VietNamNet Bridge - The link among economic and industrial areas in the Central Region Key Economic Zone remains very weak after 10 years of development. 

Local member economies are competing to lure investors

The problem is that local member economies are competing with each other to lure investors.

According to Nguyen Van Cao, chair of the Thua Thien – Hue provincial People’s Committee, by the end of 2016, the Central Region Key Economic Zone (CKEZ) had four economic zones (EZs) and 19 industrial zones (IZs), attracting 1,280 investment projects with total registered capital of VND500 trillion and implemented capital of VND210 trillion.

The EZs and IZs have been playing an important role in the development of local economies, generating jobs and accelerating economic restructuring. Roughly VND40 trillion worth of tax has been paid to the state budget.

However, Cao and other members of the regional council agreed that the EZ and IZ can only attract a few hi-tech investment projects, while they have been competing fiercely with each other to scramble for investors. 

Cao suggested setting up a new model of alliance.

According to Duong Dinh Giam, former director of the Institute for Industrial Policy and Strategy, by the end of 2016, the average investment capital of projects in IZs was VND104.1 billion (the figure was VND258 billion for foreign invested projects), while the average capital of the country was VND236 billion (VND357.8 billion for foreign invested projects).

The figures show that the projects had low investments in technology and productivity.

Tran Dinh Thien, director of the Vietnam Economics Institute, said it is the time to face the facts.

“The EZs and IZs have received special attention and big investments. But they still cannot create the expected development. This must be seen as a failure,” Thien said.

“We need another approach to IZs, EZs, foreign investment and key economic zones so as to change the situation,” he said.

An analyst pointed out that it is still unclear what ‘region’s key economic zone’ means. The EZs and IZs operating in central provinces are only ‘general zones’.

That is why central provinces still cannot exploit their advantages to develop specialized IZ. Local authorities are busy competing with each other to lure investors by offering more investment incentives.

“Each locality fights for its own benefits,” the analyst said.

“Other countries attract investors by offering outstanding institutional systems. Vietnam tries to do this with offered preferences,” he said.

“Competing by offering preferential treatment means giving one’s benefits to investors. The benefits localities get are very modest,” he said.

RELATED NEWS

Central region: advantages could become disadvantages

Airlines resume flights to airports in central region

Kim Mai