TOPIC MOBILIZE AND USE FOREIGN DIRECT INVESTMENT CAPITAL OF HANOI CITY

Theoretical foundations of foreign direct investment

Basic theoretical issues on foreign direct investment

Foreign direct investment (FDI) is the acquisition of a stake in a firm by a corporation or investor based outside of its boundaries.

The term typically denotes a corporate strategy involving the acquisition of a substantial stake in a foreign company or the complete purchase of that company, aimed at expanding operations into new markets It is important to note that this term is not usually associated with stock investments in foreign firms.

Due to differing demands and countries' capabilities to manage expenses, even strong nations like the United States, Japan, and Russia must engage in trade to meet their manufacturing needs International investment can play a crucial role in lowering production costs and enhancing capital efficiency.

-Globalization is advancing, creating an environment favourable to the flow of resources and investment across borders Globalization has had a significant impact on

The globalization of international investment activities has been significantly enhanced by advancements in telecommunications, enabling investors to access capital information more rapidly than ever before This increased connectivity allows for more informed and effective investment decisions For instance, a shift in interest rates by the United States Federal Reserve can influence stock markets across the globe, affecting economies in Japan, Europe, and beyond.

The trend of investment liberalization and globalization in the investment sector is evident, as international investors have historically prioritized foreign policy when investing abroad Despite commitments by nations to avoid nationalization and expropriation of assets, incidents of asset seizure remain common To encourage investment, countries often offer incentives such as lower taxes and agreements to expand investment activities Regional investment treaties, like the ASEAN Investment Area Framework Agreement, facilitate investment among Southeast Asian nations, while international laws, such as the World Trade Organization's Trade Related Investment Measures (TRIMs), are progressively streamlining the global investment process.

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The rapid advancement of the scientific and technological revolution has led to increased investment demands in sectors like telecommunications and aviation, fostering ongoing international collaboration Additionally, the life cycles of technology are becoming progressively shorter While wealthy nations continue to utilize older technologies, they often transfer these outdated systems to developing countries, facilitating investment and aid This exchange benefits both parties, as it extends the utility of older technologies while allowing emerging economies to reorganize and enhance their technological capabilities.

International investment allows multinational companies (TNCs) to navigate trade barriers and enhance their market presence Successfully exporting products to foreign markets involves overcoming various challenges, including protectionist measures such as tariffs and non-tariff barriers By establishing local centers and operations, businesses can effectively penetrate and thrive in these markets despite the obstacles they face.

International investment plays a vital role in enhancing a country's global standing and achieving socio-political objectives Countries adopt diverse investment strategies based on their priorities; for instance, Japan is a significant direct investor in Asia and the largest provider of Official Development Assistance (ODA) to the region, aiming to secure stable resources and expand its political influence while rehabilitating its historical image post-World War II Similarly, the United States maintains considerable influence in Latin America, while France holds sway in Africa, reflecting the legacy of colonial ties.

Investing abroad is a strategic way to mitigate risks by adhering to the fundamental business principle of diversification—"don't put all your eggs in one basket." By spreading investments across various locations, the impact of fluctuations in one region is contained, affecting only the branches there while leaving others unaffected For instance, a rise in oil prices may negatively impact industrialized nations that heavily rely on oil, while simultaneously benefiting oil-exporting countries.

Make the most of tax policy Investors will pick a location with favorable tax rates for them while also minimizing the total amount of tax paid by the firm For

Multinational corporations often employ transfer pricing strategies to minimize their global tax liabilities, particularly when they have numerous subsidiaries For instance, a firm operating in a country with high corporate income tax may import goods from a related company in a jurisdiction with lower tax rates This practice can lead to inflated prices for imported products, resulting in decreased profits for the high-tax entity while boosting earnings for the low-tax exporter Consequently, although the importing company experiences reduced profits, the overall profit for the exporting firm increases, allowing the multinational to achieve the lowest possible tax payments on a global scale.

- Purpose of the host country

Domestic capital plays a crucial role in complementing foreign capital for economic growth To accelerate expansion, a country requires substantial capital investment When local capital falls short, the economy turns to foreign direct investment (FDI) as a vital source of funding.

Obtaining technological and management expertise: Capital for growth can be mobilized to some extent by "austerity

To successfully attract foreign direct investment (FDI) from multinational corporations, a country must enhance its absorptive capacity, as this determines its ability to integrate and utilize advanced technology and management expertise While some policies may enable access to these resources despite existing shortages, they often fall short without the foundational capability to absorb and implement the knowledge gained from such investments.

Attracting foreign direct investment (FDI) from multinational corporations not only brings in investment capital but also fosters commercial relationships with domestic companies This collaboration integrates local firms into the regional labor division, enabling the host country to join the global industrial network and ultimately boost its export capabilities.

Foreign Direct Investment (FDI) aims to leverage favorable conditions for cost-effective production, leading to increased job opportunities for local workers This influx of employment not only boosts the income levels of the local population but also contributes significantly to the growth of the local economy Additionally, companies often provide innovative vocational skills training during the hiring process, enhancing the workforce's capabilities.

Emerging nations that attract foreign direct investment (FDI) benefit from a skilled workforce, as they provide local professionals and laborers opportunities to work in foreign-invested companies This not only enhances their professional training but also contributes to the overall economic development of the country.

