Stakeholders in Relationship with Investment Capital in Defense Economic Zones

(iii) Systematize the contents and criteria for evaluating the effectiveness of investment in the economic zone. In particular, specific criteria for effectiveness of investment in the economic zone have been developed, such as effectiveness in poverty reduction and effectiveness in national defense and security.

Chapter 3

SURVEY ON INVESTMENT SITUATION IN ECONOMIC - DEFENSE ZONES

3.1. Overview of the situation of communes in the national defense economic zone before investment

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In the socio-economic development strategy, the Government and local authorities

always attaches importance to the development of mountainous areas, remote areas, and revolutionary base areas. Therefore, despite being under a lot of pressure to accelerate urban development - the driving force of economic growth, the Government and local authorities still allocate an appropriate level of investment to develop the socio-economic infrastructure of communes in the national economic zone.

However, many opinions say that the investment level is not satisfactory, not enough for the communes in the national economic zones to escape poverty. But it must also be seen that, in the overall development strategy, to push the economy up, mountainous, remote and isolated areas cannot compete with urban areas - areas that have the decisive role in fundamentally changing the economy. So we need to have a comprehensive view of the infrastructure system of the communes in the national economic zones to see that the emergence of investment projects in the national economic zones as well as similar projects is an urgent requirement.

Mountainous, remote, border and island areas occupy a large area and are inhabited by many ethnic groups. Many provinces have long borders, complex terrain, and many rivers and streams that create isolated areas and greatly affect living conditions and socio-economic development as well as exchanges with regions inside and outside the province.

In the history of development and especially in each step of the country's renovation, under the direct leadership of the provincial Party Committee, People's Council and People's Committee of the provinces, along with the implementation of many ethnic policies of the Party, ethnic minority areas, mountainous areas, remote areas, border areas, and islands of many provinces have achieved many proud and exciting results and achievements, the face of mountainous areas, remote areas, border areas, and islands has had many positive changes,...

However, on the path to continuing to develop mountainous, remote, border and island areas, many difficult and complicated challenges must be overcome: The rate of social

Poverty is still very large, the characteristic of communes in the economic zone is the high poverty rate (on average over 40%, over 20% of communes have a poverty rate of 50 - 71.7%) [61]; Essential infrastructure in communes in the economic zone is almost insignificant, lacking capital, lacking land for growing food crops, etc. Therefore, the development of tasks, goals, plans and solutions for socio-economic development programs for communes in the economic zone (mountainous, remote, border, island areas) is a very big and important issue in the socio-economic development in general and at the same time contributing to ensuring national defense and security in particular.

Although there are no official statistics, however, based on reports from localities as well as summaries from relevant ministries and branches, we can outline a general picture of the infrastructure of localities in the economic zone before implementing investment projects to develop the economic zone as follows:

The quality of rural infrastructure works in the economic zones is too low, does not meet standards and does not adapt to development requirements in the conditions of industrialization and modernization.

For example, if calculated according to Vietnamese standards, the length of road per capita is 2.1 km/1000 people, but when converted to international standards, it is only 0.8 km/1000 people, which means a decrease of 2 times, only 1/3 compared to international standards. In fact, of the total number of roads, only 4% are paved with asphalt, 14% are paved with crushed stone, the remaining 80% of commune, village and hamlet roads are graded roads, that is, upgraded dirt roads and dirt roads. Regarding the electricity system, the quality is also very low. The low-voltage electricity system is mainly built by people's contributions. Due to limited funds, the low-voltage system is built with substandard equipment and the construction is not carried out according to regulations, so the electricity system is only enough to carry electricity to the villages for lighting and running common household appliances, and cannot be used for production. Due to substandard construction and patchwork, the rural electricity system causes great electricity loss, increasing electricity prices. Schools and clinics are only built solidly in some localities. However, even in these places, the construction works are temporarily called solid, but the construction quality is poor, so after a short time they have seriously degraded. In addition, the equipment in schools and clinics is of poor quality. Irrigation systems are built

By manual labor, lack of equipment and materials, lack of planning, the quality is also very poor, difficult to operate, low efficiency and waste of land. Many localities in the economic zones have almost no roads or electricity, and schools and clinics are very far away, making travel very difficult [61].

