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Investment Capital Structure by Attractive Sectors and Industries


Thuy Van

42.43%

54.26%


3.31%


Korea China Vietnam


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Investment Capital Structure by Attractive Sectors and Industries


Phu Ha


21.26%



8.14%



59.83%

9.41%



1.37%




Korea Japan

America

Vietnam

China



Trung Ha

100%

Vietnam


60.9

Cam Khe


3%



24.77%


14.30%


Korea

China

Vietnam



1.12% White Crane


98.88%


China Vietnam



2.16%

Dong Lang

23.60%





56.98%

17.35%




Korea

China

Singapore Vietnam



Figure 3.9. Investment capital structure by region

(Source: Summary report of Phu Tho Provincial Management Board 2015-2020)

Through table 3.13 and figure 3.9, we can see that the investment projects in the industrial parks of Phu Tho province are mostly domestic investment projects (96 projects, equivalent to 52.46% of the total number of investment attraction projects), foreign investors account for 47.54% of the total number of investment projects. Among the foreign investors in the industrial parks in Phu Tho province, investors from Korea account for the highest proportion with a total of 69 investment projects (37.7%) corresponding to a registered capital of 880.06 million USD, mainly concentrated in Thuy Van Industrial Park and Phu Ha Industrial Park, Dong Lang Industrial Park. In addition, there are 14 investment projects from China (equivalent to


with an investment capital of 10.42 million USD), 02 investment projects from Japan (29.5 million USD), 01 investment project from the US (4.95 million USD) and 01 investment project from Singapore (17 million USD). Thus, apart from Korea and China, other countries investing in industrial parks in Phu Tho province are very few.

Regarding the structure of investment capital by territory in each industrial zone, Phu Ha Industrial Zone and Dong Lang Industrial Zone attract diverse capital sources from countries, of which Phu Ha Industrial Zone attracts investment projects from countries such as Korea, China, the US, Japan and Vietnam. Dong Lang Industrial Zone also attracts investment capital from 3 countries outside of Vietnam: Korea, China and Singapore. The remaining industrial zones mostly have capital from Korea and China. In particular, although Trung Ha Industrial Zone was established in 2015, it is still 100% domestic investment capital, Bach Hac Industrial Zone also has only one FDI investment project from China.

Although the local government and the Management Board of Industrial Zones have been very active in promoting investment to diversify investment in many forms such as compiling investment promotion documents (investment information brochures) in 5 languages: Vietnamese, English, Korean, Japanese, Chinese; actively participating in investment promotion conferences of the province, domestically and abroad such as: Australia, New Zealand, Korea, China, ... but basically still have not really attracted diverse FDI capital sources from different regions and territories.

e. Investment capital structure by project sector and industry

The structure of investment capital in industrial parks in Phu Tho province by field and industry, investment projects mainly focus on industries such as: mechanics, assembly, electronics, construction materials, textiles, footwear, food, pharmaceuticals, agricultural and forestry processing, supporting industries, etc. Especially in recent years, the capital structure has tended to shift from attracting projects in the fields of mechanics, assembly and construction materials to electronics. Because this is a field that uses modern technology, attracting capital with a large proportion, in line with the policy of the province's investment promotion fields, which is to selectively attract production and business projects.


The business is focusing on environmentally friendly projects, with high technology content, using less energy, resources and increasing the quality of human resources. However, besides that, industries such as textiles and footwear are industries that require a lot of labor and cause environmental pollution. Although their proportion has also tended to decrease, on average they still account for about 9.85% of the total capital attracted for investment.

Table 3.14. Investment capital structure by attractive sectors and industries

Unit: %


Field, profession

Year

2015

Year

2016

Year

2017

Year

2018

Year

2019

Year

2020

Mechanical and assembly industry

29.28

28.25

30.05

29.38

25.78

28.45

Electrical and electronic industry

24.58

23.06

23.86

22.76

25.48

32.18

Construction Materials Industry

25.32

28.47

29.54

31.24

27.56

25.00

Textile and footwear industry

10.08

12.58

8.56

10.28

9.09

8.48

Other industries

10.74

7.64

7.99

6.34

12.09

5.89

Total

100.00

100.00

100.00

100.00

100.00

100.00

(Source: Summary report of Phu Tho Provincial Management Board 2015-2020)

3.2. 3. 3. Evaluation of factors affecting investment decisions in industrial parks

To mobilize investment capital for industrial zones, in addition to capital from the State budget for infrastructure, it is also necessary to mobilize capital from investment projects to develop production and business in industrial zones. Therefore, considering the factors affecting the investment decisions of investors in industrial zones is the basis for proposing appropriate capital mobilization methods.