Taxes from foreign-invested companies play a crucial role in generating budget revenue for numerous developing countries and cities For instance, in 2006, the Ford automotive assembly plant in Hai Duong contributed to half of the province's domestic revenue, highlighting the significant impact of foreign investment on local economies.

The impact of foreign direct investment on the development of

2.1 Positive impact of foreign direct investment on the host country

Capital inflows significantly enhance investment levels in the host country, leading to increased capital creation driven by higher demand for investment goods Multinational corporations (MNCs) play a crucial role by utilizing this capital efficiently, thereby improving the overall production efficiency of the host nation's economy Additionally, the swift growth of manufacturing facilities contributes to consistent infrastructural and social development, fostering a more robust economic environment.

Foreign Direct Investment (FDI) facilitates the transfer of technology and management expertise from multinational corporations (MNCs) to host countries By implementing their advanced technologies in the local market, MNCs enable host nations to leverage these innovations for economic growth Consequently, once access to this technology is established, the host country can utilize it to enhance its own development and competitive advantage.

Foreign direct investment (FDI) plays a crucial role in job creation within host nations, as multinational corporations (MNCs) either directly or indirectly increase employment opportunities MNCs actively recruit local workers, contributing to the local economy Additionally, it has been noted that these corporations often offer higher wages to their employees, further enhancing the benefits of FDI in the job market.

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Multinational corporations (MNCs) enhance customer options by introducing a wider range of products, fostering increased competition in the host country's market This heightened competition not only benefits consumers but also stimulates growth in the local manufacturing sector and promotes efficient capital allocation, ultimately driving economic progress.

Positive impact on balance of payments:

- First, when FDI comes in, it offers an alternative to imports since people choose to use foreign brand things rather than buying them overseas.

- Second, MNCs will benefit from the export of products and services by the host nation.

2.2 Negative effects of foreign direct investment on the host country

The growing influence of multinational corporations (MNCs) in host countries poses a significant threat to local businesses and products These MNCs can dominate the consumer market more quickly due to their efficiency, leading to decreased demand for local goods.

TIEU LUAN MOI download : skknchat@gmail.com products decreased, as did domestic enterprises' market share. Domestic firms are put under a lot of stress as a result of this.

Multinational corporations (MNCs) often rely on capital-intensive technologies that displace workers in traditional sectors, leading to increased unemployment and underemployment This shift creates job insecurity and exacerbates challenges for the workforce in host countries, highlighting the lack of a safety net for affected workers.

Multinational corporations (MNCs) typically offer higher salaries to their employees compared to local companies, contributing to significant income inequality This disparity is a key factor in the growing income gap, which can lead to societal unrest and various social issues In times of high inflation, the low-income population suffers the most from these inequities, exacerbating their financial struggles.

Major mergers and acquisitions by multinational companies (MNCs) lead to increased monopolistic power in the host country, significantly impacting resource allocation and consumer surplus This concentration of market power poses risks to national goals and overall well-being, ultimately jeopardizing the economic stability of the region.

The Pollution Haven Hypothesis suggests that foreign direct investment (FDI) flows may lead companies to relocate to countries with lax environmental regulations, allowing them to dispose of waste illegally This phenomenon occurs as multinational corporations seek to escape stringent environmental laws and high treatment costs prevalent in industrialized nations Consequently, countries with weak environmental protections may become attractive destinations for polluting industries, resulting in significant environmental harm to those regions.

Multinational companies (MNCs) can significantly undermine national sovereignty due to their immense size and influence These corporations possess the power to sway political parties in their host countries, leading to potential corruption among politicians As a result, the actions of MNCs can compromise the integrity of national governance.

Multinational corporations adversely impact the balance of payments by transferring royalties to their parent companies in their home countries, which can lead to significant outflows of capital This practice often involves manipulating transfer prices, further exacerbating the negative effects on the host country's economy.

MNCs often contribute to a less favorable balance of payments for host countries, as they typically pay lower taxes and repatriate profits to their parent companies through interest and dividends This financial outflow negatively impacts the economic stability of the host nation.

International economic integration negatively impacts the balance of payments by restricting exports and increasing imports, which can lead to the decline of domestic enterprises that export more than they import.

Actual situation of mobilizing and using foreign direct

Overview of Hanoi's investment environment

International economic integration is negatively impacting the balance of payments by limiting exports, increasing imports, and undermining domestic enterprises that export more than they import In response to the challenges posed by the pandemic, the city implemented Resolution 128 in May to support businesses in revitalizing the economy in the final months of the year This resolution addresses key concerns for companies, including the reintegration of foreign specialists and the resolution of tax and customs issues.

Hanoi city is actively working to enhance its investment climate by addressing challenges faced by investors, streamlining administrative processes, and improving the overall business environment This initiative aims to attract more investment into the capital and strengthen the city's competitiveness The local administration is committed to providing favorable conditions for international investors looking to establish their businesses in Hanoi.

In response to the challenges presented by the COVID-19 pandemic, the Hanoi government has implemented a variety of measures aimed at swiftly controlling the virus while simultaneously supporting businesses and foreign investors in navigating difficulties to sustain and revive production activities.