Rural infrastructure systems in the areas of national economic zones were built a long time ago, but were poorly constructed at first, so their efficiency is low, their lifespan is short, and they are seriously degraded.

The rural infrastructure system is outdated and requires major repairs, or must be completely replaced. Rural roads are upgraded dirt roads, of course not suitable for new development conditions. Even some places have been concreted and asphalted, but due to limited funding, they only reach 1/3 - 1/2 of the national standards, so they are only suitable for rudimentary, small means of transport. In reality, this system must also transport large means of transport, so the roads are severely damaged, their lifespan is seriously reduced. The electricity system is in an even worse state. Due to lack of funding, patchwork, low quality construction, and long-term exposure to natural factors, it needs to be rebuilt, otherwise it will not be usable, or it will be very dangerous to use. The irrigation system is also in a state of degradation, backwardness, .... The irrigation system is outdated, past its useful life. The school system is built with poor quality, most of them are level 4 construction works, seriously degraded. To have a place to study, every year students have to contribute money and labor for repairs [61].

The rural infrastructure system in the economic zones lacks many sources of capital and capital formation mechanisms for regular maintenance and repair, and lacks an effective management mechanism, or is not even placed in any management system.

Irrigation systems in the areas that are currently operating were mainly formed during the period of collectivization. When the transition to a market economy occurred, agricultural cooperatives were either dissolved or converted to service cooperatives. In places where agricultural cooperatives had never been built, there was a lack of people to manage the irrigation system. Roads and electricity systems were also not well managed and lacked a mechanism to form a source of capital for maintenance, so the infrastructure system in the countryside was only created but not yet maintained.

There are big differences between regions and between village communities in terms of infrastructure development.

In a region, the level of difference in socio-economic infrastructure between communes is also quite different. Besides communes with electricity, roads, schools, and stations that are quite spacious, there are communes, hamlets, villages, and communes where the children's schools are temporary houses, made of bamboo and thatch, lacking windbreaks, lacking desks or having desks that are dilapidated; the roads are still dirt roads, or gravel roads that are degraded and damaged; the electrical system is poor and causes accidents and dangers.

Table 3.1. Current status of infrastructure of 132 communes in 15 economic zones in 1998

Parameter

Unit	Total	Percentage
There is no car road to the commune center.	Commune	95	72
There is no electricity to the commune center.	Commune	101	76.5
There is no commune health station.	Commune	73	55.3
No market yet	Commune	102	77.3
No primary school	Commune	85	64.4
Clean water is available.	Household		18.2
Only temporary housing	Household		90.9
No phone	Commune	111	84.1

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Source: Department of Economics, Ministry of National Defense.

a) About traffic:

The above table shows the weakness and overload of the transportation system in mountainous communes, remote areas. In 1998, about 95/132 communes in the KTQP area did not have car roads to the commune center, accounting for 72% of the communes. According to statistics from the Department of Transport, out of 1,445 villages, only 45% of the villages have roads that can be reached by car and motorbike, the rest have to walk along trails, and of the communes with car roads, 62% can only travel during the dry season. The commune farthest from the district center is 190 km (Na Bung commune, Muong Nhe district, Lai Chau), on average, the communes are about 50 km from the district center. Traveling far from markets, towns, and markets has caused households to lack information, knowledge, and access to urban areas.

With advanced science and technology, buying and selling products and goods is also very difficult.

b) About the electrical system:

The electricity system has not yet reached many communes in remote, mountainous areas, making life in these communes very difficult and backward. For communes that have electricity, people here mainly use electricity for daily life, the use of electricity for production is still very limited. On the other hand, the electricity price is still inadequate, making it difficult to encourage the poor, especially the poor in mountainous, remote and isolated areas, to use electricity. According to statistics, only 10-13% of communes in the program have national grid electricity, 100% of communes do not have high voltage electricity. In general, the rate of communes with electricity in remote and isolated areas is very low.

c) About irrigation system:

