Foreign direct investment towards sustainable development in the northern key economic region

is the stage of getting licensed , but also review business and production activities of FDI enterprises; Sixthly, foreign direct investment towards the sustainable development in key economic regions have mutual interaction and support between foreign investors and the key economic regions. 2.1.3. Requirements for foreign direct investment towards the sustainable development in key economic regions Firstly, foreign direct investment towards the sustainable development in key economic regions must be based on the three main development backbone, which are the sustainable development of economy, society, and environment; Secondly, foreign direct investment towards the sustainable development in key economic regions has to produce pervasive effects to other economic areas; Thirdly, foreign direct investment towards the sustainable development in key economic regions must develop potentials and advantages of the key economic regions themselves and be appropriate particularly to the developmental orientation of each key economic region and generally to the entire economy; Fourthly, foreign direct investment towards the sustainable development in key economic regions must guarantee the harmony of benefits for both overseas investors and the key economic regions; Fifthly, foreign direct investment towards the sustainable development in key economic regions cannot be an independent activity, but need the orientation and guidance from the State, the awareness to comply with laws from FDI enterprises, and the active participation from communities of residents and social organizations; Sixthly, foreign direct investment towards the sustainable development in key economic regions must be coupled with the target of sustainable development of the whole country and with the common movement of the modern world. 2.2. Content, evaluation standards, and main factors affecting foreign direct investment towards the sustainable development in key economic regions 2.2.1. Content and evaluation standards of foreign direct investment towards the sustainable development in key economic regions 2.2.1.1. Content and evaluation standards of foreign direct investment towards the sustainable development in key economic regions about economy - Foreign direct investment positively contributes to foster the economic growth of the key economic regions: including evaluation standards: the 9growth speed of FDI areas in comparison with the growth speed of the key economic regions; the contribution rate of FDI areas in the economic growth of the key economic regions. - Foreign direct investment helps to promote the economic restructure of key economic regions towards modern movement: be evaluated by standards like the density of industrial production value of FDI areas compared with the total industrial production value of key economic regions; the density of production value of FDI areas in comparison with the production value of the whole region. - Foreign direct investment makes contribution to raise export turnover of key economic regions: including evaluation standards such as the rising speed of FDI areas’ export turnover; the density of export turnover of FDI areas compared with the export turnover of the entire key economic regions. - Foreign direct investment contribute to enrich the budget of key economic regions: including the following standards: the rising rate of FDI areas’ annual budget; the rate of budget incomings from FDI areas compared with the total budget incomings of key economic regions. - FDI’s contribution to the total amount of socially investing capital of key economic regions is shown in standards as the following: the contribution rate of FDI areas into the total socially investing capital in key economic regions; the increasing rate of annual investment capital of FDI areas. 2.2.1.2. Content and evaluation standards of foreign direct investment towards the sustainable development in key economic regions in terms of society - Foreign direct investment helps produce employment and speed up the transfer of labor structure in key economic regions towards advancement: The following standards can be used to evaluate this content: The number of laborers created annually in FDI areas; the raising speed of workers working in FDI areas every year; The laborers working in FDI areas to the total number of workers having jobs in key economic regions ratio; The quantity and rate of employing local labor compared with the total number of laborers of FDI areas; The industrial labor in FDI areas to the total labor working in key economic regions ratio; - Foreign direct investment continuously improves the quality of labor source having jobs in FDI businesses in key economic regions. It can be evaluated by the following standards: The average income/month/laborer 10 (including basic salary and other incomes) of workers; The labor rate, especially immigrant workers working in FDI companies with housing and facilities as well as equipment for daily activities of laborers; The number of cultural and spirit activities yearly organized by FDI enterprises; The number of places for entertainment, culture, and sport for workers in FDI enterprises; The amount of time for rest of laborers in a day; The amount of extra working time of workers; The rate of labor equipped with means of labor protection; The trained workers to the total number of laborers working in FDI areas ratio. - Foreign direct investment makes contribution to hunger eradication and poverty reduction and guarantees social welfare for residents in key economic regions: Foreign direct investment helps to foster economic growth and contribute to the budget of key economic regions, thereby indirectly affecting the tasks of hunger eradication and poverty reduction and ensuring social welfare for inhabitants of key economic regions. 