Luận văn Thạc sỹ MBA Tháng 8-2010 chuyên ngành Quản trị kinh doanh

Chapter 1 THE PROBLEM AND ITS SETTING Introduction Tuyen Quang is a mountainous province in the North of Vietnam, 165 kilometers away from the nation’s capital, Hanoi, with geographical position of 21o30' to 22o40' of the Northern latitude and 103o53' to 105o40' of longitude. The area of Tuyen Quang is 5,867 km2, of which more than three fourths of the province consists of mountainous and craggy hills. Tuyen Quang province borders with Ha Giang province in the North, Bac Kan and Thai Nguyen provinces in the East, Yen Bai province in the West and Phu Tho province in the South. It consists of five districts and one town, with 141 communes, wards and townships. Vietnam’s prime minister's decision (Decision No. 100/2008/QD-TTg July 15, 2008) on approving the overall planning of economic development which includes Tuyen Quang. The plan indicates that the said province will reach the following goals by 2020: rapid economic growth and sustainable development, efficient utilization of the potential resources of the province, narrow gradually the gap between fiscal developmental level of the province and to the average of the country, immediate getaway from the less developed provinces ensuring organic relationship with economic development all through out the country, and fast integration with nationwide and regional implementation .. Economic development is inextricably linked with cultural development because of a balance of both will yield a strong fiscal standing of the nation, thus, improving the quality of human resources. Balanced development between regions focusing on developing key economic region is a driving force behind other developing regions and reduces the gap in living standards between the strata. To well implement the national policies and poverty reduction policies for disadvantaged areas, there should be a cooperation between the government and the citizens in order to gradually improve the quality of life. (Decision no. 100/2008/QĐ-TTg July 15, 2008 of Prime Minister Approving the overall planning of economic development - Tuyen Quang province in to 2020 ) In achieving these objectives, there should be measures to improve the environment in order to attract investors through the country’s tourism sector in which capital has important implications in both theory and practice. Other factors affecting the growth of Vietnam’s economy are labor, and capital intensive technology are also important. Practices that are involved in improving the role of the environment attract investment which stengthens the process of economic and social development in Tuyen Quang province. Background of study In the process of industrialization modernization capital investment has always been considered a problem among developing countries. How to mobilize sources of capital (both sources inside and outside sources) to meet requirements of the modernization, is always a challenge to the country on the path out of poverty. Therefore, competition between countries as well as local authorities in a country to attract foreign investment capital is becoming more heightened. International investment is currently a hot issue and an interesting topic in the world. International investment contributes to the economic growth and brings positive effects for the countries receiving capital investment and export among countries. The role of international investors is becoming significant to the economic development of countries in transition from planning economy to centralized economy like Vietnam. To achieve a certain growth both in economic and social demands of these countries, thorough utilization of the resources can be done for the investment to be reasonable and effective. Tuyen Quang is entering a new period of development, promoting industrialization and modernization together with strong social democratic civilization. In this context the need for capital investment and development is very important and urgent. However, in recent years investing in Tuyen Quang are issues that need attention, especially direct investment from abroad. As planned, socio-economic development in Tuyen Quang province aims to speed economic growth (GDP) to 14.5% (Decision no. 100/2008/QĐ-TTg July 15, 2008 of Prime Minister Approving the overall planning of economic development - Tuyen Quang province in to 2020 ) over the period 2010-2015, of which capital requirements for investment and development is 45,000 billion. During this period, budget can only meet about 9000 billion (approximately 20-25%) (Decision no. 100/2008/QĐ-TTg July 15, 2008 of Prime Minister Approving the overall planning of economic development - Tuyen Quang province in to 2020) as the rest are investment firms, credit and foreign investment. Thus the short term and the long term solution in order to attract more foreign investment capital, especially direct investment from abroad is to create a force that pushes for the economic development. Departing from that practice, the researcher intends to conduct a study entitled "Investment Environment in Tuyen Quang Province: A Prospect for Development ". Statement of the Problem. This study intends to evaluate the investment status and identify investment prospects for the development of Tuyen Quang Province. Specifically, it sought to answer the following questions:  1. What are the investors’ profiles in Tuyen Quang Province as indicated by their: 1.1 Type of Business Ownership;1.2 Nature of Business; 1.3 Business Size; 1.4 Investor's Location; 1.5 Capitalization. 2. What is the present investment environment in Tuyen Quang Province in terms of the following factors: 2.1 Political; 2.2 Legal - administration; 2.3 Geographic location and infrastructure; 2.4 Economic and financial; 2.5 Labor. 3. What are the problems encountered by the investors in terms of 3.1 Political, 3.2 Legal - administration; 3.3 Geographic location and infrastructure; 3.4 Economic and financial; 3.5. Labor. 