Industrial parks and export processing zones with attracting foreign direct investment in Vietnam

negatively affecting the economic growth rate. Companies from countries in the region, which are important investors in Vietnam, have encountered financial difficulties and the direct consequence is that the flow of FDI into Vietnam has slowed down. Although in 2000 - 2001 there were general signs of recovery in the regional economy, for Vietnam alone, we have lost many advantages compared to some countries in the region. In addition, cumbersome administrative procedures and especially difficulties in site clearance have hindered many FDI projects. Some projects have been stalled for many years. These difficulties have also caused investors to tend to focus on industrial parks and export processing zones, which already have necessary infrastructure such as electricity, water, roads, etc. Therefore, FDI, which is the most important activity, determining the success or failure of the zones, has become even more important in the context of limited domestic investment and foreign investment capital flowing into Vietnam is no longer as vibrant as in previous years. In order to contribute to the research on issues related to foreign direct investment activities, this thesis with the topic "Industrial parks and export processing zones with the attraction of foreign direct investment in Vietnam" will partly answer the question that many people are interested in: how to increasingly attract foreign direct investment into established industrial parks and export processing zones?

2.Research status related to thesis topic :

Up to now, there have been many research works and articles by domestic and foreign authors on the issue of increasing foreign investment attraction in Vietnam. Particularly, there have not been many published documents on industrial parks and export processing zones. In the early 90s, when Vietnam began to develop the export processing zone model, many articles on export processing zones were published, including many

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Reference translation documents of some expert groups of research institutes such as the Institute of Foreign Economics, the Institute for Strategic Studies (Ministry of Planning and Investment). These are mainly translation works of an informative nature, introducing experiences about foreign industrial parks and export processing zones. Notably, there is currently a specialized magazine published monthly by the Ministry of Planning and Investment entitled "Vietnam Industrial Parks", specializing in providing updated information on the activities of industrial parks throughout the country. Among the research works on the development of industrial parks and export processing zones in Vietnam, the most prominent is the 1994 PhD thesis "Some issues on development and state management of industrial parks and export processing zones in Vietnam" by author Nguyen Xuan Trinh. In recent times, the situation of operation and development of industrial parks and export processing zones has changed a lot in both quality and quantity, requiring timely innovation in research and evaluation work.

3. Thesis research purpose:

- Explain the necessity of building and developing industrial parks and export processing zones to promote foreign investment attraction;

- Assessing the current status of foreign direct investment activities in industrial parks and export processing zones

- Propose some basic solutions to increase the attraction of foreign direct investment in industrial parks and export processing zones, considering this as one of the main measures contributing to promoting economic growth in Vietnam.

4.Research object and scope :

The thesis does not analyze foreign investment activities in general and does not evaluate the situation of foreign direct investment in some specific industrial parks and export processing zones, but considers and evaluates this activity in a comprehensive manner in the entire system of industrial parks and export processing zones in Vietnam.

In terms of time, the thesis focuses on the past ten years from 1991, the year the first export processing zone was established, to the present.

5.Research method :

The thesis uses dialectical materialism and historical materialism to study the problem. In addition, the thesis also uses some specific methods such as: scientific abstraction, method of combining analysis with synthesis, comparative statistics, forecasting and empirical analysis...

6.Scientific contributions of the thesis :

- Systematize theoretical issues on industrial parks and export processing zones.

- Analyze some international experiences in the development and state management of industrial parks and export processing zones.

- General assessment of all industrial parks - export processing zones in Vietnam, analysis of the current status of foreign direct investment (FDI) activities in industrial parks - export processing zones, pointing out the successes, limitations and problems in attracting FDI to industrial parks - export processing zones in Vietnam.

- Propose some basic solutions to increase foreign direct investment attraction in industrial parks and export processing zones in the coming years.

7.Structure of the thesis :

Thesis title: "Industrial parks and export processing zones with attracting foreign direct investment in Vietnam".

In addition to the introduction, conclusion, list of references and appendices - the thesis is structured into three chapters:

- Chapter 1: Theoretical and practical basis of developing industrial parks - export processing zones to attract foreign direct investment

- Chapter 2: Current status of foreign direct investment in industrial parks - export processing zones in Vietnam in the period 1991-2001

- Chapter 3: Basic orientation and some solutions for developing industrial parks - export processing zones to contribute to promoting foreign direct investment attraction

CHAPTER 1: THEORETICAL AND PRACTICAL BASIS OF DEVELOPING INDUSTRIAL PARKS – EXPORT PROCESSING ZONES TO ATTRACT FOREIGN DIRECT INVESTMENT

1.1. Concept of industrial park - export processing zone

1.1.1. Export processing zone :

The formation and development of EPZs in the world stemmed from changes in the economic and technical environment of the global economy after World War II, strongest starting in the years of the 1950s.

