-
 Leaders
of Vinh Phuc Province share a common understanding that private
sector growth is the key driver for the province's economic
development, and therefore we focus on creating favorable
conditions for private sector development and investment. As a
result, during the past few years, Vinh Phuc has continuously
shown a strong growth rate. In 1997, there were only 91 private
firms in the province, but by June 2004 the number of private
firms had increased ten-fold to 930. Similarly, the total
registered capital of private firms is currently around 2,170
billion dong, which is 25 times the total registered capital in
1999.
We attribute these achievements to successful planning of
industrial zones; reform of public administration; and policies
geared toward attracting investment, especially from the private
sector. Specifically, Vinh Phuc has developed nine large
industrial zones, and over 30 small industrial areas and trading
villages for smaller businesses. This province has an agency in
charge of Industrial Zones and Investment Promotion, which acts
as a "one door" focal point that deals with all matters related
to project appraisal, land allocation, and investment
incentives. This agency is responsible for coordinating with
related sectoral agencies on all issues related to investment,
thereby shortening the waiting periods for businesses. The
province also actively supports many investment projects by
waiving or reducing land-use fees and site clearance costs.
Furthermore, we use provincial budget resources to support basic
infrastructure development such as leveling land and
constructing roads. The province is willing to sacrifice
short-term benefits such as land-use fees, in order to achieve
long-term economic development, through measures such as using
our own budget resources to build infrastructure that attracts
investment.
To facilitate regular dialogue with businesses and to better
understand their issues, Vinh Phuc DPI sponsors a Provincial
Business Club, provides it with free office space and actively
participates in the club's activities. In reality, some
government authorities harass and cause problems for businesses,
but individual entrepreneurs normally do not dare to file
complaints for fear of retaliation. The DPI encourages
businesses to voice their issues through the club, so that the
club can consolidate opinions and recommendations from the
business community and raise them with the appropriate state
agencies. When businesses have problems with local government
offices or specific policies, DPI will send someone to work
directly with the businesses to help them resolve the issues.
Mr. Nguyen Van Lai, Director, Vinh Phuc Department of Planning
and Investment.
-
 Binh
Duong's success in attracting investment and private sector
development is a result of local leaders' mindset and
determination to create a business environment that is
transparent and favorable to investors. When we split from Song
Be Province in 1997, Binh Duong continued the "one door" policy,
and local government officers have proactively taken on the
responsibility of preparatory work needed for investment, such
as site clearance and compensation. In other provinces,
investors have to do these things themselves, which costs a lot
in time and effort, and requires going through many doors. Our
province also continually reviews the investment licensing
process in order to shorten and eliminate unnecessary steps,
thereby minimizing the waiting period for investors to receive
investment licenses and administrative sub-licenses for
operation.
There are some who say that Binh Duong attracts investment by
giving extra investment incentives beyond what is offered by
other provinces. This is not the case. Binh Duong does not offer
any investment incentives above and beyond those in the national
policy. The provincial DPI simply summarizes and explains the
incentives available [in the national policy] and publishes a
guide that we make readily available to investors. We have heard
that some provinces seek to attract investment by offering
special incentives, such as extensions for land-use fee waivers.
In our understanding, that is illegal. My personal opinion is
that incentives are merely cosmetic and are thus unsustainable.
What's most important is to create a transparent and enabling
business environment. Binh Duong People's Committee has
published and widely disseminated a booklet that clearly
describes the roles and responsibilities of each government
office that has anything to do with investment. Its purpose is
to equip investors with all the information they need to
determine whether it is likely that their investment projects
will be approved, and to estimate how long the waiting periods
will be for subsequent decisions.
When the central government issues regulations or decisions that
are unclear and can negatively impact businesses operations,
Binh Duong provincial authorities will send written feedback and
recommendations to the central authorities. In the meantime, we
are flexible in our implementation while remaining within the
legal framework. Take, for example, the recent decision issued
by MPI requesting that only wood processing projects that have a
reforestation plan be approved. The result of this has been that
many provinces completely stopped granting licenses to wood
processing projects. The Binh Duong DPI responded by requiring
investors to explain their source of wood materials and
continued to approve licenses for those projects that use
imported wood, plywood, plaster wood or cashew tree wood (which
has no other use except as firewood). As a result, wood
processing projects have continued to operate in Binh Dong
province.
Mr. Le Viet Dung, Deputy Director,
Binh Duong Department of Planning and Investment
-
 Differing
levels of infrastructural development are responsible for gaps
in economic growth between localities; Nam Dinh lags behind due
to poor transportation infrastructure. The private sector in Nam
Dinh is very weak, and in my opinion, economic growth in the
province will require linking with large state-owned general
corporations to implement investment projects.
Mr. Tran Quoc Hung, Deputy Director,
Nam Dinh Department of Industry
-
 The
human factor is the most relevant in explaining the differences
in economic development between cities and provinces. Vietnam
just started to officially recognize and develop the private
sector in the last 10 years, so the legal and regulatory
framework is still incomplete. Thus, implementation is very much
dependent on local authorities. Central level laws and
regulations, as well as Party policies, can be implemented with
a certain level of flexibility that is suited to local
conditions. Central government policies and laws are the same
throughout the country, however southern officials tend to
adhere to the "spirit" of the laws and are more active, creative
and daring implementing regulations in ways that promote
economic development. In contrast, northern local officials tend
to stick to the "letter of the law," which lacks the necessary
flexibility. This explains why central laws and policies, when
applied at the local level, have differing levels of impact.
It should be noted that sometimes local authorities take the
need for flexibility a bit too far. They look for loopholes in
central regulations and offer special investment incentives to
attract investment and increase economic growth for their
localities. For example, some provinces recently granted
land-lease fee waivers of up to 15 or 20 years. This type of
activity does not promote healthy competition, and is a policy
not sustainable for the long term.
Mr. Tran Trac, Head of the Regional III Department, the Central
Economic Committee
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