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As Vietnam’s growing economy continues to attract global investors, some provinces are proving more appealing than others.
For many foreign investors, Hanoi, Ho Chi Minh City, southern Binh Duong, Dong Nai and Ba Ria-Vung Tau provinces are most favourable destinations to expand investments. But China’s textile giant Texhong Group chose northern coastal Quang Ninh province, about 150 kilometres northeast of Hanoi, for establishing its new manufacturing project in Vietnam.
Texhong is now constructing a $300 million textile factory in the province’s Van Don Economic Zone. When the facility is put into operation next year, it will be one of the largest textile factories in Vietnam, according to the investor.
According to the Ministry of Planning and Investment’s Foreign Investment Agency, Quang Ninh has attracted 97 foreign-invested projects so far, capitalised at $4.1 billion. This number is small if compared with other provinces or cities like Hanoi, Ho Chi Minh City, Binh Duong or Dong Na - but growing fast.
Vu Van Hop, deputy director of Quang Ninh Provincial Investment Promotion Agency, said he saw an upward trend of foreign investment inflows to the province.
“Since early this year, we have received about 30 foreign investors coming here to study investment opportunities. This is much higher than the past years,” said Hop.
And among these 30 foreign investors, four secured investment certificates to develop projects in Quang Ninh, worth a total of $390 million.
Nguyen Van Doc, Chairman of Quang Ninh Provincial People’s Committee, said more and more foreign investors eyeing potential in Quang Ninh.
Positioned on the border of southern China’s Guangxi province and bordering Vietnam’s Lang Son, Bac Giang, Haiphong and Hai Duong, Quang Ninh is emerging as the third economic hub in the north of Vietnam, after Hanoi and Haiphong. It is also home to the nation’s largest coalmine in the country.
The Vietnamese government sees Quang Ninh as part of the pivotal economic development triangle of Hanoi-Haiphong-Quang Ninh in northern Vietnam, that would driving regional economic development.
Due to its favourable geography and a giant coal mine, Doc said, Quang Ninh was a good place for developing seaports, shipbuilding and heavy industrial projects.
Currently, US-based AES Corporation and its partners are building a $1.4 billion Mong Duong thermal power plant in Quang Ninh. Meanwhile, another American company, SSA Marine, teamed with Vietnam National Shipping Lines to invest into Cai Lan international container port.
“With the advantage of position and seaport, investors could save a lot of transport charges when they manufacture products in Quang Ninh and export to international markets,” said Doc.
But Quang Ninh is not only favourable to investors in industry sector. Home to the world heritage Halong Bay - one of the most beautiful bays in the world, Quang Ninh also attracts investors for tourism projects.
Halong Bay covers an area of 1,553 square kilometres with 1,969 islands. There are in the bay many soil islands, caves, grottoes, beaches, beautiful landscapes enabling the development of attractive tourist sites of various types.
Last year, Halong Bay received 6.6 million tourists. The local authorities estimates this number would exceed seven million this year.
“There is still a lot of room for investors to invest in tourism industry here,” said Doc.
However, Doc and other Quang Ninh’s leaders understand that to attract more investors, they have to upgrade the province’s infrastructure network, perceived as one of the disadvantages of Quang Ninh.
The provincial authorities mapped out a plan to call for private investments for infrastructure projects, including Van Don International Airport, Hai Ha Industrial Park, Cai Rong Seaport and Halong-Mong Cai Highway.
The province also asked the Vietnamese government for permission to build a huge entertainment centre, including a casino, in Van Do Island.
“Tourism is an advantage of Quang Ninh, however we don’t have an entertainment centre to attract tourists. Meanwhile, the infrastructure linking Quang Ninh with neighbouring provinces remains underdeveloped,” Doc said.
Some foreign investors have responded to the call of Quang Ninh to invest in infrastructure projects.
Korea’s Joinus Company Ltd received the green light from the Vietnamese government to prepare for the construction of Van Don International Airport under build-operate-transfer model. The Korean investor also proposed to build an expressway connecting Halong city and Van Don Island. The total investment capital of the two projects is about $1.5-$2 billion.
Japan’s SE Group expressed interest in building a bridge and a road connecting Quang Ninh with Hanoi-Haiphong Expressway. This project, if implemented, will significantly shorten travelling time from Hanoi to Quang Ninh. And other investor, Thai-Italy Company is in negotiations with the province to build a highway from Halong city to bordering Mong Cai town.
To enhance its appeal to private investors, Quang Ninh has recently proposed the Vietnamese government unprecedented incentives for investors interested in Van Don and Mong Cai, envisioned as special administrative and economic zones in the future.
According to the proposal, investors developing hi-tech projects and services projects in Van Don and Mong Cai could enjoy corporate income tax exemption for 15 years and 20 years, respectively. The current legal framework allows investors to enjoy only four years of exemption and 50 per cent of reduction in the following nine years.
Moreover, time for land leasing for service and urban projects could be extended up to 99 years and 120 years respectively instead of 70 years in maximum at this time. The provincial authorities also proposed to reduce 70 per cent of personal income tax for Vietnamese and foreigners working in the zones, 20 per cent higher than current maximum reduction.
Quang Ninh Provincial People’s Committee also proposed the Vietnamese government to exempt taxes on materials and equipment imported from other countries by investors to set up their projects in the zones for a duration of 20 years.
But Doc suggested that such incentives were vital to turn Van Don and Mong Cai into special economic and administrative zones.
“The goal is to create the most favourable and level playing field for both domestic and foreign investors to start up their businesses in Quang Ninh,” said Doc.