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Last updated: Monday, June 18, 2018


20 Years of Vinh Phuc Economy: Achievements from Innovative and Dynamic Thinking

Posted: Tuesday, December 27, 2016

With its potential and position, plus innovative thinking and dynamic investment attraction policies, Vinh Phuc province has become an effective destination for many major projects in 20 years since re-establishment, thus contributing to the success of many entrepreneurs, the growth of businesses and the prosperity of the locality.

New thinking in investment attraction
Vinh Phuc province was re-established in 1997 from the split of Vinh Phu province into Phu Tho province and Vinh Phuc province. Then, the province embarked on building an independent administrative unit with a lot of difficulties such as small natural area, and midland and mountainous terrain. As an agricultural province, its industry and service were not developed, companies used backward industries and achieved low economic efficiency; infrastructure was poor (6 communes did not have access to electricity, roads were not asphalted.)

After re-establishment, the province defined industrial development as the foundation and investment attraction as a driving force of economic development. Thus provincial government embarked on various solutions to create a favourable and attractive investment and business environment. From an idea to a point of view that “investors are citizens of Vinh Phuc and the success of enterprises is the success of the province,” Vinh Phuc province introduced a variety of appealing investment attraction policies.

Defining that administrative reform was the key to unlock an open investment environment, the province promptly enhanced the capacity of government at all three levels of province, district and commune, while introducing many public administration reform programmes and plans for specific periods and phases. Therefore, in 2007 when the country started administrative reform, Vinh Phuc had successfully applied the one-stop single-window mechanism. Investment projects licensed in Vinh Phuc province needed a third of regulatory time to be completed with highest publicity and transparency (investment licensing needed 3-5 days compared with 15 days provided in the law). In 2002, the province established an agency for administering industrial zones for investment promotion, consulting, appraisal and licensing. In districts with industrial zones, Vinh Phuc set up steering committees for site clearance and land compensation to quicken the implementation of projects. And, most recently, the Vinh Phuc Investment Promotion Agency (IPA Vinh Phuc) was founded to receive documents and supervise other bodies in delivering administrative procedures in the single-window mechanism and grasp emerging difficulties to report to the Provincial People’s Committee for resolution. Every year, the provincial government holds dialogues with local businesses in order to learn about their problems and introduce prompt solutions.

With its drastic actions, Vinh Phuc province created an attractive investment environment, evidenced by the increase in investment projects. The province had only eight foreign direct investment (FDI) projects and one domestic direct investment (DDI) project in 1998 and 856 projects in 2016, including 227 FDI projects with US$3.4 billion in total and 629 DDI projects with a combined registered capital of VND49.2 trillion, 55 per cent of which are operating effectively.

The province also took strong action in mobilising official development assistance (ODA) and achieved important results, especially in 2011-2015. The Provincial People’s Committee hosted regular meetings with business partners and central agencies every year.

To date, total ODA value in the province has amounted at US$177 million, of which US$123.7 million was managed by Vinh Phuc. In addition, the province successfully called donors for three projects with an expected value of US$350 million. ODA and NGO funds have contributed significantly to adding investment capital to local development, building an attractive investment environment, upgrading infrastructure, raising people's living standards, and reducing environmental pollution.

Interests in supporting economic sector development
In addition to foreign investment, the Provincial Party Committee and the Provincial People’s Committee defined that domestic enterprises, particularly the small and medium enterprises (SMEs), are important forces to achieve sustainable development goals. The province issued a series of preferential investment encouragement and business support policies appropriate to each stages of development, particularly Resolution 04/NQ-TU of the 15th Provincial Party Congress and Plan 4589/KH-UBND of the Provincial People’s Committee on SME development to 2020.

As local enterprises have faced numerous difficulties arising from the global economic downturn in recent years, the province has directed the application of various measures to better the investment environment, improve the provincial competitiveness, step up administrative procedure reform, maintain the one-stop single-window mechanism at the district level, operate the government - business dialogue information portal to timely collect and answer questions from enterprises, intensify examination and inspection of investment projects, eradicate slow-moving projects, and open the “business coffee hours” on Fridays - an interactive forum for enterprises and officials. Therefore, local companies have created more jobs and paid more taxes to the province. With strong actions from all tiers of government, 20 years after re-establishment, the province had 91 enterprises with a combined registered capital of VND57 billion in 1997 and 7,394 companies with a registered capital of VND55.9 trillion in 2016 (an increase of 981 folds).

Carrying out Party and State policies, Vinh Phuc province set up the Business Reform and Development Committee to advise the provincial government on restructuring, reform and performance improvement of transformed State-owned enterprises. The province has reshuffled 48 companies (41 companies and seven affiliates). At present, Vinh Phuc has 10 State-owned companies, including six wholly State-owned enterprises and eight partially State-owned enterprises. The State divested five out of seven companies and the remaining two have planned for public offering. Vinh Phuc province was praised by the Government of Vietnam as one of two provinces with best SOE equitisation in the country.

The province has also focused on developing collective and cooperative economies. At present, it has 714 cooperatives, with some operated in new models. Cooperatives are playing an important role in restoring and developing traditional cottage industries, generating jobs, increasing incomes for people in rural areas, and speeding up economic restructuring process and labour structure.

Vinh Phuc province is always consistent with the viewpoint that “The property of investors in Vinh Phuc province is the property of Vinh Phuc province; products of investors in Vinh Phuc province are the brands of Vinh Phuc province; difficulties of investors are difficulties of Vinh Phuc province; the success of investors is the success of Vinh Phuc province.” The province is confident that Vinh Phuc will continue to accompany and support businesses for shared prosperity and growth.

In 20 years since re-establishment, to date, the province’s economy has progressed strongly. The average annual growth was over 20 per cent.
In the 1997-2016 period, the province’s gross regional domestic product (GRDP) reached 15.37 per cent a year, of which agriculture, forestry and fisheries expanded 5.67 per cent; industry and construction grew 23.89 per cent; and the service sector rose 10.39 per cent. Per capita GRDP climbed from only VND2.18 million in 1997 (about US$180) to VND72.3 million (US$3,200) in 2016.
The province’s economic structure shifted rapidly, with the share of industry and construction rising from 18.4 per cent in 1997 to 61.97 per cent in 2016; the share of service declining from 36.5 per cent to 27.78 per cent; and the share of agriculture, forestry, fisheries slipped steadily from 45.1 per cent in 1997 to 10.25 per cent in 2016.
From a central budget-dependent province, Vinh Phuc has emerged to be one of the biggest budget collectors in the country. The State budget revenue rose from VND114 billion in 1997 to over VND1 trillion in 2002 and reached the point of spending and collection balance from 2004. The value exceeded VND10 trillion in 2009, over VND20 trillion in 2014 and estimated VND28.5 trillion in 2016 (nearly 251 times more than that in 1997).

Dang Xuan Vinh

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