SOME FEATURES OF STATE MANAGEMENT FOR FOREIGN DIRECT INVESTMENT IN THE CONTEXT OF INDUSTRIAL REVOLUTION 4.0 IN QUANG NINH PROVINCE, VIETNAM

ABSTRACT

Besides other capital sources, Foreign Direct Investment (FDI) is an additional financial source, strongly contributing to the development of political institutions and economic institutions. Based on benefits such as creating changes in society, increasing employment, transferring technological and production techniques, etc., developing economies consider the attraction and management of FDI as the driving force to improve market conditions and investment environment. Quang Ninh is one of provinces in Vietnam that is leading in attracting FDI, however, the management and utilization of this capital is still inefficient, causing limitations in the contribution and spillover effects of this region to the economic development of Quang Ninh province. By applying methods of analysis - synthesis, sociology... authors believe that studying the current situation of FDI management in Quang Ninh will be a necessary basis to promote strengths and limit weaknesses in the FDI management of the province, promoting the province to a higher position in the field of FDI, and solving social problems.

АННОТАЦИЯ

Прямые иностранные инвестиции (ПИИ) являются дополнительным финансовым источником, вносящим значительный вклад в развитие политических и экономических институтов. Основываясь на таких выгодах, как создание изменений в обществе, увеличение занятости, передача технологических и производственных технологий и т.д., развивающиеся страны рассматривают привлечение и управление ПИИ в качестве движущей силы для улучшения рыночных условий и инвестиционной среды. Лидирующей провинцией Вьетнама по привлечению ПИИ является Куангнинь, однако управление и использование этого капитала по-прежнему неэффективны, что приводит к ограничениям и побочным результатам этого экономического развития провинции. Применяя методы анализа - синтеза, социологии, авторы полагают, что изучение текущей ситуации связанной с управлением ПИИ в Куангнине станет фундаментом для укрепления сильных и ограничения слабых сторон в управлении ПИИ, а также продвижения провинции на более высокие позиции в области ПИИ и решения социальных проблем.

Keywords: FDI, State Management, Quang Ninh province, Industrial Revolution 4.0

Ключевые слова: ПИИ, Государственное управление, провинция Куангнинь, промышленная революция 4.0.

Introduction

FDI plays an important role in supplementing capital for investment in socio-economic development of many countries and provinces. As of September 2022, this type of business has only contributed more than 5% (VND 1270/25190 billion) to GDP with 153 FDI projects carrying out production and business activities with a total investment capital above. 10.33 billion USD [4]. Although FDI is an important economic sector for the economic development of Quang Ninh, its contribution is still quite modest and has not really contributed to increasing production capacity, economic restructuring, and promoting the transformation of technological process. This problem results from many different reasons such as internal problems of the province, national policies, competition of neighboring localities...,but based on the study in evaluation criteria of efficiency of FDI [2; 3] the management of FDI is regarded as one of the causes contributing to promoting or pulling down the economic development of a province. Through analyzing the strengths and weaknesses of Quang Ninh province in FDI management, it is possible to partly understand these contents.

Objective

The objective of this study is to assess the status and effectiveness of state management in the FDI sector in Quang Ninh province.

Methods

In the research, this study uses a combination of research methods: from desk research to document analysis, combined with investigation, survey and expert interview.

Results

1. Some results achieved in the state management of foreign direct investment in Quang Ninh

State management of the FDI sector by the Quang Ninh government in the period 2010-2020 has made many positive changes in the direction of creating and serving and achieved some initial but very important results and spreading influence, which contributes to the development of the FDI sector in the right direction, stably and sustainably. Some of the striking results can be summarized as follows:

About organizational structure: The organizational structure of the IPA Board, through many adjustments, has been streamlined, operating effectively, efficiently, and highy independent. The contingent of officials and civil servants performing official duties has appropriate professional qualifications, good moral qualities, professionalism and responsibility to meet the requirements of the task. The decentralization and authorization in the state management of FDI ensures reasonable, clear clues, sufficient authority and real power to fulfill the assigned functions and tasks.

