Inflow of FDI a driver of economic growth in Vinh Phuc

Inside Honda factory in Vinh Phuc province (Photo: VNA)

Vinh Phuc – Vinh Phuc has reaped success in attracting foreign direct investment (FDI) for many years, and the source of FDI capital has become a driver of economic growth in the province.

Investors said they chose Vinh Phuc for investment based on many factors, one of which is the development of industrial parks and clusters, completed with technical infrastructure such as electricity and water supply systems.

The province has 18 industrial parks approved by the Prime Minister, with total area of more than 5,700 hectares. There are also 21 industrial clusters covering a combined 500 hectares of land. Eleven investors have poured money into infrastructure at industrial parks, and so far eight industrial parks have been put into operation.

All businesses are given equal access to land, and the province also helps investors with land clearance and the streamlining of administrative procedures.

It is also noteworthy that Vinh Phuc has sent many delegations abroad to promote the province’s advantages and incentives to potential foreign investors.

According to Nguyen Van Do, Director of the provincial Department of Planning and Investment, Vinh Phuc has been able to attract FDI into different industries, with many investors building large-scale production facilities, creating many jobs for locals and contributing significantly to the province’s budget, such as Toyota, Honda, Daewoo Bus, Piaggio and Young Poong, to name just a few.

The number of FDI projects in Vinh Phuc has increased quickly over the past decade, from only eight in 1998 to 402 as of the end of September 2020, with total registered capital surpassing 5.7 billion USD.

The presence of FDI enterprises has helped Vinh Phuc maintain a high economic growth rate, averaging 7.1 percent a year during the period from 2015 to 2020. The local productivity has also improved greatly, at an average 8.3 percent a year.

Local officials said besides pumping capital into the economy, FDI enterprises have also transferred expertise and skills in business administration to local managerial staff members, as well as modern technology in production, and industrial working style to local workers.

In addition, FDI enterprises have contributed remarkably to the State budget revenues in Vinh Phuc. While budget collection in the province during 2006-2010 totalled 42.2 trillion VND, the revenue for the State budget during 2015-2020 averaged 30 trillion VND a year.

Those operating in the assembling and trading of motorbikes and automobiles have accounted for around 80 percent of the FDI sector’s contribution to the State budget.

A typical example of such enterprises is the Toyota Vietnam. In 2019, a year with many difficulties for the automobile market, the company turned out 50,114 vehicles and sold a record 79,326 vehicles, up 22 percent from the previous year, and paid nearly 1.2 billion USD into the State coffer. In the first six months of 2020, despite the COVID-19 pandemic, the company produced 16,905 vehicles and sold 25,853 vehicles, contributing nearly 350 million USD to the State budget.

In the time ahead, the provincial administration plans to intensify investment promotion activities, by holding conferences to introduce its potential, investment incentives and policies to both domestic and foreign investors.

At the same time, the provincial authorities will improve planning work, make public approved development plans along with detailed action plans to implement them, and continue with administrative procedure reform towards creating a transparent, healthy and fair play ground for all investors.

Vinh Phuc will hold regular dialogues with the local business community to get updates on their operations and problems so as to timely remove obstacles for them. To further assist local enterprises, the provincial authorities will invest in housing development for workers, accelerate land clearance work and revise management mechanisms and policies for industrial parks.

The province is acting in accordance with the motto “All investors in Vinh Phuc are citizens of Vinh Phuc,” and “Businesses’ success is the success and pride of Vinh Phuc.”