2.2.1.3. Content and evaluation standards of foreign direct investment towards the sustainable development in key economic regions as to environment - Foreign direct investment must be coupled with the rational exploitation and economical and effective utilization of natural resources in key economic regions. Standards used to measure this content are: The export value of raw materials to the total export value of FDI areas ratio; the rate of consuming natural resources/a unit of products and services. - Foreign direct investment must comply with and strictly follow laws of environmental protection of the invested country, in general, and of key economic regions, in particular. In order to assess the implementation of laws on environmental protection of FDI businesses, the following standards should be based on: The quantity and rate of FDI enterprises making Reports on the evaluation of environmental effects and Commitment for environmental protection; The number and rate of FDI companies having waste processing system/the total number of FDI enterprises; The quantity and rate of FDI businesses violating laws on environmental protection. - Foreign direct investment in key economic regions must be attached with the use of high technology, modern technology, and friendly technology to environment: this can be evaluated by standards: The scale of capital investment/labor; The rate of fixed property equipped (fixed property)/labor; 11 The technological level of FDI projects (high, medium, and low technology); The rate of FDI projects from developed countries. - Foreign direct investment in key economic regions must be combined with the building of methods for environmental protection and prepared for the precaution, prevention, settlement, and control of environmental pollution; at the same time the protection, nourishment, and improvement the environmental quality in key economic regions. The standards for this evaluation include: The cost invested for researching and developing technology for environmental protection; The cost put into the tasks of protecting environment of FDI businesses; The spending invested for the tasks of environmental protection to the total investment capital of FDI enterprises ratio. - Foreign direct investment must offer good effects to private businesses on the issue of environmental protection, contributing to impact the work of environmental management of the invested country, in general, and key economic regions, in particular: seriously carrying out criteria for environment of FDI companies also has positive influence on environmental results from trading partners supplying inputs and satellite companies through giving support and consultancy on environmental managing systems or environmental handling measures that FDI enterprises have done. Through FDI joint venture partners, inland companies can learn and get help as well as advice to make environment improved. 2.2.2. Main factor affecting foreign direct investment towards the sustainable development in key economic regions Firstly, group of factors from the invested country includes: (i) The improvement of legal system and policies related to FDI towards the sustainable development in key economic regions; (ii) Strategies to attract FDI towards the sustainable development in key economic regions; (iii) The quality of planning tasks and projects to draw FDI towards the sustainable development in key economic regions; (iv) The capability to examine and monitor FDI activities towards the sustainable development in key economic regions; (v) The connection and coordination in operation amongst Ministries, departments, and localities as well as between local areas in key economic regions; (vi) The quality of human resources to meet the demand for foreign direct investment towards the sustainable development in key economic regions; (vii) The synchronous and modern development of technical infrastructure system satisfying requirements for foreign direct 12 investment towards the sustainable development in key economic regions; (viii) The maturity and development of supplementary industry system and services assisting business activities in key economic regions; Secondly, group of factors from foreign investors includes: (i) Business strategies and the orientation of the investing market; (ii) financial potentials; (iii) FDI projects’ level of technology; (iv) The awareness to comply with laws from overseas investors. 2.3. Experience from some Asian countries in foreign direct investment towards the sustainable development in key economic regions and lessons for the Northern key economic region 2.3.1. Experience from some Asian countries in foreign direct investment towards the sustainable development in key economic regions International experience in foreign direct investment is summarized from successful experience from some Asian countries in drawing and managing foreign direct investment, which is: Experience in attracting FDI and promoting area development as well as intensifying the level division to manage the capital source for investment from Indonesia; Experience in improving investment environment, constructing infrastructure, creating human resources of high quality, and developing supplementary industry from Thailand; and experience in perfecting legal system and policies, focusing on infrastructure renovation and technology transference, and paying more attention on the selection of FDI projects from China. 