Regarding FDI planning: Basically, Quang Ninh has completed the planning of FDI areas in industrial zones and economic zones in many localities in the province, especially FDI areas; the formulation and adjustment of the planning of the FDI sector in accordance with the current situation, creating a foundation for attracting investment; the organization of the implementation of the planning is carried out flexibly, combining the implementation of the FDI sector already in the planning with the review and additional adjustment of the FDI sector according to the development conditions and requirements of the province; minimize the status of asynchronous planning implementation, causing waste of investment resources; The plan for construction and development of the FDI sector is formulated in a timely manner, with basic vision and depth. Enterprises in the FDI sector basically strictly follow the planning, rarely violating the planning.

Regarding support for the FDI sector: The State's preferential policies and mechanisms for FDI have gradually been concretized by the Quang Ninh provincial government to be suitable for the real situation, notably the mechanism of attracting investment according to the requirements of the FDI sector in public-private partnership (PPP) form, making good changes, achieving many positive results, creating confidence and persuasion for investors to invest in the province's FDI sector. The occupancy rate of FDI reached over 80%, higher than the national average (over 70%).

Regarding the settlement of administrative procedures: Basically, administrative procedures have changed towards simplification, publicity and transparency; diversified methods of exchange and connection between state management agencies, enterprises and FDI sector; the number of administrative procedures resolved at the provincial public administration center reached a high rate (92%), in which the number of administrative procedures carried out according to the 5 principles of processing documents at the right time and right place at the provincial administrative center also reached more than 95% of the total number of administrative procedures performed at the Center. Notably, starting from June 1, 2022, the Provincial Public Service Center has cooperated with departments, agencies and sectors to officially digitize records and results in receiving and handling administrative procedures.

Through the survey of 4 groups of criteria: access to services; public administrative procedures; results of public administrative service provision and reception; handling the comments, reflections and recommendations conducted by the researcher (Appendix 1), it can be seen that the resolution of administrative procedures has changed in quality in the direction of positively serving enterprises. The evaluation results of the FDI sector, especially enterprises, on the quality of management of the IPA Board in the years from 2015 to 2020 (Appendix 2) also showed a significant improvement. This confirms that the Quang Ninh provincial government is well implementing administrative procedures for enterprises in the FDI sector.

In addition, the inspection and supervision of the administrative procedure settlement process of officials is conducted regularly, openly and transparently to ensure that administrative procedures are resolved conveniently and quickly, cutting costs and time, reducing interference, negativity, bureaucracy.

Regarding the inspection and examination: It can be seen that the inspection, inspection and supervision of activities in the FDI sector and FDI enterprises are carried out seriously and in accordance with the process, which has contributed to detecting and correcting, controling and handling violations, creating a transparent investment environment, healthy competition, ensuring the harmony of interests for enterprises, employees and the State.

2. Limitations in state management of FDI areas in Quang Ninh province

2.1. Regarding the formulation and implementation of the development planning of the FDI sector

Currently, the new FDI sector development planning focuses on industry and field development orientations, not associated with value chains..., not located in the grand plan connected with Industry 4.0 specifically. The formulation of development plan of the FDI sector to 2030, with a vision to 2050, does not have many scenarios close to the development ability in the direction of increasing linkages between FDI enterprises. The capacity of the planning appraisal agencies as well as the staff working in consulting and appraising FDI planning is not up to the task, and is also influenced by external factors. The frequent addition and modification of FDI planning also shows that the quality of the planning has not met the development requirements and is quite limited in vision.