In response to the challenges posed by the COVID-19 pandemic, Hanoi is committed to achieving "dual goals" of epidemic control and socioeconomic development A meeting is scheduled for 2021 to address these objectives The resilience of Hanoi's economy is reflected in the growth figures from the first five months of 2021, during which the city successfully attracted 591.7 million in investments.

In the first five months of 2021, Hanoi attracted VND 4,780 billion in non-budget investment across 35 projects, reflecting a significant increase in international investment This success is attributed to proactive leadership at all levels, which effectively monitored the economic impact of the COVID-19 pandemic and developed comprehensive strategies for each region Additionally, the city actively communicates with businesses to address their concerns and implement effective solutions for the recovery of production and operations, laying a solid foundation for achieving greater goals in 2022.

Advantages and disadvantages in attracting foreign direct

Hanoi is actively enhancing its investment framework to attract foreign direct investment, particularly in high-tech industries, which currently represent about 18-20% of total investments The city is also prioritizing the development of high-end hotels and is open to foreign investment across various sectors under the Foreign Investment Law, with a particular emphasis on the West Lake and North Red River regions.

Hanoi is actively promoting a list of projects seeking foreign investment, particularly in the hospitality sector, as the city aims to develop several much-needed 5-star hotels The government is prioritizing the completion of planned developments along the Red River and is investing in the establishment of two new industrial zones in Phu Dong and Sai Dong A, each covering approximately 200 hectares for foreign investment projects To streamline the process, a foreign investment working group has been created to implement a one-stop system for awarding investment licenses and to assist in the execution and settlement of significant foreign investment initiatives.

To enhance administrative reform, it is essential to implement the Investment Law and the New Enterprise Law, fostering an open and transparent investment environment that aligns with integration needs Timely support for major ongoing projects, such as the 65-story residential development, the 1,000-bed hospital, the West Lake project, and the CDMA mobile network, is crucial This includes ensuring efficient site clearing and prompt execution of construction activities.

City authorities should enhance direct engagement with businesses to swiftly address challenges and implement recommendations while effectively managing incomplete projects Additionally, the city has established bidding procedures to allocate land-use effectively.

The Department of Planning and Investment is finalizing documentation to promote the designation of 4-5 locations for high-end hotel construction, actively seeking investors through extensive media outreach Currently, the land transfer process takes 44 days, but by implementing modern management software (VLAP), this duration can be significantly reduced to just 9-10 days per transaction.

Despite these benefits, international investors are still cautious to invest in Vietnam This is due to the following factors:

Foreign Direct Investment (FDI) projects lack specific regulations on technology transfer, encompassing machinery, equipment, management training, and market experience Additionally, there are no effective management mechanisms in place to incentivize foreign investors to introduce modern technology As a result, this gap leads to the transfer of outdated, expensive, and environmentally harmful technologies, hindering the city's technological advancement.

Many technicians, scientists, and operators are deterred by the cumbersome administrative processes, high visa costs, income facilitation challenges, and elevated housing prices Additionally, there is a lack of consensus on salary and personal income tax policies between local employees and foreign workers.

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Investment costs, especially infrastructure rental rates, are notably high in Hanoi compared to neighboring countries and provinces, making the city less competitive Additionally, site clearance poses significant challenges A survey by the Ministry of Natural Resources and Environment reveals that current land transactions are taking 4 to 6 times longer than the legally mandated period, leading to numerous issues for individuals involved.

Hanoi is focused on strategic planning and collaboration with relevant authorities to develop a regional master plan that outlines the capital's growth and comprehensive construction initiatives This approach aims to establish a clear framework for the city's development and attract public funding The city boasts a well-integrated transportation network, including roads, waterways, railways, and airports, making it an ideal location for business ventures Notably, major global manufacturers like Canon and Yamaha Motor have established their production facilities in Hanoi, highlighting its appeal as a business hub.

In the coming years, the city aims to enhance its infrastructure by investing in ring roads, tram lines, and three new bridges over the Red River Additionally, plans include the development of two major tourist attractions, numerous parks, commercial centers, and hospitals Hanoi is also home to two key river ports, Khuyen Luong and Pha Den, which are capable of accommodating large vessels.

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Hanoi benefits from a reliable and abundant water supply sourced from the Red River and Duong River, with both surface water and groundwater readily available The high quality of groundwater meets the demands for residential and industrial water use Water pricing is structured to support various sectors, with service businesses and migrants paying $0.43 per cubic meter, while production facilities, hospitals, and schools are charged $0.20 per cubic meter Domestic water is available at a cost of just $0.10 per cubic meter.

The power network has been enhanced to ensure a reliable and continuous electricity supply, with rates set at $0.10/KWh for residential use, $0.09/KWh for manufacturing, and $0.08/KWh for industrial zones Additionally, the telecommunications infrastructure has been integrated into the global system, featuring advanced technology, a digital switchboard, and optical cables, with international call rates at $1.30 per minute However, costs are expected to decrease significantly once Vietnam establishes its own satellite.

Land rent in Hanoi is categorized into four tiers, with rates ranging from $0.06 to $12 per square meter per year, and contracts are secured for a minimum of five years Any adjustments to the rent cannot exceed a 15% increase from the previous rate When renting a factory, the investor is only responsible for paying the factory's rent, while the lessor is accountable to the state for the payment obligations.