2.3.2. Lessons gained from experience in foreign direct investment towards the sustainable development for the Northern key economic region By summarizing experience from some Asian countries in foreign direct investment mentioned above, the dissertation author gains some lessons from the experience as a reference for Vietnam, in general, and the Northern key economic region, in particular in the FDI orientation towards environmental protection. These lessons are: (i) Renovating and improving legal system as well as opportunely adjusting investment policies to be suitable to targets and direction of the country in each stage; (ii) Getting planning tasks and projects for FDI attraction of the key economic region done well coupled with general strategies for social-economic development of the country to meet the need for sustainable development; (iii) Actively and positively raising the effectiveness in dividing levels to manage foreign direct investment activities; (iv) Strengthening the work of verifying and supervising activities of foreign direct investment to ensure the sustainable development of the key economic region; (vi) Actively and positively developing supplementary industry to meet the 13 demand for sustainable development in the key economic region; (vii) Expanding synchronous, modern, and high qualitative infrastructure in the key economic region. 14 Chapter 3 THE REAL SITUATION OF FOREIGN DIRECT INVESTMENT TOWARDS THE SUSTAINABLE DEVELOPMENT IN THE NORTHERN KEY ECONOMIC REGION 3.1. Potentials, advantages, difficulties, and challenges to foreign direct investment towards the sustainable development in the Northern key economic region 3.1.1. The generalization of formation and development process of the Northern key economic region The Northern key economic region was formed according to Decision No. 1018/1997/QĐ-TTg covering 5 Provinces and Cities of Ha Noi, Hai Phong, Quang Ninh, Hai Duong, and Hung Yen, located in the domains of Hong River Delta and the Northeastern mountainous areas. On August 13 th 2004, the Prime Minister released the Decision No. 145/2004/ QĐ-TTg on the main direction to develop society and economy in the Northern key economic region till 2010 and with the vision till 2020. On the Decision, the scale of the Northern key economic region was expanded to include another 3 provinces, which were Ha Tay, Vinh Phuc, and Bac Ninh. Since August 1st 2008 after the Resolution made by Congress at the third meeting of the Tenth Congress on extending the administrative border of Ha Noi City, covering all Ha Tay Province, Me Linh Ward (Vinh Phuc), and 4 Communes of Luong Son Province (Hoa Binh), the Northern key economic region has included 7 provinces and cities: Ha Noi, Hai Phong, Quang Ninh, Hai Duong, Hung Yen, Bac Ninh, and Vinh Phuc (Ha Tay was merged to become part of Ha Noi Capital). 3.1.2. Potentials, advantages, difficulties, and challenges to foreign direct investment towards the sustainable development in the Northern key economic region 3.1.2.1. Potentials and advantages to foreign direct investment towards the sustainable development in the Northern key economic region The Northern key economic region has a lot of potentials and advantages in attracting FDI towards the sustainable development. This is the region with favorable geological sites, plentiful and diverse natural conditions, quite synchronous infrastructure, and development levels which are much higher than those of other regions in the whole country combined with great capability of training and expanding human resources. Among 15 these things, human resources of high level is viewed as the noticeable and competitive advantage to draw FDI in comparison with other key economic regions in the entire country. 3.1.2.2. Difficulties and challenges to foreign direct investment towards the sustainable development in the Northern key economic region Beside potentials and advantages, the Northern key economic region is also facing a lot of difficulties and challenges to attract FDI towards the sustainable development in the region. Particularly, the system of mechanism and policies has not completely and specifically reflected on properties and individual characteristics of the Northern key economic region yet; the connection and coordination in the region remain poorly effective; the labor quality after training is still at a low level, incompatible with potentials and advantages of the region about the number of labor sources; high population density, along with low average agricultural land per capita, makes it hard to change the purpose of using agricultural land; and environmental pollution, especially the pollution of water source because of industrial waste materials and the process of urbanization is higher and higher and hits alarming degree. These are huge challenges to the Northern key economic region between continuing promoting the speed of economic growth coupled with expanding the scale to develop industry and reaching the target of sustainable development on environment. 