2.2. Regarding support to establish and invest in the FDI sector

The policies to support the establishment and investment of FDI in the province also revealed some shortcomings. Specifically:

(1) Regarding investment incentives in FDI: Although there are many different policies, Quang Ninh province still lacks specific mechanisms and policies, capable of creating breakthroughs in intellectual capital development and scienctific and technological transfer in the context of Industry 4.0 when the competitive pressure in attracting investment is increasing. Meanwhile, investment projects to build TA structures inside and outside the FDI barrier have not been prioritized properly. Incentive policies for investors in the FDI sector put forward according to specific characteristics have not been effective, especially still causing tax evasion, transfer...

(2) Regarding investment promotion: The professionalism of the departments involved in the management process is not high, and the effectiveness is limited. The specialized staff is limited in foreign languages (especially Japanese, Korean...). Administrative procedures, activities and support services have been improved but do not show efficiency. The number of projects in the field of technology and intellectual capital that are motivational and expanding influence is still negligible. FDI projects have small scale and low efficiency mainly from China. There is also a situation where many potential investors come to find out, just stopping at the research and field survey step...

(3) Regarding business support: Currently, policies to support and prioritize investment in the FDI sector still reveal many shortcomings, specifically:

- Support for site clearance costs: It can be seen that the level of support in the form of an advance from the budget for FDI investors 30% of the cost of compensation, site clearance and resettlement has too many binding conditions, so it has not worked effectively in practice.

- Support vocational training for investors of secondary FDI projects: The level of support according to regulations is low, not encouraging enterprises to invest in vocational training for their own workers.

- Support for technology transfer: The level of support implemented according to Decision No. 3799/2010/QD-UBND dated December 15, 2010 of the Provincial People's Committee is outdated and not suitable for the current situation.

2.3. Regarding the implementation of administrative procedures for enterprises in the FDI sector

Through the survey on the group of criteria “Castlemen and civil servants directly handle the work” (Appendix 1), it shows that the quality of job handling is still limited, expressed at the level of “satisfied” and “very satisfied” with 6 indicators belonging to the low group (from 62.3 to 81.1%), special attention should be paid to the quality of answers and solutions, preferences of officials and civil servants directly performing official duties on issues of concern to enterprises. This shows that the capacity and service attitude of this team is still far from the task requirements. In addition, the survey also shows that the arrangement of equipment at the location where businesses access services is not really reasonable and convenient.

The Department of Planning and Investment's transparency index of access to information needs to be improved when it ranks third in 2021. However, this progress is not sustainable, and there are still potential risks of lag. The Department needs drastic and creative solutions to maintain stability and improve this index.

2.4. Regarding the implementation of regulations of law in the FDI sector

In the period 2010-2020, the implementation of the provisions of the law on labor and environment still reveals some shortcomings and limitations that need to be addressed, specifically:

- Regarding labor: There is still a situation that some enterprises have not strictly and fully complied with legal regulations such as: areas of social insurance, late payment of workers' wages, not voluntarily strictly implementing regulations on fire prevention and fighting. ...The income and living standards of workers are still low. Besides, there is a serious shortage of housing for FDI workers, and there are potential risks to security, order and social evils.

The solutions to mobilize and promote human resources for FDI in the province have not been really effective. Although the distribution of vocational students after high school has been improved, the rate is still low (about 30%), making vocational training difficult. The implementation of the policy to support vocational trainees on the list of training encouragement of the province in the period 2016 - 2020 has not reached the target. The operation of vocational colleges is not effective [1].

- Regarding the environment: The regulations and sanctions to deal with violations are not strict enough, leading to the situation that enterprises are willing to accept fines for violations so that they do not have to invest in the construction of wastewater and waste treatment zones which is very costly. There are also some local hot spots of environmental pollution in the FDI area. There is a situation of pushing responsibility, respecting, avoiding due to fear of affecting the diplomatic relations of the province when detecting violations of enterprises on the environment, leading to a lack of drastic measures in handling violations.

