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Legal and Economic Environment Factors of Investment

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1.2.3. Investment capital factor


Capital is a necessary condition for all economic and social development processes, especially infrastructure development. In a market economy, capital is a special type of commodity. It differs from other types of commodities in that it has a certain owner.

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Infrastructure development investment for agricultural production and rural economy aims to establish a synchronous infrastructure system such as: roads, electricity, irrigation, wholesale markets, etc. Therefore, the amount of investment capital to develop these infrastructures is very large. Meanwhile, the internal capital of agriculture is low, the attractiveness of investment capital for investment in developing agricultural infrastructure is poor. In that context, budget capital and policies to attract non-budgetary capital play a very important role. In recent times, budget capital has played an important role in investing in key projects and is a source of capital to attract other capital sources for agriculture and rural areas.

In the coming development stage, the direct budget source of the State will be gradually limited and will only focus on prioritizing investment in multi-purpose infrastructure development.

Legal and Economic Environment Factors of Investment

The State needs to have a policy mechanism to market development investment capital to encourage other economic sectors to participate.

investment. With abundant labor resources in agriculture and rural areas, using those labor resources for infrastructure construction is considered a solution to create capital for

Investment in infrastructure development of agriculture and rural areas.


1.2.4. Legal and economic environmental factors of investment


In economic activities, the legal environment and the economic environment play a very important role, because it creates legal and economic conditions for economic activities to operate and have high results and efficiency. Infrastructure investment is one of the economic activities, so the legal environment and the economic environment also affect them in a specific way.

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For infrastructure investment, the legal and economic environment affects many aspects. Specifically:

- First of all, the legal environment creates conditions for the formation of infrastructure into a system with the connection between the general infrastructure of the whole country and the infrastructure system of localities and agricultural businesses. The master plan of the infrastructure system is one of the bases, and at the same time, the content of infrastructure development investment in general and agriculture in particular.

- Second, the legal environment creates conditions for mobilizing resources for infrastructure investment, including budget capital and capital from organizations and individuals. For example, allowing domestic private economic establishments

investment in the form of BOT, the establishment of a mechanism for the state and people to work together

d% create a legal environment for the socialization of capital sources for infrastructure development investment.


- Third, the economic environment creates the attraction of resources for investment in infrastructure development for agriculture and rural areas. For example, policies on land and capital have initially attracted investors to invest in the less attractive field - investment in infrastructure development for agriculture and rural areas in recent years.

1.3. Contents of investment in infrastructure development serving rural agricultural production

The content of infrastructure investment in general for manufacturing industries is considered from many different aspects. However, people often consider it according to investment activities - that is, the work to obtain infrastructure works and exploit their benefits. In that aspect, the content

Infrastructure investment for agricultural sectors includes:


1.3.1. Planning for investment in infrastructure development


Planning is the arrangement of a job or a problem for a long-term future, depending on the problem that needs planning. For planning investment in developing agricultural infrastructure, it is the arrangement of time and

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space and physical conditions to build certain infrastructure works for the future.

Planning has a direct impact on investment in developing agricultural and rural infrastructure. Therefore, it is considered the content of investment in developing agricultural and rural infrastructure. Specifically:

- Planning creates a legal basis for infrastructure investment and development. From there, proactively creating material conditions to build infrastructure from

Land as a destination for capital, human resources as direct factors serving the implementation of construction projects.

- Planning contributes to connecting agricultural and rural infrastructure works into a system.

- Planning creates conditions to attract organizations and individuals to participate in investing in developing agricultural infrastructure in different forms, creating conditions to diversify capital sources for building agricultural infrastructure. Because, through planning the future infrastructure system, the

is determined.


However, for planning to have the above positive impacts, planning work must be studied regularly and plans must be updated.

timely adjustment to actual situation and conditions.


Through research and analysis of management methods of Programs/Projects

Projects at the ministerial level with state budget capital: the role and responsibility of the investment entity (often called the Managing Agency) of the Ministry and sector are not clearly shown, mainly assigned to the Project Management Boards to perform the state management function with the Program/Project Investors, so when there are projects that do not meet quality standards, investment efficiency is not fully promoted or even after handover into use, they cannot operate, it is very difficult to assign responsibility.

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In proposing solutions to innovate investment work, the Thesis will deeply analyze the role and management responsibility of the Management Subject of the Ministry-level agency, only inspecting, monitoring and evaluating the effectiveness of the project after investment, demonstrating the systematic and synchronous interaction between the productivity and quality of agricultural production and the infrastructure projects invested in the area.

In summary, appropriate solutions attaching the role of responsibility with the ownership of state-invested assets to specific project investors (from choosing investment priorities to post-investment management) make the project operate effectively both financially and in terms of economic value - x% social for people living in the project area, as well as harmonizing interests with other project programs in the whole region and the whole country.

1.3.2. Mobilizing resources for infrastructure development


For infrastructure investment and development, planning is a prerequisite task. Mobilizing resources for infrastructure investment and development is the next task of special importance. Together with organizing and implementing investment activities, mobilizing resources aims to turn planning ideas into reality.

Resources for infrastructure development are of many types: land as a geographical support

The location of the works; human resources and capital are factors to implement the construction activities of the infrastructure.

Mobilizing resources for agricultural infrastructure development has its own specific features. This is partly due to the characteristics of agricultural infrastructure, and partly due to the characteristics of agricultural infrastructure.

The main points of capital sources in agriculture and rural areas are dominated. These issues are mentioned in the previous sections of the thesis. However, it is necessary to emphasize the role of resources from the state budget and solutions to socialize the mobilization of resources for investment in infrastructure development in agriculture and rural areas. Because these are solutions that play a very important role in investment in infrastructure development in agriculture and rural areas.