3.2. The real situation of foreign direct investment towards the sustainable development in the Northern key economic region 3.2.1. The generalization of the reality of foreign direct investment attraction in the Northern key economic region 3.2.1.1. About the number, registered capital, and scale of FDI projects - About the number of FDI projects: gathered from January 1st 2003 to July 20th 2012, the Northern key economic region had 3,239 FDI projects remaining effective. If compared with other key economic regions, in the period 2003-7/2012, the Northern key economic region attracted 8.8 times FDI projects higher than that of the Central key economic region (364 projects) but one third less than that of the Southern key economic region (6,245 projects). - About registered FDI capital and implemented FDI capital: during 2003-2011, the Northern key economic region drew $34,620 million of FDI capital. The total implemented FDI capital put into the region was $11,5 16 million in the period from 2003 to 2011, reaching 33.3% compared with registered FDI capital at the same period, an annual average of $1,3 million/year. - About the scale of FDI projects: The scale of FDI projects in the Northern key economic region from 2003 to July 2012 is mainly small and medium with an average rate of $11 million/project (correspondingly $12 million/project in the South and $29 million/project in the Central) 3.2.1.2. About the structure of foreign direct investment - About FDI structure classified into industries and fields From 2003 to 7/2012, FDI structure classified into industry in the Northern key economic region was focused chiefly on the field of industry and construction, making up to 58.22% the total number of projects and 62.14% the total registered capital in the area. The field of service attracted 1,332 FDI projects, taking 41.12% the total number of projects and 37.57% the total registered capital. The combination field of agriculture, forestry, and fishery account for just 0.64% the total number of projects and 0.28% the total registered capital. - About FDI structure classified into forms of investment From 2003 to 7/2012, FDI in the Northern key economic region was primarily performed by the form of 100% foreign investment with 2,537 projects, accounting for 78.33% the total number of projects and 64.63% the total registered capital. There were 573 joint venture projects, making up 17.69% the total number of projects and 18.89% the total registered capital. The remainders were of other forms like Business cooperation contracts (2 projects), BOT, BT, and BTO Contracts (48 projects), Joint stock Company (78 projects), and subsidiary-parent Company (01 project). - About FDI structure divided into investing partners There were 62 countries and dominical regions having FDI projects in the Northern key economic region during 2003-7/2012. Among these countries, Asian countries had 2,584 projects, taking 79.77% the total number of projects and 69.12% the total registered capital. Of 12 nations and regions having over $1 million of total registered capital, 2 countries representing for European were the Netherlands (ranked 5th) and Luxembourg (ranked 9th); and the United States (ranked 8th about the total registered capital) represented for countries from Americas. - About FDI structure divided into invested areas 17 Foreign direct investment in the Northern key economic region was concentrated mainly on Ha Noi with 1,991 projects, accounting for 61.46% the total number of projects and 41.89% the total registered capital. Projects were least invested in Quang Ninh, which had a humble number of 96 projects, making up 0.29% the total numbers of projects and 11.43% the total registered capital. 3.2.2. The reality of foreign direct investment towards the sustainable development in the Northern key economic region from 2003 to 2011 3.2.2.1. The real situation of foreign direct investment towards the sustainable development in the Northern key economic region - FDI area’s contribution to the economic growth of the Northern key economic region: The contribution rate of this area to the economic growth of the Northern key economic region in the period 2006-2011 rose continuously over years and was comparatively stable. To be totally counted in the period, GDP of FDI area averaged 17.38% compared with the GDP of the region. - FDI area’s contribution to the total socially investing capital of the Northern key economic region: The capital of FDI area contributed to the total socially investing capital of the Northern key economic region tends to rise over years and makes up a significant rate in the total investing capital of the region for society. During the period 2003-2010, FDI capital kept certain at an average contribution of about 12% in comparison with the total socially investing capital of the region. The results show that the contribution rate of inland capital area to total socially investing capital in the Northern key economic region was quite high, accounting for 86.83%. - FDI area’s contribution to local budget in the Northern key economic region: FDI area has greatly contributed to local budget of the Northern key economic region in that last years. To be totally counted during 2003-2010, the payment rate for budget of FDI area compared with the total budget of the area was 15.4%/year. - FDI area’s contribution to export of the Northern key economic region: Foreign direct investment in the Northern key economic region has good effect on export activity of the area. Generally from 2003 to 2011, the export value rate/FDI implemented capital always rose in almost all provinces and cities in the region. - FDI area’s contribution to the economic restructuring of the Northern key economic region 18 + During the last years, FDI area has made considerable contribution to the process of restructuring economic industries in the Northern key economic region towards raising the density of production value in industrial field. The density of industrial production value of FDI area was increasing and made up 40.62% compared with the value of industrial production in the Northern key economic region in 2006. One after another, the figure was 42.69% (2007); 44.24% (2008); 43.36% (2009); 49.11% (2010); and 57.38% (2011). Compared with the general production value of the Northern key economic region, the value of industrial production of FDI area took 23.9% (2003); 28.08% (2008); and the record rate of 40.18% (2011). + FDI contributes to transfer the component structure in the Northern key economic region: The structure of industrial production value in the Northern key economic region during the period 2006-2011 had moved towards the direction of raising the density of industrial production value of FDI area. FDI area’s industrial production value always held a higher density than that of State-run businesses and private companies in the region. 