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National Highway 1 traverses Hanoi, connecting to National Road 5, which links to Hai Phong port, and National Highway 3, leading to Noi Bai International Airport This article provides essential information on specific container shipping costs.

Ha Noi – Hai Phong (by road): + Container 20 feet: 100 – 120 USD

Ha Noi – Ho Ch Minh (container 20- 40 feet): + Railway: 800 USD

Actual situation of foreign direct investment in Hanoi

Since Vietnam began welcoming foreign investment, Hanoi has consistently emerged as a top destination for this vital capital, reinforcing its leadership in foreign investment alongside several other provinces As the heart of the Red River Delta and a key economic engine for the nation, Hanoi's appeal continues to grow, driven by effective policies and mechanisms that foster economic development in the northern region.

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2019, Hanoi city led the country in attracting foreign investment capital, with capital of 7.5 billion USD and 8.67 billion USD respectively.

The Indochina Energy Development Project, backed by Thai investors with a total registered investment of $10 million, stands out as the largest investment initiative in Hanoi during the first two months of 2019 This foreign-funded project focuses on knowledge, research, and technology, primarily offering management consulting services while excluding construction, electrical system installation, and technical consulting activities from its investment scope, except for financial, legal, tax, securities, and insurance advice.

Super Gold Moon Co., Ltd (Korea) has initiated a project focused on accommodation and catering services, boasting the second-largest registered investment capital of 3.448 million USD This investment consists of 0.86 million USD in contributed capital and 2.586 million USD in borrowed capital, with the entire project financed through foreign cash.

In third place is the EB Nguyen Xien Supermarket Project of Big C Thang Long International Trade and Supermarket Service

Company Limited (Thailand) with a total registered investment capital of 2.5 million USD in the form of a joint venture.

As of the end of 2019, Ho Chi Minh City attracted investments from 81 nations and territories, with Hanoi hosting 20 key partner countries Japan leads with 959 projects and nearly $10.2 billion in registered investment, representing 28.3% of the total capital Singapore and South Korea follow closely, each contributing $6.0 billion, accounting for 16.7% of the total Notably, the United States, France, and the United Kingdom have invested $293 million, $247 million, and $419 million, respectively Significant projects include Beerco Limited's $3.85 billion investment in Vietnam Beverage Co., Ltd., aimed at beer production and malt brewing in Hanoi.

Bảng: Vốn đầu tư vào một số địa phương trong năm 2019, 2020

Capital Capital ers Province Province

1 Ha Noi 8,454 Ho Chi Minh 4,400

2 Ho Chi Minh 8,295 Bac Lieu 4,000

In 2020, Hanoi emerged as Vietnam's third-largest city, boasting a capital of $3.83 billion USD despite the challenges posed by the Covid-19 pandemic By March 2021, the city had welcomed 34 newly licensed foreign direct investment (FDI) projects, amounting to a total registered capital of 30.5 million USD, with 29 of these projects being fully funded by foreign investors Additionally, five joint ventures were established, and nine existing projects were modified to increase investment, contributing an extra 47.8 million USD, with foreign investors injecting 8.2 million USD into the economy.

As of May 19, 2020, Hanoi City has successfully attracted $1.045 billion in foreign direct investment (FDI), comprising 255 newly licensed projects with a registered capital of $327 million, 63 projects that increased their capital by $378 million, and 468 instances of capital contributions for share purchases totaling $340 million Singapore leads the FDI rankings with $262.7 million, accounting for 25.1% of the total registered capital, while Japan follows in second place.

230 million USD, accounting for 22%; Taiwan comes in third with 185.5 million USD, accounting for 17.7%; and Korea comes in third with 106.9 million USD, accounting for 10.2%.

Project Nidec Chaun Choung Vietnam (Japan invested through Taiwan) – 174.5 million USD; Hanoi Lotte World Aquarium Project (Korea) – 47 million USD;

The Office Project 29 Lieu Giai, also known as Twin Peaks, has seen a significant capital increase to 246 million USD, while the Trade Finance Center project, along with its ancillary works by TSQ Vietnam, has raised its capital to 67.5 million USD These projects are among the major licensed developments in the region.

By the end of 2020, Hanoi is set to attract a total of USD 1,907 million in foreign investment, comprising USD 662 million from 464 newly licensed projects and USD 1,245 million from 132 projects receiving additional capital Additionally, foreign investors have contributed significantly, with total purchases reaching USD 1,280 million.

Hanoi's investment landscape reflects growing optimism among investors, with numerous projects being adjusted to enhance capital The city has seen significant success in foreign direct investment (FDI), with a goal of attracting $30-40 billion from 2021 to 2025 and disbursed capital reaching $20-30 billion The localization rate is expected to surpass 30% by 2025 Additionally, there has been a 50% increase in businesses adopting advanced technology, modern management practices, and environmental protection measures since 2018.