4. What possible solutions could be proposed to overcome the problems identified and to attract more investors in further developing Tuyen Quang province? Scope and Delimitation The topics related to this study are Economics, Finance, Law and International Relations. However, due to the scope time and the research activities will manly focus on direct investment in Tuyen Quang province for 2006-2010. Subjects focused research is investor have licensed investment certificates, and the investment environment. time since the government promulgated the general investment law effect in 2006. Significance of Study This study will be beneficial to the following: For the Provincial Level: Research shows that the strengths and weaknesses of the investment environment so that a solution to improve investment environment to attract resources from outside the province such as investment capital, science technology, scientific management also exploit and promote the province's comparative advantage in minerals, forest resources, tourism resources and abundant labor resources of the province Research on the investment environment to provide information on enterprises operating business in the province, review scientific evidence for the leadership of the provincial to building strategy of economic development - social, open reform, poverty reduction, implementation of modernization and modern industrial. For communities: Research to detect obstacles in the process of business activities from which to support and removal of difficulties and improve the competitiveness of the business community. Improve the investment environment to attract domestic investors and foreign investor in the province also means creating more jobs, raise incomes, improve living standards for people, besides enjoying The main advantage of the welfare projects such as electricity, roads, schools, health ... For future researchers: This study will help future researchers on research methods, analysis and evaluation of investment environment of the province from which researchers’ future studies will determine the issues for further studies Definition of Terms: Business Size is the maximum capitalization of a project investment. Capitalization is the sum of a corporation's long-term debt, stock and retained earnings. Direct investment is a form of investment by which investors are participating directly in investment management activities. Domestic investment is a form of investment that the investor-owner as well as investment capital - the capital of the country to leave the operating organization and business activities in order to target for profitability and take responsibility for the capital, as well as the results of its business operations. Investment environment consists of legal, economic, political, cultural, and social factors which affects directly or indirectly to the operation and foreign investment of a country. Foreign Direct Investment is thought to be more useful to a country than investments in the equity of its companies because equity investments are potentially "hot money" which can leave at the first sign of trouble, whereas FDI is durable and generally useful whether things go well or bad. ( Investment refers to capital in tangible assets or intangible assets Investment law in 2005, defines: Investor is an individual who commits money to investment products with the expectation of a financial return. Generally, the primary concern of an investor is to minimize risk while maximizing return, as opposed to a speculator, who is willing to accept a higher level of risk in the hopes of collecting higher-than-average profits.( Political environment includes all laws, government agencies, and lobbying groups that influence or restrict individuals or organizations in the society. Chapter 2 REVIEW OF RELATED LITERATURE AND STUDIES Foreign Literature Investment is defined as any use of resources intended to increase future production output or income. Investment is "to spend, to sacrifice" in existing resources to achieve results beneficial in the future. In other words, investment is the sacrifice of current benefits for a great benefit of income in the future. Resources may be in the form of money, natural resources, labor and intellectual capital. The results can be achieved through financial assets, physical assets, intellectual property and human resources qualification and recognition to work with higher productivity in any business entitiy. There are many criteria for the classification of an investment; we can divide investors into three main categories: Financial investment which is a type of investment that people lends money or purchases price for certificates with predetermined interest, Trade investment which is a type of investment that people have money to buy goods and sell them for a higher price to earn a profit and Investment in Development in which people carry out activities to create new assets for the economy, increase the potential production of a business and social activities Therefore it is a condition to create jobs and improve the lives of all people in the society. Foreign direct investment resources (FDI) Foreign direct investment reflects the objective of obtaining a lasting interest by a resident entity in one economy (‘‘direct investor’’) in a resident entity of an economy other than that of the investor (‘‘direct investment enterprise’’). The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence on the management of the enterprise. Direct investment involves both the initial transaction between the two entities and all subsequent capital transactions between them and among affiliated enterprises, both incorporated and unincorporated.(www.oecd.org/dataoecd/10/16/2090148.pdf) Balance of Payments Manual: Fifth Edition (BPM5) (1993) and the Detailed Benchmark Definition of Foreign Direct Investment: Third Edition (BD3) (1996 refer FDI to an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor. Further, in cases of FDI, the investor’s purpose is to gain an effective voice in the management of the enterprise. The foreign entity or group of associated entities that makes the investment is termed the "direct investor". The unincorporated or incorporated enterprise-a branch or subsidiary, respectively, in which direct investment is made-is referred to as a "direct investment enterprise". Some degree of equity ownership is almost always considered to be associated with an effective voice in the management of an enterprise. It also suggests that a threshold of 10 per cent of equity ownership is required to qualify an investor as a foreign direct investor. Once a direct investment enterprise has been identified, it is necessary to define which capital flows between the enterprise and entities in other economies should be classified as FDI. Since the main feature of FDI is taken to be the lasting interest of a direct investor in an enterprise, only capital that is provided by the direct investor either directly or through other enterprises related to the investor should be classified as FDI. The forms of investment