3.2.2.2. The real situation of foreign direct investment towards the sustainable development of society in the Northern key economic region - About the capability to produce employment and make contribution to foster the transference of labor structure in the Northern key economic region towards the direction of industrialization + The capability to create employment in FDI area: FDI area of the Northern key economic region has continuously produced jobs for workers over years. In the period of 2003-2010, FDI area of the Northern key economic region has 2,047,044 laborers having jobs, with an average of 255,880 workers/year. The rising rate of labor working in FDI area averaged 24%/year during this region. + The contribution of FDI area in promoting the transference of labor structure: Of total laborers currently working in FDI area, industrial employment rapidly rises and makes up the highest density. If the number of workers having jobs in industrial field in FDI area of the Northern key economic region was 78,222 in 2003, taking 77,26% the total number of laborers in FDI area in 2003, the number of industrial working laborers in 2006 was 185,623, making up 89.92%, and 354,138 in 2010 with 79.86% correspondingly. - About raising the quality of labor source in FDI enterprises in the Northern key economic region 19 + Workers’ salary and income: The average salary and income of laborers in FDI area has been improved in the last few years, but they remains lower than those of workers working for private businesses and joint stock companies. Additionally, there is a definite difference in the salary of between those who have jobs in enterprises with FDI capital and those of private businesses, between job positions, between managing employees and workers without training in the same kinds of enterprises with FDI capital. + Working conditions of laborers: The reality of working extra shift, extra hours happens in almost all businesses with FDI capital in general and enterprises with FDI capital in the Northern key economic region, in particular, especially in companies producing textile and garment, leather shoes, fishery processing, and industrial production. FDI enterprises have not carried out well regulations on complying with hygiene safety and labor protection. + Physical and spiritual life of laborers Although workers’ salary and incomes in enterprises with FDI capital has considerably increased in recent years, they are still lower than those of other types of businesses. With such low income and high working intensity, spiritual life of workers in businesses with FDI is very poor and deficient. They do not have time to take rest, entertain, and take part in other social activities. + Training and raising professional level for workers Laborers after recruited to work in companies with FDI capital have got supplementary training, chances to access, learn, and acquire new technology and technique as well as methods to operate businesses and industrial working manners, little by little contributing to enhance levels of professional knowledge and skills. - About effects of foreign direct investment on the situation of security and order in the Northern key economic region + Enterprises with FDI capital have not strictly performed labor laws and ensured laborers’ rights, generating social conflicts and leading series of strikes and go-slows. + Happenings of violating bylaws of foreign employees’ entrance and exit still exist in such forms as: illegally enter the country, wrongly work 20 compared with entrance purposes, excessively stay, dishonestly declare to get visa, disorderly cause insecurity at localities. 3.2.2.3. The reality of foreign direct investment towards the sustainable development of environment in the Northern key economic region - Situation of carrying out laws on environmental protection: amongst businesses with FDI in the area, Japanese enterprises often do better on the tasks of protecting environment. Most companies with FDI offending laws on environmental protection are businesses with small and average size from Taiwan, South Korea, and China. Vinh Phuc Department of Natural Resources and Environment inspected and verified enterprises with FDI in 2011 and found 14 businesses with violating acts on environmental protection. Authority agencies fined these businesses and with the suggestion of VND 528.75 million. - Situation of investing in environmental protection of enterprises with FDI capital: Most companies with FDI capital in the border of Vinh Phuc Province have actively applied measures of processing waste materials before dismissing it into environment and put money into changing new technology in production and waste processing in order to reduce environmental pollution such as: Vietnam Honda Company, Vietnam Toyota Company, Vietnam Exedy Co., Ltd, Vietnam Meisei Co., Ltd (Vinh Phuc), and