Van Trung industrial park (Viet Yen). Photo: Viet Hung.

Since the beginning of 2017, the provincial People's Committee directed the synchronous implementation of measures to improve business-investment environment, enhance the province’s competitiveness, and accompany businesses to remove their difficulties during the investment process and business operation. Localities and sectors were tasked to support the improvement of infrastructure at industrial parks and clusters and land clearance of key projects. The local business environment continued to be improved with the provincial competitiveness index (PCI) in 2016 leaping seven places over the previous year, ranking 33rd among the total 63 cities and provinces nationwide.

Investment attraction witnessed strong and impressive steps forwards. The provincial People’s Committee approved the implementation of two build-transfer (BT) projects with a total investment of over 1.5 trillion VND (66 million USD) and continued to consider the applications of five other projects worth nearly 2 trillion VND (88 million USD). Regarding foreign direct investment (FDI), the province ranked eighth among 63 cities and provinces in terms of the number of projects and 11th in registered capital amount.

FDI projects continued to be an important source of capital to meet development investment needs and promote local socio-economic expansion. Major projects included the An Khanh – Bac Giang thermal power plant in Vu Xa commune, Luc Nam district (with registered capital of over 22.5 trillion VND (990.8 million USD)); the DNP Bac Giang clean water factory in Lang Giang district, Bac Giang city (worth nearly 1.3 trillion VND(57.2 million USD)); the Lan Son industrial cluster in Luc Nam district and Khai Hong plastic factory (worth 150 million USD); and the establishment of Lens Technology Co. Ltd. at Quang Chau industrial park (worth 200 million USD).

Reality showed that in order to make an impressive shift in attracting investment, the improvement of the business environment is made a regular task of the entire political system. An important point in improving business climate is reforming administrative procedures and ensuring publicity and transparency in handling issues related to investors and clarifying individual responsibilities.

Thanks to high consensus from the provincial People’s Committee to departments and authorities at the grassroots level, some projects quickly got approval for early implementation, promising to create numerous jobs and make remarkable contributions to the local socio-economic development.

Besides the achievements, there were shortcomings in attracting investment. In Bac Giang, investment projects mainly focused on the field of industry. Looking at the structure of domestically-invested projects, those in the industry made up 83.8 percent, service 14 percent, and agriculture 2.2 percent of the total registered capital. For FDI projects, the respective proportions are 64.5 percent and 35.5 percent. Businesses have yet been interested in agriculture and rural areas, causing an imbalance between investment in industry (83.8 percent) and agriculture (2.2 percent). The quality of investment projects remained low, with more stress on number and scale.

Major projects mostly operated in sub-contracting and assembling, using temporarily imported and re-exported materials, leading to limited contributions to the budget and large pressure in population in industrial parks. A number of investors have taken advantage of loose mechanisms to occupy the land, delay investment or make an investment for the wrong purposes, trade their projects and hire their factories illegally.

Many investors violated regulations in environmental protection, releasing untreated wastewater to the environment.

Increasing quality of projects

A chain making electric motorbike at PEGA company (Song Khe industrial park – Noi Hoang) Photo: Huong Giang.

In order to make investment attraction an important solution to improve economic growth while minimizing shortcomings, in the coming time, basing on the fruitful results over the past years, sectors and authorities at all levels should apply new measures comprehensively. First of all, the province should continue with the policy of drawing investment for local economic development, with priority given to enhancing the quality of investment projects. Attention should be paid to investors with advanced technology, high added value, large projects, strong financial capacity and competitive products, and those capable of joining the global value chains with the wide influence on the locality’s socio-economic growth.

Sectors and local authorities should strengthen communications and create favorable conditions for enterprises to invest in agriculture and rural areas. At the same time, it is necessary to pay more attention to administrative reform and improving provincial competitiveness, and creating an image of a friendly and open investment destination, while helping remove obstacles in land clearance compensation for investors.

One of the important solutions is ensuring the quality of projects’ verification, business license issuance, giving priority to projects friendly to the environment and refusing those with high pollution risks. The province can hire independent consulting experts to evaluate the quality of investment attraction over the past years and seek new solutions suitable to the current situation. A list of investment projects using land with high commercial value for auction should be made and submitted to the Chairman of the provincial People’s Committee to create transparency.

Meanwhile, it is crucial to build and carry out plans on inspecting licensed projects, focusing on those with slow progress and delay to find out measures to speed up their progress, or revoke licenses and strictly handle projects violating regulations.

Nguyen Cuong, Vice Director of the Department of Planning and Investment