Table : FDI into Hanoi over the years 2017–March 2022

Year Number of new Registered capital (billion USD) project Total Divided

New Additional Capital funding capital contributio n

Quarter 62 513.1 mil 24,9mil 122.8 mil 365,4 mil

Ho Chi Minh City continues to lead the way in terms of new developments, with

Hanoi ranks second with 505 projects as it continues to implement a selective foreign investment strategy aimed at attracting businesses with strong economic, scientific, and technological capabilities The city focuses on high-potential industries while expanding into sectors like transportation and logistics infrastructure, enhancing industrial park facilities, and accelerating the development of information technology infrastructure and data centers Additionally, Hanoi prioritizes investments in environmental and waste treatment, along with the development of satellite urban areas and smart urban zones to support commerce and tourism A notable project is the West Lake West Urban Area Project, which has seen an increase in investment capital by over 774 million USD.

On June 29, 2020, an adjusted investment certificate was issued for the project at 29 Lieu Giai (Singapore), reflecting an increase in investment capital by $246 million, as confirmed by the certificate issued on March 31, 2020.

In the first quarter of 2021, the total registered capital for newly permitted and additional foreign direct investment (FDI) projects reached 101.5 million USD, with foreign investors contributing 50.7 million USD By the end of May 2021, the total registered capital for newly established FDI projects in Hanoi amounted to 519.2 million USD, which included 139 new projects worth 76.8 million USD and 63 projects that increased their investment capital by 442.4 million USD In May alone, 16 new FDI projects were approved in Hanoi, totaling 5.3 million USD, consisting of 14 fully foreign-owned projects and 2 joint ventures Additionally, 13 projects underwent restructuring to enhance their investment capital, cumulatively raising the total registered investment capital to 184 million USD.

In August 2021, Hanoi saw the approval of 12 new foreign direct investment (FDI) projects totaling 17.6 million USD, as reported by the Hanoi Statistics Office Additionally, two existing projects received amendments to increase their investment capital by 47 thousand USD Foreign investors also participated in cash contributions and share acquisitions on seven occasions, raising the overall investment capital to 1.1 million USD.

By August 2021, the city had attracted FDI capital of 841.8 million USD, with

243 fresh registered projects worth 157.3 million USD, 91 additional projects

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In response to the complexities of the COVID-19 pandemic, the city implemented social distancing measures on July 24, 2021, which led to a decrease in state budget investment resources Despite these challenges, several foreign investors, including the Cu Ne Renewable Energy Investment Project, which increased by $176 million, the Krongbuk Wind Energy Project, up by $165 million, and the B.Braun Pharmaceutical Project, which expanded by $5.5 million, have continued to operate effectively and register for further investment growth.

Assessing the situation of attracting FDI in Hanoi

The results achieved (number of projects and total investment capital)

Hanoi is experiencing a notable transformation in its administrative procedures, attracting investors due to its advantageous market conditions, skilled workforce, and robust infrastructure The completion of land and floor connections to northern provinces is enhancing accessibility As a result, investment in Hanoi's projects is expected to increase, with numerous major investors actively engaging in developments within the city.

Hanoi has successfully attracted 6,625 eligible foreign investment proposals, amounting to approximately $48.7 billion Between 2016 and 2019, the city received 2,268 foreign direct investment (FDI) projects, totaling $13.689 billion in FDI capital, with these firms contributing $3.416 billion to the state.

In 2018, Vietnam's foreign direct investment (FDI) reached an impressive US$7.5 billion, marking a 2.23-fold increase from the previous year and the highest since the FDI encouragement policy was introduced three decades ago The FDI sector employs over 310,370 individuals, representing 11% of the workforce in enterprises Notably, foreign investors contributed approximately US$1.6 billion in capital immediately after changes in business registration, reflecting a 43.7% increase from 2017 Hanoi's industrial zones host investment projects from 25 countries, with Japan accounting for 60% of the registered capital, featuring significant projects from companies like Canon, Panasonic, and Yamaha, alongside investments from China, Korea, and Singapore.

In 2018, revenue is expected to reach 24,450 million USD, rising 25.1 percent from the previous year Export turnover in the province is anticipated to be $6,848 million USD, accounting for

Foreign Direct Investment (FDI) businesses contribute significantly to the economy, accounting for 49.8% of total export turnover, reflecting a 1.5% increase from the previous year Among the three economic sectors, FDI enterprises dominate exports, with state-owned enterprises at 30.8% and non-state enterprises at 19.8% In 2018, FDI's budget contributions were projected to reach $1,330 million, a 21% rise from 2017, representing 13.7% of the city's total budget revenue These businesses play a crucial role in enhancing both the volume and quality of the city's export products, which predominantly include advanced and high-tech items such as car electrical systems, camera components, software, vehicles, color flat-screen televisions, and motorbike parts.

Foreign companies investing in Hanoi have significantly enhanced the skills and management capabilities of local professionals and engineers A key strategic goal of attracting foreign direct investment is to create more job opportunities for the workforce Many employees benefit from advanced technical training and gain access to superior managerial qualifications, leading to a substantial increase in the employment of skilled technical personnel in the region.

The article emphasizes the importance of developing a skilled workforce in Vietnam's foreign investment sector, which is crucial for adapting to market mechanisms and supporting the country's industrialization and modernization efforts By the end of 2018, more than 295,000 personnel were employed in foreign-invested projects, with female employees representing approximately 58% of the workforce Additionally, the average monthly salary for workers in this sector exceeded 11.6 million VND, surpassing earnings in other business areas.