so on. - The level of using technology in FDI projects: the level of technology utilized in FDI projects is also varied in different industries and professions. The advanced level of technology in field of processing agriculture, forestry, and food products is backward; the 5 other fields (mechanics, building material production, electricity and electronics, textile and garment, leather shoes, and paper production; other fields) only reach medium level of technology. - Bad effects of FDI area on sustainable development and environment in the Northern key economic region: The violations of laws on environmental protection of FDI area in the Northern key economic region, causing environmental pollution and affecting production activities, include: sewage containing pollutants of Vietnam Nissan brake production Company, Quang Khai industrial park, Yen Binh Prime joint stock Company; non-processing wastewater with the content of Chrome 6, the most toxic among metals (coupled with Asen and Mercury) found in Tungkuang industry joint stock Company (in Hai Duong); smoke, dust, and exhaust of Chifon Cement Company in an incident occurring in 2010 in Hai Phong. 21 3.3. General evaluation of foreign direct investment towards the sustainable development in the Northern key economic region 3.3.1. Achievement - About economy: (i) FDI investment structure is suitable to the country’s policy of general economic structural movement towards increasing the density of industry and service field; (ii) FDI investment structure according to investing partners also has good changes with the more and more appearance of countries around the world investing in the area, not few of which are overseas investors with potentials of both finance and technology; (iii) Foreign direct investment in the Northern key economic region has made contribution to supplement capital for total social investment, playing important role in export and raising local budget incomings in the Northern key economic region. - About society: (i) FDI area has produced employment in the Northern key economic region, greatly impact the transference of labor structure towards industrialization and modernization; (ii) some Vietnamese businesses producing supplementary products or distributing supplementary products are also formed; (iii) modern managing methods of some FDI enterprises like Honda, Toyota, or Ford Company have clear effect in imparting advanced management to Vietnamese labor. - About environment: Most FDI enterprises in the Northern key economic region are aware of complying with laws on environmental protection; businesses have actively put money into tasks of protecting environment, limiting bad influences on environment. 3.3.2. Restrictions of FDI towards the sustainable development in key economic regions and its causes 3.3.2.1. Restrictions - In economic field: (i) Investment structure based on industries of FDI area is still imbalanced and inappropriate to the policy of encouraging and favoring the development of business and field; (ii) FDI contribution in the Northern key economic region to the economic growth is incompatible with potentials. Technology used in FDI companies in the Northern key economic region remains low and average, even backward in some cases; there exist phenomenon of pricing transfer and tax evasion in FDI enterprises in the Northern key economic region, causing losses to state budget and difficulties to the task of managing tax in FDI companies. 22 - In social field: Jobs created in FDI area of the Northern key economic region is incompatible; (ii) monthly average income of workers does not match with the time and intensity of working; (iii) Physical and spiritual life of laborers deficient, and the quality of life is poor; (iv) Labor conflicts and strikes tend to increasingly go up, influencing order and social security of the local area. - In environmental field: (i) the assignment of protecting environment in businesses with FDI capital in the Northern key economic region is not satisfactorily concerned by investors; (ii) the occurrence of offending laws on environmental protection is quite popular in almost all provinces and cities in the area; (iii) some overseas investors seem to look down on people’s health and living habitat of Vietnam, again and again breaking regulations on environmental protection, making residents’ surroundings seriously worse regardless of investigation, warning, and punishment of government of different levels in the Northern key economic region. 3.3.2.2. Causes of restrictions Firslty, the legal system and polices in regard to foreign direct investment continue overlapping, laking of synchronicity and unification; Secondly, the task of making planning of the Northern key economic region is largely limited, not effectively meeting requirements for the sustainable development of the area and failing to offer strategies to draw FDI towards the sustainable development; Thirdly, the management task of the State on foreign direct investment is problematic; Fourthly, the quality of labor source of the Northern key economic region is restricted, and labor structure classified into business remain rational; Fifthly, the technical infrastructure structure in the Northern key economic region is poor and limited; Sixthly, complementary industries in the Northern key economic region are not developed well to ensure FDI towards the sustainable development. 