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1.3.3. Organization of investment in infrastructure


Implementation is one of the important contents of investment in agricultural infrastructure development. Therefore, implementation has a great influence.

to the results of investment in industry infrastructure.


Investment organizations must comply with the planning and plans, which are directly investment projects, when the above issues are determined reasonably and regularly.

Evaluation to make timely adjustments is a factor that ensures the success of investment activities and vice versa.

Currently, the State has a series of reforms in rectifying investment and construction management using State budget capital. Through synthesizing and analyzing data collected through different sources and information channels, it can be generally concluded that the investment management situation up to now (2005) still has many limitations, as follows:

- Regarding investment management mechanism: investment management of ministries and branches according to their assigned functions, tasks and scope of investment management is still very loose, inspection and supervision of investment activities of grassroots units under their management have many loopholes leading to investment not in accordance with the general development orientation of the industry and society, not in accordance with planning and quality.

poor investment, scattered investment, slow implementation progress, inefficiency, high waste loss, long-term debt in basic construction investment, etc.

- Regarding the preparation and selection of investment projects, the procedures are cumbersome and complicated, but the results of selecting investment projects with very low feasibility (the rate of projects submitted for approval that need to be revised and supplemented is 17.5%), not meeting the actual needs of production.

Investment implementation: over 5% of total projects have violations in investment procedures, mainly due to delays in approval progress. (according to the report of the Ministry of Planning and Investment in 2006)

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- Post-investment project management and operation (post-project management) has not been carried out, almost all programs/projects after the end of investment when handing over

When put into use for an agency, unit, collective,... it is not possible to check and evaluate the investment efficiency in terms of economic - social aspects, the level of impact of the works.

invest in productivity and quality of agricultural production and services.


In short, it is necessary to continue to have more positive solutions in managing infrastructure investment for agricultural production, especially in the post-harvest management stage.

Investment needs to review and learn from the experiences of countries with similar development conditions as Vietnam in the past.

1.3.4. Organization of operation and exploitation of infrastructure works


After construction, agricultural infrastructure works need to be organized for operation and regular maintenance. All contents from planning to mobilizing resources, to organizing construction

Although the implementation is good, but the organization and exploitation are not good, the infrastructure development process will not achieve the desired goals.

Unlike business investment, infrastructure investment is a type of development investment. Therefore, the exploitation of infrastructure after construction has different contents. The organization of exploitation of infrastructure investment works includes:

+ Well organize the exploitation activities of infrastructure works built to serve production and people's lives in the region.

+ Protect infrastructure works from natural disasters (rain, wind, flood, etc.), human and livestock damage.

+ Regular maintenance and repair when these structures are damaged.

More importantly, localities and the agricultural sector must see that infrastructure development is to serve agricultural and forestry production and life.

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Therefore, the organization of exploitation of infrastructure system works not only operates and exploits those works but also expands production and

life from the activities of the infrastructure project.

1.4. Some methods to evaluate the economic efficiency of infrastructure investment serving agricultural production

1.4.1. Evaluation of economic efficiency in investment in agricultural production infrastructure in Vietnam

The evaluation of the effectiveness of infrastructure investment in agricultural production is currently mainly applying a set of criteria built according to the principles and methods of evaluating economic efficiency - x% society is commonly available, but in general, the evaluation of the effectiveness of infrastructure investment serving agricultural production is currently using the following methods:

- Method of evaluating financial investment efficiency in livestock and crop production in relation to infrastructure development investment.

Financial investment efficiency [59,128] of investment activities is the level of meeting the needs of developing production, business and service activities and improving the lives of workers in production, business and service establishments based on the investment capital that the establishment uses compared to other periods, other establishments or compared to general norms.

In agriculture, crop cultivation and livestock breeding are the two main production sectors and also the two sectors that bring large agricultural output for domestic consumption and export to the whole society in many countries, especially in Vietnam (in 2007, agriculture, forestry and fishery products exported more than 13 billion USD). Therefore, evaluating the effectiveness of infrastructure development investment in relation to the development of the two sectors of crop cultivation and livestock breeding allows to understand the essence of investment efficiency, because that is the ultimate goal of infrastructure development investment in agriculture.

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The following formula can help evaluate the level of financial efficiency in development investment:

Crop and livestock sector results from infrastructure investment

E tc = (5)

The amount of investment capital that the crop and livestock industry

done to produce results


Etc is considered efficient when E tc > E tc,o

In which, Etc,o is the standard financial efficiency index, or the percentage achieved by other periods of the industry chosen as the basis for comparison, or the percentage achieved by other units according to the efficiency standards [128;57].

To reflect the economic efficiency - x% in addition to the financial efficiency for infrastructure investment serving agricultural production, there needs to be a system of unified evaluation criteria including many related indicators and indices. Each criterion reflects a comprehensive aspect (more quantitative) of the efficiency of use over a certain period of time.

In which, the indicator expressed in money is the most commonly used. However, the value of money changes over time, so when using monetary indicators, it is necessary to pay attention to the depreciation factor of money to calculate the efficiency.

Financial investment is close to reality.


Evaluating the effectiveness of infrastructure investment through the financial efficiency of the activities it affects is necessary, but those activities are affected by many factors. Therefore, evaluating under fixed conditions of factors or

Evaluating the impact of a business before and after the project is more meaningful. In particular, evaluating the financial efficiency of the operations of some infrastructure projects such as irrigation projects, electricity projects , etc. is very necessary and meaningful for improving the efficiency of exploiting these projects.

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