3. Causes of existence and limitations

3.1. Objective reasons

- The system of legal documents regulating state management for FDI still has shortcomings, especially there are no documents to adjust state management in the direction of promoting intellectual capital and comprehensively meeting the context of Industry 4.0, especially still confused. Difficulty in choosing the appropriate management model and method: (1) Regulations on authorization for IPA committees still have many vague points, leading to the extent of IPA authorization for localities in the province is still limited and faces many difficulties. (2) The removal of inspectors in the organizational structure of industrial parks and IPAs to control and manage FDI while still having human resources to perform other tasks will reduce the effectiveness and efficiency of state management because of fragmented force. Some provisions of specialized laws and central guidance on decentralization and authorization of state management for FDI are still unclear; Provincial documents on state management by domain have not been fully institutionalized in accordance with specialized laws, so they must be regularly amended and supplemented;

- The current mechanisms and policies for FDI are not complete and strict, regularly revised and supplemented, reflected in the following aspects: (1) policies on development of the FDI sector, institutionalization, and policies. books for each field associated with specific Industry 4.0 are still slow; lack of breakthrough policy mechanisms, making a difference in the context of Industry 4.0; (2) regulations on compensation and site clearance for FDI projects are still inadequate and not close to actual conditions; (3) The current incentive policies for investment in building housing for workers are not strong and attractive enough.

Although the State's policies for the period 2010-2020 have been stable, they still need to be adjusted and changed to suit the general socio-economic development situation of the country and the dynamic and breakthrough development of Quang Ninh province. This also makes the government of Quang Ninh province passive, having to change planning and plans, causing difficulties for investors. Strong competition from developing countries in the region and the impact of economic globalization create many challenges for FDI development as well as state management of FDI, which causes the fierce market competition in the fields of export, labor, technology...

- Unfair competition between provinces and cities in the country, stemming from local interests in order to attract investment in the local FDI sector at all costs, inevitably leads to hot and unsustainable growth, posing potential threats that to negatively affect the investment and business environment.

- FDI enterprises have not voluntarily complied with the law. Some enterprises only promote economic benefits, have not seriously implemented social responsibilities, creating barriers and causing difficulties for state management of FDI.

3.2. Subjective reasons

(1) Group of causes related to direction, administration and coordination

- The management is not really scientific and effective, which is considered one of the main reasons leading to limitations in the state management of the FDI sector of the People's Committee of Quang Ninh province. There is a worrying situation in which violating enterprises are slow to be treated, and some administrative procedures are slow to be resolved ... partly stem from the above reasons. Administration and efficiency in the administration of the government also lead to many shortcomings and limitations in the state management of FDI, such as: status of research and development of FDI planning based on proposals and subjective wishes of private investors; inconsistencies between sectoral plans; the lack of diversity and efficiency in business support activities and services; ineffective solutions to channelize vocational training, provide enough labor for the FDI sector... The above weaknesses have made the province's FDI sector lose its competitive advantage compared to neighboring localities, especially compared to Hanoi and Hai Phong.

- The decentralization, authorization, mechanism of assignment and coordination among departments, branches and localities are not synchronized and consistent throughout the province. Therefore, there is still an overlap in direction, management, administration, extrusion of responsibility between management agencies when violations related to FDI occur, reducing the effectiveness and efficiency of state management, making it easy to arise “asking – giving” mechanism, causing troubles for enterprises. Authorization mechanism is not consistent at some places and times, and there is a state of emotional authorization.

- Forecasting capacity of a number of departments, branches and localities is still limited, not following up with and updating new orientations in FDI development of the province, lacking initiative and creativity in advising, coordinating and inspecting , supervision, lack of drastic in implementing the direction of the Provincial People's Committee, leading to the situation that state management has not actually created the necessary synergy to keep up with the development momentum of the FDI sector. Awareness of the importance of sustainable development and environmental protection responsibilities of state management agencies and FDI enterprises is still limited, including the responsibility of the head.