a. Influencing factors

Based on the theoretical basis, the studies on factors affecting investment capital mobilization (input mobilization) in chapter 1, the thesis serves as a basis to determine the factors affecting the investment decisions of investors in production and business in industrial zones (how to use output capital). The thesis builds a research model with factors affecting the investment decisions in industrial zones in Phu Tho province including:


Investment infrastructure (CSHT): Enterprises decide to invest when the infrastructure of industrial parks meets requirements such as convenient transportation, can take advantage of infrastructure connections with neighboring provinces to avoid duplication and waste of resources. Hard infrastructure must be synchronized with the quality of accompanying services (electricity, water, road maintenance, ...) In addition, logistic infrastructure such as customs, domestic customs clearance, and transportation are also very important, because this is the bloodline system that helps businesses operate smoothly.

Investment incentive policies (UDDT): businesses are interested in a clear and transparent policy system that is quickly implemented, attractive investment incentive policies on land rent, corporate income tax, support for site clearance costs, and preferential credit for investment in building infrastructure in industrial parks.

Living and working environment (MTS ) : businesses are interested in the responsiveness of the system, education, health care, living environment, community cultural activities, entertainment, cultural similarities and friendliness of the people, whether disagreements between workers and businesses are satisfactorily resolved or not. Investment industry advantages (LTDT): businesses are interested in the supply of raw materials for production, economies of scale when located near major supply and distribution partners, access to local consumption markets and competition.

compete with main competitors.

Local institutions (TCDP): businesses are interested in the dynamism of the leadership team and local government, interested in the settlement of administrative procedures, whether the implementation between government levels is consistent or not, whether the action programs are drastic or not, whether the local government is interested in and accompanies businesses to overcome difficulties as a long-term partner throughout the investment process to encourage them to expand investment and attract other investors.

Communication (TT): businesses are concerned about whether they receive full information about investment incentives, whether information about investment incentives is fully updated on the website and mass media, or


Investment promotion activities organized by the province to attract investment.

Human resources (HR): businesses are interested in high-quality supply (with labor discipline and professional skills). The training and vocational training system is linked to market needs and business requirements.

Business costs (CPKD): businesses are concerned with land rental costs, compensation costs for site clearance, raw material costs, cheap labor, reasonable electricity and water costs, and competitive transportation and communication services. If business costs are high, it will negatively impact investment decisions and vice versa.

Below is a summary table of factors affecting investment decisions in industrial parks in Phu Tho province.

Table 3.15. Factors affecting investment decisions in Phu Tho Industrial Park


Symbol

Image factor

enjoy

Source


Infrastructure


Infrastructure

Location advantage theory; industrial organization theory, theory of national competitiveness; Chia-Li Lin and Gwo- Hshiung Tzeng (2009); Yue-man Y et al. (2009); UNIDO (2015); Ha Bao Khanh (2017); Le Thi Lan (2017); Pham Van On and Tran Phan Doan Khanh (2015); Dinh Phi Ho (2011); Le Hoang Ba Huyen (2013); Mai Van Nam and Nguyen

Thanh Vu (2010).


UDDT


Investment incentives policy

Eclectic theory; Industrial organization theory; Yue- man Y et al. (2009); UNIDO (2015); Ha Bao Khanh (2017); Le Thi Lan (2017); Pham Van On and Tran Phan Doan Khanh

(2015).


MTS

Living environment

and work

Industrial organization theory; Eclectic theory; Ha Bao Khanh (2017); Le Thi Lan (2017); Pham Van On and Tran Phan Doan Khanh (2015); Nguyen Dinh Tho and Nguyen Thi

Mai Trang (2008).

LTDT

Investment advantages

Eclectic Theory; Industrial Theory; Ha Bao Khanh

(2017); Le Thi Lan (2017).

TT

Media

Eclectic Theory; Industrial Theory; Tetsushi

Sonobe and Keijiro Otsuka (2011); Le Thi Lan (2017).


TCDP

Local institutions

Location advantage theory; Yue-man Y et al. (2009); Le Thi Lan (2017); Nguyen Dinh Tho and Nguyen Thi Mai Trang

(2008).


Symbol

Image factor

enjoy

Source


NNL


Quality of human resources

Theory of national competitiveness; Chia-Li Lin and Gwo- Hshiung Tzeng (2009); Tetsushi Sonobe and Keijiro Otsuka (2011); Ha Bao Khanh (2017); Le Thi Lan (2017); Pham Van On and Tran Phan Doan Khanh (2015); Dinh Phi Ho (2011); Nguyen Dinh Tho and Nguyen Thi Mai Trang (2009); Vu Hung Cuong and Tran Xuan Duong (2014); Pham Van Nam et al. (2010).