23 Chapter 4 ORIENTATION AND MAJOR SOLUTIONS FOR PROMOTING FOREIGN DIRECT INVESTMENT TOWARDS SUSTAINABLE DEVELOPMENT IN THE NORTHERN KEY ECONOMIC REGION 4.1. Orientations for foreign direct investment towards sustainable development in the Northern key economic region 4.1.1. Foundation for formation of orientation for foreign direct investment towards sustainable development in the Northern key economic region 4.1.1.1. Domestic and international background affecting foreign direct investment towards sustainable development in the Northern key economic region In the current period and the next years, domestic situation and international context create the country in general and the Northern key economic region in particular big strengths and opportunities, together with extreme weaknesses and threats in performing objectives of social and economic development and protection of the independence, sovereignty, unification and territorial integrity during the strategic period. In addition, it offers threats for Vietnam and the Northern key economic region in orienting attraction and management of FDI operations to guarantee objectives of sustainable development. 4.1.1.2. Objectives of social and economic development in the Northern key economic region during 2011 - 2020 Economic, social and environmental targets of the Northern key economic region in the period of 2011-2020 are identified based on Decision No. 145/QĐ-TTg on August 13rd, 2004 about Major orientation for social and economic development in the Northern key economic region until 2010 and vision until 2020, which is foundation for formation of FDI orientation towards sustainable development in the Northern key economic region until 2020. 4.1.2. Orientation for foreign direct investment towards sustainable development in the Northern key economic region until 2020 First, to renew thought on FDI attraction to the Northern key economic region towards focusing on quality of FDI inflows; Second, to enhance coordination of strategy establishment to attract and use effective FDI inflows; Third, to orient attraction of FDI capital from countries with source technology such as U.S., Europe and Japan to the Northern key economic 24 region to take a short-cut some technology sectors; Fourth, for enterprises in the area, to be necessary to take advantages of benefits from investment attraction of multinational companies and large economic corporations by building development strategies to participate in global value chains of companies in the world market step by step; Fifth, direct FDI inflows in the area to industries, sectors with potential and development advantages such as industry, services, commerce; Sixth, to coordinate between investment promotion agencies, trade promotion agencies and tourism promotion agencies of the Government and local organizations in the area in a more close and harmonious way. 4.2. Major solutions for enhancing foreign direct investment towards sustainable development in the Northern key economic region until 2020 4.2.1. Group of solutions from Central State 4.2.1.1. Solutions for continuing to renew, complete legal systems and policies related to FDI operations towards sustainable development First, to complete management mechanism and legal systems, policies suitable for commitments with WTO; Second, to complete the legal documents, to guide implementation of Investment Law promulgated in 2005; Third, to consolidate apparatus and improve capacity of civil servants to enforce law and systems of investment encouragement policies in a effective way. 4.2.1.2. Establishment of FDI strategies and plans of FDI attraction for the country towards sustainable development FDI strategies and plans must be in a master plan of the resources of the country, associate with other domestic and foreign resources to promote integrated strength, improve national competitiveness in the context of extensive integration and international competitiveness. The relevant strategies must be concretized by sectors, territories suitable for the sector plans and major products as well as international commitments and requirements of investors. Based on FDI plans, it is necessary to build List of countries attracting FDI, projects by important industry, sector and the specific technical parameters to provide basic information for investors interested in, in which projects necessary to apply form of joint venture as a matter of priority should be focused. 4.2.1.3. Improvement of validity and effect of State management for foreign direct investment operations 25 First, to innovate and organize State management apparatus towardss compactness; Second, to review and assess the implementation results of State decentralization in general and foreign investment in particular; Third, to invest in additional funds and improve physical facilities for ministries, departments, and local authorities to meet requirements of investment management operations; Fourth, to enhance investment in training, fostering State management staffs. 4.2.2. Group of solutions from local government in the Northern key economic region 4.2.2.1. Solutions for improving quality of development spatial planning in the Northern key economic region towards sustainable development First, to change perceptions, methods, make spatial planning for social and economic development for the Northern key economic area; Second, to build spatial planning for social and economic development for the Northern key economic area; Third, to invest funds in research institutes with professional capacity, function of making planning for social and economic development; Fourth, to consider, evaluate, select spatial planning for social and economic development and other types of specialized planning of the Northern key economic region. 