(2) Group of causes related to the quality of FDI management staff: IPA Board, the agency directly performing state management tasks for the province's FDI sector, currently has 23 staffs and contracts, formally and professionally trained, but still show weaknesses in foreign languages, without a strategic vision. The quantity distributed in each part is sufficient in quantity but the quality does not meet the actual requirements. Due to the pressure of downsizing, the number of people directly managing, receiving and handling administrative procedures related to FDI decreased, and there were not enough human resources to completely solve all arising jobs and administrative procedures, which is quite cumbersome. The public service ethics of officials, cadres and civil servants of the Board is also a very important factor, directly affecting the quality of state management and the provision of public administrative services.

The survey results (Table 1) show that, because all administrative procedures related to FDI are received and handled at the Provincial Public Administration Center, the assessment of staff quality is also affected by the spillover effects of other related departments, ie spiritual benefits, good general service attitude and vice versa. With a province currently leading the country in terms of provincial PCI like Quang Ninh, it is still necessary to continue to improve the professional capacity, service attitude and sense of responsibility of this team.

An inadequacy that needs to be tackled is that although the Project on Job Locations has been developed, there is still a situation of arranging people to work in some inappropriate positions: Investment Promotion Department (with 08 members, there are 06 members). experts who do not know specialized foreign languages), Investment Advisory Department (with 05 members, only 01 member belongs to Foreign Economic Relations and 01 is fluent in foreign languages), Investment Support Department and Offices (especially with professionals who are still elementary). In addition, the specialized planning staff of the Board is still limited in vision, lacks advanced technology, has not reached the desired quality, lacks sustainability and long-term vision.

(3) The group of causes related to the propaganda and guidance of enterprises in law enforcement

Due to the lack of effective propaganda and guidance measures, the province's FDI enterprises have difficulty in capturing information and monitoring the management process of state agencies. Some business leaders are not fully aware of the meaning and importance of strictly complying with the provisions of the law on investment, construction, social insurance, environmental protection... while regulating sanctions. Sanctions for violations of enterprises are still low, not enough of a deterrence, leading to some very common violations such as: not contributing enough capital as committed, not reporting when moving headquarters, late paying taxes, social insurance ... The work of propagating and disseminating the law of enterprises to workers is still formal, not clearly defined goals and criteria, not really attached to the interests of employees.

(4) The group of causes related to the quality of human resources and the training and retraining of human resources for the FDI sector

Human resources and basic technical skills of workers in the FDI sector of the province are “lack” and “weak”, mainly unskilled, cheap, low-skilled workers. The rate of trained workers is not high, there is a shortage of technically qualified workers for the FDI sector; a part of laborers does not want to work in the FDI sector because of the constraints of discipline, time, lack of cultural institutions and worker housing. The province also does not have an investment strategy to build a team of businessmen capable of serving, on par with cooperation partners, leading to limited capacity and experience of investors, especially investors. Infrastructure is quite common. This is also a major barrier to the policy of attracting high-tech investment projects to FDI.

The system of vocational training institutions is large, widely distributed throughout the province, but not strong. Proactivity and flexibility are limited. The linkage and coordination between vocational training institutions and employers have not been paid attention and low efficiency. The ability to forecast labor supply and demand in the FDI sector of industries and localities is not good, and there are no effective policies and timely measures to attract laborers to study and work in the FDI sector. With the rapid increase in labor demand in the FDI area, despite the active support from the authorities at all levels, the number of laborers working in the FDI sector over the past time has not yet met the demand of enterprises.

CONCLUSIONS

For Quang Ninh province, FDI plays a crucial role in promoting capital market, the development of manufacturing industry and creating a boost for economic growth for many years now. However, the use of FDI inflows in particular and the management of the FDI sector in general in Quang Ninh province still have many points that need to be improved such as: institutions and legal documents still have shortcomings, especially the lack of documents on adjustment of FDI management in the direction of promoting intellectual capital and comprehensively meeting the context of Industry 4.0; have not really chosen the right model, suitable management method; lack of science in effectively operating management; decentralization, authorization and coordination among departments, branches and localities are not synchronized and consistent throughout the province; forecasting capacity of some departments, branches and localities is still limited, not keeping up with and updating new orientations in FDI development of the province; The foreign language and professional skills of the staff performing the tasks of FDI management are limited and lack a strategic vision. Therefore, in the coming time, Quang Ninh province should have some solutions to thoroughly handle shortcomings and limitations in FDI management; building and improving provincial management capacity through the application of intellectual capital criteria and building a full scenario of the possibility of FDI development in the context of the industrial revolution 4.0; learn management capabilities from a number of domestic and international provinces and cities, contributing to increasing the quality of management in the period of 2023-2030.