In 2019, Hanoi solidified its position as a leader in foreign direct investment (FDI) in Vietnam, attracting USD 8.464 billion, a remarkable 90.02% increase from the previous year The city realized a total foreign investment capital of USD 6.75 billion, with newly established and additional projects contributing USD 2.128 billion This included 871 new projects with investments of USD 1.39 billion and 180 projects that increased their capital by USD 738 million Overall, foreign investors injected USD 6.336 billion into Hanoi in 2019, showcasing a significant rise from the USD 7.501 billion attracted in 2018, marking a 2.18 times increase.

TIEU LUAN MOI download : skknchat@gmail.com and new investment in 2019 will also expand considerably in terms of the number of projects as well as capital investment

As of December 22, 2019, Hanoi has emerged as a leading destination for foreign investment, attracting $8.45 billion in capital, with a notable disbursement of $6.5 billion This represents a remarkable 74% disbursement rate, the highest in recent years Overall, the city has accumulated over $42.5 billion across 5,955 legitimate projects, with the total realized capital disbursed reaching $26.5 billion, accounting for approximately 62.3% of the nation's total investment.

In 2020, Hanoi ranked third in the country with a capital investment of $3.83 billion The city allocated $662 million for 464 newly licensed projects and $1.25 billion for 132 projects receiving additional funding, bringing the total investment to $1.28 billion.

Despite the challenges posed by the Covid-19 pandemic in the first nine months of 2021, Hanoi city maintained a positive outlook for commercial investment, attracting overseas investors The city's business sector contributed significantly to the economy, accounting for approximately 10% of total budget revenue, 12.6% of development investment capital, and 30% of employment, with a registered capital of 1.28 billion USD.

Hanoi's socio-economic development is underscored by its impressive import-export turnover, accounting for 45% of the city's total With a workforce of 350,000 individuals earning an average monthly salary of 12.7 million VND—surpassing the national average—Hanoi showcases a robust commercial investment climate This positions the city as a secure, attractive, and stable destination for international businesses and investors.

Hanoi's economic landscape features substantial investments across various sectors, including manufacturing and processing with a registered capital of approximately 332 million USD, scientific and professional activities at around 156 million USD, and wholesale and retail with 120 million USD Notably, countries such as Singapore, Japan, South Korea, and the United Kingdom have been key contributors to this investment growth, as reported by the Hanoi Department of Planning and Investment.

Electrical and electromagnetic industries receive 44% of investment, mechanical engineering receives 24%, and other sectors receive 32%, according to the city's industrial development plan (pharmaceuticals, processing agricultural products, food, garment, printing industry ).

As of December 2021, Hanoi's industrial parks have successfully attracted over 700 projects, comprising 303 foreign direct investment projects valued at nearly 6.1 billion USD and 399 domestic investment projects totaling around 18,000 billion VND Between 2015 and 2020, investment attraction in these parks reached 1.7 billion USD, surpassing the target by 130% and reflecting a 13% increase from the previous five-year period The contributions of industrial park businesses have significantly bolstered the growth of key industries in the city, reinforcing Hanoi's status as a leading global destination for investors.

Foreign Direct Investment (FDI) has significantly contributed to the socio-economic development of Vietnam, particularly in Hanoi However, it has not fully achieved the intended goals of attracting high technology The contributions are primarily in processing and assembly, with limited transfer of advanced machinery and techniques Additionally, FDI enterprises engage minimally in technology research and development, and there is a low dissemination of technology, business culture, and management practices Furthermore, some FDI companies are responsible for environmental pollution.

Chapter III: Directions and solutions to attract and effectively use FDI in Hanoi.

Objectives and orientations to attract FDI into Hanoi in the

1.1 Forecast of demand and ability to attract FDI in Hanoi

In Hanoi, realized investment capital is estimated to reach 2.3 billion USD in

2018 (up 43.7% from 2017), with roughly 1.6 billion USD supplied by foreign investors to acquire shares and dispersed as soon as the business registration agency changes shareholders/members.

In 2018, the projected revenue is set to reach $24.45 billion, marking a significant increase of 25.1% from the previous year Additionally, the province's export turnover is expected to hit $6.848 billion, representing 49.8% of the total export turnover and reflecting a growth of 1.5% compared to the same period last year.

Foreign Direct Investment (FDI) businesses play a crucial role in the economy, representing the largest share of exports across all sectors, with state-owned enterprises at 30.8% and non-state enterprises at 19.8% In 2018, the budget contributions from this sector were projected to reach USD 1,330 million, reflecting a 21% increase from 2017 and comprising 13.7% of the city's total budget revenue.

In addition, there are around 295,000 personnel working in foreign-invested firms and projects Female employees make up around 58% of the workforce.

Workers in the foreign investment sector earn an average monthly salary of over 11.6 million VND, surpassing that of other industries The city targets a 7-7.5% increase in Gross Regional Domestic Product (GRDP) by 2022, alongside a 10% rise in investment capital for social development and a 5% boost in export turnover.

In response to the challenges posed by the COVID-19 pandemic, Hanoi is committed to achieving "dual goals" of epidemic control and socioeconomic development The city's economic performance in the first five months of 2021 reflects its resilience, with international investments reaching 591.7 million USD and 35 projects securing VND 4,780 billion in non-budget investments This success is attributed to proactive leadership that anticipates the pandemic's impact on various sectors and actively engages with businesses to address their concerns Through effective strategies and communication, Hanoi aims to facilitate the recovery of production and business, laying a strong foundation for achieving ambitious goals in 2022.