by the direct investor which are classified as FDI are equity capital, the reinvestment of earnings and the provision of long-term and short-term intra-company loans (between parent and affiliate enterprises). Furthermore, a direct investment enterprise is an incorporated or unincorporated enterprise in which a single foreign investor either owns 10 per cent or more of the ordinary shares or voting power of an enterprise (unless it can be proven that the 10 per cent ownership does not allow the investor an effective voice in the management) or owns less than 10 per cent of the ordinary shares or voting power of an enterprise, yet still maintains an effective voice in management. An effective voice in management only implies that direct investors are able to influence the management of an enterprise and does not imply that they have absolute control. The most important characteristic of FDI, which distinguishes it from foreign portfolio investment, is that it is undertaken with the intention of exercising control over an enterprise. Local literature Reviews: The concept of environment to attract investment The concept of environment to attract investment capital is a term mentioned in both economics and business administration researches in many countries. In Vietnam, the transition to market economy requires implementation of policies of innovation in an open economy integrated with the world, thus, attracting foreign investment. The environmental issues attract new investment capital and further reached to more researches to address the environmental. Environment to attract investment includes many factors which directly or indirectly affects the efficiency of investment projects. The factors included are reality of infrastructure; related to financial benefits such as tax regimes, labor costs, physical assets, regulations on hiring, assignment, mortgage, prices, various administrative procedures ensuring security and social order, political stability. If the above favorable factors will encourage the investment and attract more investment capital, the country will gear towards development and to solidify its stance, the government should also participate in making policies to increase the confidence of investors. Environment to attract investment capital that has the characteristics and nature of the following: (1) objectivity: No single investor or a business exists in isolation, it should exists objectively, it can facilitate or mediate difficulties for investors. Environment to attract investment capital creates a binding surface for investment activities, on the other hand, creating favorable opportunities for investors. (2) Integrated: Integrated in the sense that it includes many elements that have relationships with each other. The number and the specific components of the environment to attract investment depend on the level of development and socio-economic, managerial and right main components of the environment. (3) Diversity: Environment to attract investment capital is a mixture of environmental components. Therefore, research and analysis is fundamental for the getting the overall correlation between environmental components and the elements. (4) Dynamic: Environment to attract investment capital and other elements mobilize the growing trend as it always immediately transformed by the internal operations of investment which is also an active process in a constantly changing environment. Factors and conditions of the environment to attract investment capital affect investment activities of investment or business activity on a regular basis. (5) Systematic: The stability of the environment to attract investment depends on the complexity and variability of the interactive environment. In order for the maneuvering of investments, systematic approach should be dealt every now and then to assess its effectivity and to gauge its efficiency. The process of selecting investment location: In most cases, choose the location of TNC investments are carried out by three steps: (1) Company selected a potential area to invest in it, (2) Some of the potential area was selected; (3) The location of potential in that country is determined. The main factors to evaluate the investment location: (1) Market: growth and size of the market, income per capita, import barriers, consumer preferences specific of that country (2) Cost: cost, quality, availability and productivity of workers trained / can be trained; The cost inputs, components and raw materials; The costs of transportation, communications and utilities; tax, financial costs, access and availability of foreign currency; preferences and disadvantages to investment trade (3) Natural resources: The availability of natural resources (4) Infrastructure: physical infrastructure (roads, seaports, airports, telecommunications) infrastructure technology, research and development school) infrastructure industry (research institutions, universities and outsourcing business, the supply industry, industrial clusters); educational infrastructure (schools, colleges, universities) (5) Policy Framework: The stable economic, political and social; development policies of private sector and privatization of state enterprises; rights, warranties and incentive structure and operation of the market; the international agreements on trade and the legal system in general. Main proclivities of FDI. The list of FDI investors is not only limited to search market and investors looking for natural resources; instead, investors looking for efficient and strategic search assets today is also on the list and given due importance. In addition, most investors around the world are in the service sector, although this may not be true for FDI situation in all countries. Venture is still a common form using a variety of other arrangements including strategic alliances, networks, agreements other non-capital. Activities merger and acquisition is also an important form of FDI. The relationship of history and geography impacts the current crisis. In addition, the FDI flow to foreign countries often shows the comparative advantage and competitive strategies of the country to invest. Therefore, linkages of geography, history and other link made the basis for selection of investors. The economic benefits from FDI. The following are the benefits brought by FDI: (1) Employment: While the number of jobs created are suitable for different scales of investment and production process itself and along with new jobs and income is additional purchasing power for local peo