APPENDIX 1

REPORT RESULTS OF SURVEY QUESTIONS NO.1

Regarding the level of satisfaction of investors and FDI enterprises with

State management work of the IPA Board

I. General Information

1. Number and name of enterprises distributing questionnaires: 88.

Number of votes collected: 88

2. Survey subjects: 88 FDI enterprises.

II. Summary of results

Question 1. At which agency did you submit the application, handle the work and receive the results?

 At the provincial public administration center: 100% (88/88)

Question 2. How many times do you go back and forth during the process of solving work (from the first time you come to the office until the time you receive the results)?

 1 time: 70.5% (62/88)                                                  2 times: 15.9% (14/88)

 03 times or more: 4.5% (4/88)

Specific reasons for having to go back 3 or more times: Due to an incorrect procedure, it must be completed again.

Question 3. Does the officer cause any difficulty to you in the process of solving work?

 Yes: 5.9% (5/88)                            No: 94.3% (83/88)

Question 4. Do you have to pay extra money in addition to the prescribed fee/fee?

in the process of problem solving?   

 Yes: 4.5% (4/88)                            No: 95.4% (84/88)

Question 5. Does the agency give you results on time?

 On time: 80.6% (71/88)  Sooner than scheduled: 11.3% (10/88)

 Late appointment: 6.8% (6/88)

Has the agency informed you of the delay in appointment?

 Yes:100% (88/88)                                            No: 0%

Question 6. In order to improve service quality for investors and FDI enterprises in the coming time, in your opinion, the State management agency should pay attention to the following content? (preferably choose 3 of the contents below)

• Continue to improve and simplify administrative procedures: 39.7% (35/88).
• Improve communication attitude of civil servants: 28.4% (25/88).
• Improving the capacity of civil servants to solve problems: 27.2% (24/88)
• Some other content: 4.7%

Question 7: Could you please give your assessment of the timeliness of the information on the website of the Quang Ninh Investment Promotion and Support Board (investinquangninh.vn).

• Very timely: 36.3% (32/88)
• Timely: 51.2% (45/88)
• Relatively timely: 9.1% (8/88)
• Not timely: 3.4% (3/88)

Question 8: Could you please give your assessment of the completeness of information on the fields of state management on the website of the Quang Ninh Investment Promotion and Support Board (investinquangninh.vn).

• Very complete: 47.7% (42/88)
• Full: 43.1% (38/88)
• Relatively complete: 8% (7/88)
• Incomplete: 1.2% (1/88)

Question 9: Would you please give your assessment of the convenience in accessing and exploiting information on the website of the Quang Ninh Investment Promotion and Support Board (investinquangninh.vn).

• Very convenient: 51.2% (45/88)
• Convenient: 34.1% (30/88)
• Relatively convenient: 12.5% (11/88)
• Not convenient: 1.2% (1/88)

Question 10: Please indicate your level of satisfaction with the following: (check the box of your choice)

APPENDIX 2

RATING THE COMPETITIVE INDICATORS OF DEPARTMENTS, BOARDS, QUANG NINH PROVINCE IN 2020, 2021

1. Ranking of the provincial competitiveness index (DCCI) in 2020

2. Ranking of the provincial competitiveness index (DCCI) in 2021

Source: Compiled by the author

Table 1.

Survey results on the quality of cadres and civil servants

Content of the review

Source: The author summarizes from the survey results in Appendix 1

References:

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