From 2021 to 2025, and extending to 2030, Hanoi is poised for significant development, leveraging its expanded land and resource potential The city is strategically reorganizing industrial parks and clusters to align with its socio-economic growth plans Additionally, Hanoi is actively promoting corporate participation in innovative initiatives, aiming to enhance its market size and overall economic landscape.

Hanoi's investment in technological and social infrastructure, along with enhanced urban services, positions the city as an attractive destination for overseas investors By fostering a supportive environment for foreign firms, especially from developed countries, the government aims to boost urban infrastructure and high-quality services This strategy is expected to catalyze economic growth and promote foreign direct investment (FDI), creating a synergistic effect that will drive the city's socioeconomic development in the coming years.

1.2 Objectives and directions to attract FDI in Hanoi

Hanoi aims to attract between 30 to 40 billion USD in foreign investment, with disbursed capital expected to reach 20 to 30 billion USD from 2021 to 2025 To achieve this, the city will focus on selecting high-quality projects and competitive value-added goods from firms, targeting large-scale global unions Additionally, Hanoi will implement policies to enhance the development of supporting sectors, high-tech manufacturing, biotechnology, and environmentally friendly technologies Key areas of focus include information technology, agricultural growth, and food safety programs The city has set development targets for 2030 and a vision for 2050, emphasizing the creation of a sustainable capital.

The article emphasizes the need for Hanoi to develop a synchronized and contemporary social and technological infrastructure, aiming for harmonious growth that balances heritage conservation with economic advancement It highlights the importance of fostering a knowledge economy and environmental preservation while enhancing national defense and international connections The vision is to transform Hanoi into a "Green-Civilization-Modern" city, characterized by dynamism, efficiency, and competitiveness on both national and global stages This transformation seeks to create a high-quality living and working environment, promote engaging entertainment options, and establish a favorable investment climate, all while improving workforce capabilities and ensuring efficient investment procedures.

To effectively mobilize investment resources and foster business growth, the city prioritizes the development of high-quality human resources, research and development, and financial services Hanoi's socioeconomic strategy focuses on long-term growth, encouraging large technology corporations to establish R&D and innovation centers, akin to the Samsung Group's initiatives This approach leverages the fact that Hanoi hosts 82% of the country's scientific workforce, highlighting the city's potential for technological advancement and economic development.

Hanoi plays a vital role in the country's socioeconomic development, with foreign direct investment (FDI) being crucial for its growth Recent years, particularly from 2017 to 2019, have seen significant economic advancements and an improved investment climate, enhancing the city's capacity to attract FDI As Hanoi's reputation for attracting investment capital strengthens, future inflows into local enterprises are anticipated to rise Addressing infrastructural challenges and enhancing human resource quality and administrative processes will further bolster FDI growth The city has set ambitious targets for FDI firms to ensure continued financial influx and economic progress.

From 2021 to 2025, the gross domestic product (GRDP) is projected to grow at an average rate of 7.5% to 8% During this period, the total investment capital for societal development is expected to range between 3.1 and 3.2 billion dong Additionally, the digital economy is anticipated to contribute approximately 30% to the overall GRDP.

The region's total state budget revenue stands at approximately 1,405 trillion VND, while local budget expenditures are around 613.7 trillion VND To support the community's growth, an investment capital of over 3 billion VND is necessary.

As of now, the agriculture, forestry, and fishery sector contributes 2.27% to the GDP, while industry and construction account for 23.99% The service sector dominates with a significant 62.74%, and product tax minus product subsidies represents 11% In comparison, the 2021 figures were 2.24% for agriculture, 23.68% for industry and construction, 63.06% for services, and 12.02% for product tax minus subsidies.

Regarding priority areas to attract investment:

The city boasts several key sectors that align with overall growth trends, positioning it to attract investment and engage in the global value chain By leveraging its unique advantages and strengths, the city and its surrounding provinces can enhance regional development and economic collaboration.

First, invest in and create synchronous and contemporary urban technical infrastructure (transportation, smart cities, water supply and drainage infrastructure, and the environment).

The production and processing sector focuses on industries related to agriculture, forestry, fisheries, and foodstuffs By leveraging modern technology, these sectors aim to enhance efficiency and productivity in processing and production activities.

Solutions to enhance attraction and effective use of foreign

2.1 Solutions from the city government a

Foreign investors often find the administrative processes in Vietnam to be a major concern, contributing to a decline in venture capital in recent years Although the 2005 Investment Law is intended to treat domestic and international investors equally, significant implementation challenges remain that are difficult for foreign investors to navigate To enhance the effectiveness of foreign direct investment (FDI) attraction initiatives, it is essential to simplify these administrative procedures.

-First, renewing views on administrative procedures.

State agencies need to prioritize the investment and commercial operations of foreign-invested firms, focusing on their core interests and responsibilities They must recognize the importance of reforming administrative procedures to simplify processes for these businesses, ultimately enhancing their operational efficiency By streamlining administrative tasks, agencies can significantly reduce the time and costs associated with foreign investment activities Implementing innovative strategies will be essential in achieving these goals, ensuring that foreign investors receive optimal support and benefits.