60. The trend of globalization taking place with increasing scale and speed has strongly promoted the process of trade and investment liberalization, creating a global market economy. Economies are increasingly dependent on each other and tend to open up, following the trajectory of the market economy. In developed industrial countries, a series of factors have appeared that seriously reduce the competitiveness of products in the world market, such as: increasingly high land prices, the development of industries that consume a lot of raw materials, standardized industries such as mechanical engineering, component manufacturing... that do not require high technology; increasing costs of transporting imported raw materials... Meanwhile, developing countries that have just escaped from the colonial yoke of imperialism are in a difficult situation in the process of economic development, increasing unemployment, lack of investment capital and foreign currency to exploit natural resources to build an independent economy. On the other hand, due to lack of capital, lack of advanced technology, lack of management staff and skilled workers with high qualifications, developing countries are unlikely to be able to fully build at once, nationwide, the necessary conditions and factors to have industrial products that are competitive enough in the world market. Here is the meeting point of the economic development needs of developed countries and developing countries . The urge to seek

Cheap labor and raw materials have encouraged developed countries to move their labor-intensive and resource-intensive industrial production facilities abroad, closer to those resources. In addition, by developing production facilities abroad, multinational corporations also solve the problem of environmental pollution - a challenge that is becoming increasingly serious in developed industrial countries. Developing countries, seeing their limitations and advantages, have tried to create a suitable economic environment to attract investment from outside to solve their economic bottlenecks, creating growth momentum for the entire national economy.

EPZs are a form of creating conditions to quickly exploit and promote the comparative advantages of a country or a region by actively participating in the international division of labor. Obviously, in terms of benefits and efficiency according to the theory of comparative advantage, EPZs are where the interests of developing countries and transnational corporations, the main source of foreign direct investment in the world today, converge.

Export processing zones are established to create an area specializing in the production of export goods, outside the trade and tariff regime of the host country. With this nature, there are currently many different understandings and definitions of the export processing zone model in the world. The most typical are the definitions of two international organizations, the World Export Processing Zones Association (WEPZA) and the United Nations Industrial Development Organization (UNIDO).

According to the WEPZA Operating Regulations, export processing zones include all areas authorized by governments of countries such as free ports, free trade zones, free industrial zones or any foreign trade zones or other areas recognized by WEPZA . According to this definition, export processing zones are tax-exempt areas.

According to UNIDO, an export processing zone is " an administratively and sometimes geographically limited area that enjoys a tariff regime that allows free import of equipment and all products for the purpose of manufacturing export products. The tariff regime is issued together with preferential legal regulations, mainly on taxes, to attract foreign investment..."; " The concept of an export processing zone includes the establishment of modern factories in an industrial park and a series of incentives to encourage investment by foreign businesses in the host country... ".

Thus, the concepts of UNIDO and WEPZA on export processing zones are different in the nature of economic activities. Vietnam's export processing zones are defined according to UNIDO's perspective. According to the Regulations on Industrial Parks, Export Processing Zones, and High-Tech Parks issued together with Decree No. 36/CP dated April 24, 1997, " Export processing zones are areas specializing in the production of export goods, providing services for the production of export goods and export activities, with defined geographical boundaries, no residents; established by decision of the Government or the Prime Minister ".

Export processing zones are an economic model that developing countries, especially Asian countries, have been using as an active tool to attract foreign investment and promote export-oriented industrialization. Export processing zones have been attractive to developing countries since the late 50s and early 60s and exploded as an economic development trend in these countries in the 70s and 80s. These countries found in the export processing zone model a suitable intermediate solution, allowing developing countries to strongly shift their economies towards export orientation. In general, based on the goals of establishing export processing zones to attract foreign direct investment, increase exports, create jobs, acquire advanced techniques and technologies, and learn management experiences from multinational corporations, the export processing zone model has become a dynamic economic entity.

First, reflecting special economic measures, policies, and laws aimed at economic growth, gradually integrating developing countries into the world economy. Among the above goals, it can be said that attracting foreign direct investment is the most important goal, the driving force that creates the premise for the remaining goals of the host countries.

However, not all EPZs established in countries have operated successfully, achieving the initial foreign investment attraction rate as expected by policy makers and investors. Only a few typical Asian countries are considered successful in this goal such as Taiwan, South Korea, Singapore, Hong Kong, Malaysia and China. The main reason is that this is an area with an abundant labor force, low labor costs, and is located on the maritime route connecting the ports and the most vibrant commercial centers in the world. Asian EPZs account for nearly 70% of the labor force in EPZs worldwide and although only accounting for a small part of a country's exports, the total export turnover of the EPZs of Taiwan, South Korea and Malaysia combined accounts for 80% of the export volume of all EPZs in the world. However, this success is really difficult to repeat in other developing countries. Many EPZs fail and fail to achieve their intended goals. There are many reasons for these failures:

- Firstly , there are too many EPZs established in a number of countries close to each other, creating a surplus market of concentrated EPZs with high density in an area with similar economic, social and geographical conditions. This situation leads to fierce competition to attract foreign direct investment between EPZs, forcing these countries to offer more concessions in finance and in some other areas, while not having time to create a favorable business environment and good infrastructure to attract investment activities.

Industrial parks and export processing zones with attracting foreign direct investment in Vietnam - 2

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