Water is the basic factor for the development of production in general and agriculture in particular, each step of agricultural progress is closely linked to the development of irrigation. However, for particularly difficult communes with complex terrain, the ability to exploit water resources for production is very limited because mountainous, remote and isolated areas often have high slope differences between the production area and rivers and streams. In addition, the irrigation infrastructure system is underinvested, mainly small irrigation works, most of which are made by the people themselves with local materials, so they are often damaged. Therefore, to develop production and carry out hunger eradication and poverty reduction, investment in irrigation infrastructure development is an important factor.

d) Regarding educational infrastructure:

Although some areas in the economic zones have made progress in universalizing education, establishing a network of educational institutions, and the literacy rate has increased significantly, there is a large gap in the educational level between regions. Especially in mountainous, remote and isolated areas with little access to basic education, the educational level of ethnic minorities is very low, the rate of illiteracy and re-illiteracy is high, etc. According to the investigation of the Ethnic and Mountainous Areas Committee, up to 70% of the students who do not go to school are children of ethnic minorities. This gap is even more evident in higher education levels.

A major cause of limited access to education, the ability to

In addition to the lack of facilities, there are other reasons such as: underdeveloped transport infrastructure makes it very difficult to go to school, even having to travel half a day to get to class; economic difficulties mean that instead of going to school, children in mountainous, remote and isolated areas have to work to help their families, etc. Obviously, to ensure fairness in access to educational services for all people, it is necessary to have a policy to develop the education system in mountainous, remote and isolated areas.

e) Regarding the health system and public health care:

By the end of 1998, in 132 communes in 15 economic zones, 73/132 communes still did not have health stations, accounting for about 55.3% of the communes. At the same time, the lack of medical equipment, facilities, doctors, and medical staff was very common in mountainous communes, remote areas, and isolated areas. The weakness of the health infrastructure system along with the lack of knowledge has caused difficulties in primary health care for ethnic minorities. Although there are health stations, people still do not have the habit of going to see a doctor, which is also the reason why disease prevention work has not been proactive. In many poor communes, there is a situation of disease development that affects people's lives. Thus, to improve the quality of life of people in especially difficult communes, there must be more appropriate investment in the health infrastructure and health care system [61].

f) About domestic water:

The source of domestic water for people in particularly difficult communes is mainly from rivers, streams and lakes. About 80% of villages do not have enough water for daily use and clean water. The quality of water does not meet hygiene standards and cannot meet the demand for domestic water in the dry season. This is the cause of epidemics in mountainous communes, remote areas. The lack of domestic water is still very common, especially in highland and rocky areas. In many places, in the dry season, people have to carry water 5-10 km from their homes. The lack of clean water and water storage facilities has made people's lives even more difficult.

To achieve the set goals, the amount of work that needs to be done in investment projects in the economic zones is very large. We will study the investment situation to achieve the set requirements through surveys and assessments of the reality in the economic zones.

3.2. Survey results on investment situation in defense economic zones

3.2.1. Identify survey subjects

To determine the survey object, the thesis analyzes the project formation, the parties involved in investment decision making and project implementation, on that basis, the main objects that the thesis approaches are determined, these objects must have a great influence on the success of investment activities in economic zones.

3.2.1.1. Parties involved in the relationship with investment capital in defense economic zones

Investment projects in the economic zones mobilize capital from four sources: budget capital (including government capital and international funding); credit loans; capital mobilized from organizations and communities; and other capital.

Capital mobilized from organizations and communities

Other capital

Government decision

The Ministry of Planning and Investment shall preside over (the Ministry of Finance, the State Bank, the Committee for Ethnic Minorities and Mountainous Areas, and relevant ministries and branches) to balance and arrange

Credit loan

These capital sources are balanced and arranged as follows: The Ministry of Planning and Investment shall preside over and coordinate with the Ministry of Finance, the Ministry of Agriculture and Rural Development, the State Bank of Vietnam, the Committee for Ethnic Minorities and Mountainous Areas and relevant ministries and branches (including the Ministry of National Defense) to find solutions to balance capital sources arranged according to the annual plan submitted to the Government for decision to invest in projects according to the program.

Budget capital (Including Government and International funding)

Project funding

Diagram 3.1. Capital sources of investment projects in the economic zone

Projects will be balanced based on approved capital sources. Source