CPKD


Business expenses

Industrial organization theory; eclectic theory; location advantage theory; Tetsushi Sonobe and Keijiro Otsuka (2011); Ha Bao Khanh (2017); Le Thi Lan (2017); Pham Van On and Tran Phan Doan Khanh (2015); Mai Van Nam and

Nguyen Thanh Vu (2010).

QDDT

Decision

invest

International Trade Theory; Theory of Customer Satisfaction

Investor; Dinh Phi Ho (2011).

(Source: Research synthesis)

b. Research model

Decision to invest in Phu Tho Industrial Park

The research model of factors affecting investment decisions in industrial parks in Phu Tho province includes 8 independent variables and 1 dependent variable.


Investment infrastructure

Investment incentive policies

Living and working environment

Investment industry advantages

Local institutions

Media

Human resources

Business expenses

Figure 3.10. Model of factors affecting investment decisions in Phu Tho Industrial Park

To identify factors affecting investment decisions in industrial parks, the research model is presented as follows:

QDDT = b 0 + b 1 Infrastructure + b 2 UDDT + b 3 MTS + b 4 LTDT + b 5 TCDP + b 6 TT


+ b 7 NNL + b 8 CPKD + e i

In which: QDDT: Dependent variable CSHT, UDDT,......CPKD: Independent variable

Research hypothesis

Infrastructure has a very important impact on the production and business efficiency of enterprises. According to Le Hoang Ba Huyen (2014) and Mai Van Nam (2010), infrastructure is the top concern of investors when making investment decisions. Good infrastructure is one of the important factors to evaluate the investment environment. Outdated infrastructure will increase investment costs and create barriers to investment activities. Theories such as Location Advantage Theory; Industrial Organization Theory, National Competitiveness Theory as well as empirical studies by Ha Bao Khanh (2017), Le Hoang Ba Huyen (2012), Dinh Phi Ho (2011), .... have proven the importance of this factor. Therefore, the author proposes hypothesis H1:

Hypothesis H1: Infrastructure has a positive (+) influence on investment decisions.

Incentive policies are considered as one of the powerful tools to attract investment and impact the investment decisions of enterprises in industrial zones (Eclectic theory; Industrial organization theory). Attractive incentive policies are also one of the basic characteristics of economic zones and industrial zones in the world. This factor has also been confirmed to have a positive influence on the investment decisions of enterprises in previous studies by Yue-man Y et al. (2009); UNIDO (2015); Ha Bao Khanh (2017); Le Thi Lan (2017); Pham Van On and Tran Phan Doan Khanh (2015). Therefore, the author proposes hypothesis H2:

Hypothesis H2: Investment incentive policies have a positive (+) influence on investment decisions.

The Living Environment factor is also known as the social infrastructure of the industrial park. This is the operating environment of the enterprise and also the place where the workers live. A good living environment will positively affect the investment decision of the


business (Industrial Organization Theory; Eclectic Theory). Studies by Ha Bao Khanh (2017); Le Thi Lan (2017); Pham Van On and Tran Phan Doan Khanh (2015); Nguyen Dinh Tho and Nguyen Thi Mai Trang (2008) have also demonstrated that these factors have a positive impact on investment decisions. Therefore, the author proposes hypothesis H3:

Hypothesis H3: Living and working environment have a positive (+) influence on investment decisions.

Eclectic theory; Industrial theory both affirm that the advantage of the investment industry is one of the factors that positively affects the investor's decision. Besides, the studies of Ha Bao Khanh (2017); Le Thi Lan (2017) have also proven this. Therefore, the author proposes hypothesis H4:

Hypothesis H4: Investment industry advantage has a positive (+) influence on investment decisions.

Local institutions are believed to have a positive impact on investment decisions. (Location theory). In Vietnam, each locality has its own institutions. It depends on the dynamism of local leaders, administrative procedures, and the support of local authorities. Therefore, a locality with a good investment institution will positively influence investment decisions. In the study of Yue-man Y et al. (2009); Le Thi Lan (2017); Nguyen Dinh Tho and Nguyen Thi Mai Trang (2008) also pointed out this. On this basis, the author proposes hypothesis H5 as follows:

Hypothesis H5: Local institutions have a positive (+) influence on investment decisions.

According to Kotler (2002), the media factor is one of the important factors to convey information to investors. Favorable location, attractive incentive policies, competitive input costs... are not really meaningful if this information is not known to investors (Eclectic theory; Industrial theory). In addition, from the research of Dinh Phi Ho (2012), it has also been proven that these factors have a positive impact on investment decisions. Therefore, the author proposes hypothesis H6:

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