’s economy in 2020 was 1.6 times as big as in 2015, ranking 11th in the country. Meanwhile, per capita income was VND70 million ($3,040), ranking 19th. It can be seen that Hai Duong’s biggest challenge nowadays is finding sufficient capital sources for development. In 2020, the total investment capital of the whole province was over VND44.85 trillion ($1.95 billion), while Quang Ninh and Haiphong mobilised several tens of trillions of VND each.

The deemed reasons for how Quang Ninh and Haiphong managed to mobilise such tremendous capital flows comes down to local authorities’ success in cultivating trust among investors and businesses for creating a safe and transparent investment environment and a dynamic administration, attested through the PCI results of these localities.

Trieu The Hung, Chairman of Hai Duong People’s Committee, summed up the province’s ambitions by saying, “Hai Duong will need to improve its investment and business environment to attract large enterprises to invest in the province and create new dynamic infrastructure. At the same time, the province needs to support the development of small- and medium-sized enterprises, startups, and innovative digital technology enterprises.”

“Along with that,” he added, “a top focus should be attracting major enterprises and economic groups to lead innovation and the creation of value chains while deploying high technology in manufacturing and supporting industries.”

Establishing new methods

To establish a new position and status, Hai Duong has to not only effectively utilise its existing advantages and potentials but also leverage its unique values. That is the shortest way to catch up and get ahead in the Fourth Industrial Revolution and digital transformation, suggested Deputy Prime Minister Pham Binh Minh at the opening session of the 17th Hai Duong Party Congress at the end of last year.

Particularly, Hai Duong needs to leverage the opportunities arising from Industry 4.0, shifting global investment flows, as well as Vietnam’s host of new free trade agreements. If the province manages to ride these waves, it will be able to push up investment attraction from domestic and external sources into priority sectors and building strong connections between foreign investors and the private sector.

To realise the province’s ambitions, Hai Duong has joined forces with local IT giant FPT Corporation to support its digital transformation and e-government journey. Under the partnership, up to 80 per cent of Level 4 administrative procedures would be digitalised by 2025. This would provide a significant boost to the province’s investment and business environment while improving economic governance.

Moreover, the province has identified four pillars to fast-track its development and carve out a new position for itself in the Vietnamese economy. These are developing high-tech industry and supporting industries; developing high value-added commodity agriculture focusing on high-technology and organic production; developing high-quality tourism services; and building smart and green urban areas.

In this spirit, right from the outset of 2021, Hai Duong has been actively promoting digital transformation and cooperation with domestic ITC giants – a push that has not been slowed down by the strong disruptions from the COVID-19 pandemic.

Amid the latest outbreak of the coronavirus pandemic, Hai Duong has overcome multiple difficulties to successfully organise the first international trade promotion for its agricultural products and receive export orders for thousands of tonnes of lychees and other famous agricultural products. The province’s farmers, with support from the government, became digital farmers for the first time, selling their goods on e-commerce platforms.

“Our recent achievements are cause for optimism, but also there is plenty of space for improvement. We need even more drastic actions to forge ahead,” said Pham Xuan Thang, Secretary of Hai Duong Party Committee, who has many times reiterated this at meetings with the province’s top leaders.