-Secondly, continue to simplify administrative procedures in appraisal and licensing.

To enhance investment licensing and administrative processes, the City People's Committee should adopt "one-stop" and "one-stop" connection principles The Department of Planning and Investment will serve as the central authority for investment and cooperation, acting as the sole agency with access to the city's records This will streamline communication between investors and relevant agencies, ensuring prompt responses and facilitating smoother registration Additionally, it is essential to provide investors with clear information on the required documentation for investment license applications.

To enhance investment licensing and administrative procedures, it is essential to adopt "one-stop" and "one-stop" connection principles The City People's Committee recommends revising the list of projects requiring environmental impact assessments, aiming to reduce the number of reports needed and clearly identify exempt projects To minimize registration time and prevent the use of outdated, polluting technologies, appraisal agencies must conduct swift and accurate evaluations for necessary reports Additionally, these authorities should consistently gather information on innovative global technologies.

-Thirdly, create conditions for foreign-invested projects, after being licensed, to quickly deploy and soon go into production and business activities.

The project's execution involves several key processes, including land allocation, land clearing, compensation, construction, importation of materials and equipment, and environmental impact assessments State agencies play a crucial role in guiding enterprises to adhere to relevant laws and regulations while monitoring their construction activities In cases of legal violations, enterprises are first advised to rectify the situation, with restrictions applied only in serious or persistent cases The City People's Committee needs to promptly address these critical issues.

The Department of Natural Resources and Environment and Land is tasked with conducting a comprehensive cadastral measurement and mapping, while also optimizing all procedures related to land allocation and leasing Additionally, the Ministry of Natural Resources and Environment, along with relevant agencies, is urged to expedite the drafting of regulations concerning site clearance and the transfer of land use rights, particularly for projects situated outside of industrial parks and manufacturing zones.

To expedite the implementation of licensed foreign direct investment (FDI) projects, it is crucial to swiftly carry out compensation and site clearance Additionally, land rent should be postponed or exempted for projects facing delays or requesting to halt operations due to challenges Furthermore, issuing re-certifications to companies subleasing land in industrial zones will help accelerate the development of industrial parks.

Effective construction management procedures should adhere closely to the registered design, ensuring a well-organized approach without excessive interference State management agencies responsible for capital construction must fulfill their roles and responsibilities while streamlining processes for greater efficiency Additionally, it is crucial to prioritize the inspection and supervision of investment progress in compliance with established regulations.

- Fourth, the conduct of business operations of foreign-invested firms begins with tax payment, import and export activities, environmental protection, prevention, and control processes with state authorities.

Regulatory agencies are responsible for ensuring that businesses meet legal requirements regarding conditions and equipment, while also providing guidance on compliance Companies must adopt advanced procedures, including self-calculating and paying taxes, assessing eligibility for additional payments or tax exemptions, and registering their annual import and export plans alongside implementing amortization measures In Hanoi, state management agencies overseeing foreign direct investment (FDI) and local authorities across the country must engage in regular dialogues to address legislative policies, swiftly resolve business proposals, and enhance the efficiency of rules and procedures.

In the near future, the city must promptly review and assess the status of all local projects to implement suitable support and corrective measures Emphasis should be placed on addressing violations by foreign investors and swiftly resolving any emerging issues to facilitate these enterprises in overcoming challenges.

-Sixth, promulgate regulations on inspection and examination of foreign-invested enterprises.

Establishing a clear inspection regime for state management agencies is crucial to prevent arbitrary inspections and the criminalization of economic relations among businesses This approach ensures effective oversight while allowing for the enforcement of legal sanctions against businesses that violate the law.

Effective business inspections and examinations are crucial for ensuring compliance with the law, prioritizing the need for businesses to adhere willingly to regulations It is essential to prevent scenarios where companies exploit inspections to mask operational issues Illegal activities must be addressed through established procedures and penalties Additionally, coordination among state entities is necessary to enforce strict legal compliance while fostering a favorable business environment Furthermore, increasing investment in infrastructure is vital for supporting these efforts.

Infrastructure development and improvement is an important part of the process of improving the investment climate in order to attract foreign investment.

To maintain a healthy and competitive investment environment, Hanoi must quickly upgrade and enhance its existing industrial and urban infrastructure The city has developed specific strategies to achieve this goal.

To enhance production and business activities, it is essential to mobilize resources both domestically and internationally This involves implementing regulations that support the private sector and investing in critical infrastructure improvements, including transportation, seaports, telecommunications, electricity, and water supply Additionally, proactive measures must be taken to prevent power shortages that could hinder economic growth.

Focus on putting money into a variety of initiatives in the domains of post and telecommunications, as well as information technology, in order to build new services and network infrastructure.

Investing in key sectors such as culture, medical education, telecommunications, marine, and aviation is crucial for our nation's growth, particularly in light of our commitments upon joining the WTO To address urgent national needs, it is essential to implement proactive measures that exceed the required commitments, facilitating earlier access to investment opportunities in these vital areas.

Tiêu đề	Mobilize And Use Foreign Direct Investment Capital Of Hanoi City
Tác giả	Ly Huyen Ngan
Người hướng dẫn	Nguyen Thi Ai Lien
Trường học	Investment Economics
Thể loại	Thesis
Thành phố	Hanoi

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