4.2.2.2. Solutions for FDI attraction to the Northern key economic region associated with sustainable development goals First, to understand the positive and negative impacts of FDI on economy in a clear and united way; Second, to promulgate and execute reasonable investment encouragement policies to reach socio-economic efficiency; Third, to apply investment encouragement policies flexibly to direct foreign investors to the key economic sectors of the area; Fourth, to enhance innovation of investment promotion. 4.2.2.3. Solutions for coordination between ministries and agencies and local in the Northern key economic region First, for provinces and cities directly under the central, to be necessary to coordinate with concerned ministries and agencies and local in the region on the initiative; Second, to supplement, change planning opportunely to adapt to new conditions; Third, to make spatial planning for social and economic development and other types of planning of the area; Fourth, to consolidate steering committee for development coordination of the Northern key economic region towards compactness. 4.2.2.4. Solutions for improving management of FDI enterprises in the Northern key economic region 26 First, to improve information for foreign investors to approach, update the current guidelines and policies of our country; Second, to organize interdisciplinary management agencies instead of the current FDI project management board; Third, to review and supplement the current policies, regulations, management mechanisms of FDI enterprises operating in the area to create a synchronous system of policies suitable for movement of development of enterprise in the region, general management mechanism of the country and international practice; Fourth, to encourage and make appreciate supporting policies for FDI enterprises, to facilitate the political and social organizations in the enterprises, which is to gather and motivate employees to properly implement commitments in the labor contract; to build consentaneous and long relationship between labors and business owners. 4.2.2.5. Solutions for improving human resource quality in the Northern key economic region to meet FDI requirements towards sustainable development First, to build plans of human resource development towards strengthening connection of provinces in the Northern key economic region associated with the requirements and strategic objectives of social and economic development of the area; Second, to build policy framework of human resource development of the Northern key economic region; Third, to enhance investment in education – training at all educational levels to meet increasing requirements of human resource quantity and quality, requirements of foreign investors. 4.2.2.6. Solutions for developing supporting industries First, to promote and create an environment for enterprises in the region to participate in the supporting industry development; Second, to encourage foreign investment capital for the supporting industries, especially industries and sectors without conditions and capacity for implementation; Third, to enhance link among enterprises in developing the supporting industries; Fourth, to develop human resource for the supporting industries 4.2.2.7. Solutions for building, improving economic - social infrastructure towards modern to attract foreign investors First, to focus all resources of investment capital on building synchronous technical infrastructure system with ability to connect local in the area and the Northern key economic region with other locals in the country, ensuring convenient circulation with the world and the area; Second, to attach importance to increase of additional investment capital sources by public-private partnership method (PPP), to use resources on site 27 to accelerate the level of synchronization, modernization of technical infrastructure systems; Third, to coordinate, build and improve quality of road traffic structure; Fourth, to be interested in system of schools, hospitals, health centers, cultural centers, amusement parks, cultural and tourism works, residential areas, urban areas, etc, in a comprehensive way to attract foreign investors, especially when they intend to make a long-term business in the area. 28 CONCLUSION 1. Foreign direct investment towards sustainable development in key economic regions is investment activity of foreign organizations and individuals in key economic regions of another country, which meets planning and developing requirements of that region; makes positive impact on the development of the region to ensure harmonious and rational combination among economic development, social development and environmental protection not only for the key region, but also spillovers to other regions both in the present and in the future. 2. NKER is one of national key economic regions that provide potentials and advantages for attracting FDI. In the past few years, NKER and the Southern key economic region are the two national economic regions that attract the most number of FDI projects in comparison to other economic region of the nation. FDI sectors of the region has taken an important part in promoting economic growth, restructuring the region’s economy towards industrialization and modernization, creating jobs, increasing export turnover, and step by step expanding the region’s export market. Whereby, NKER’s role of a leader and motivation in developing economy is confirmed gradually. 3. However, a part from positive effects, the operation of FDI sectors in NKER also raises obstacles for the region’s sustainable development. Bad effects of FDI sectors on the area have been shown in three aspects: economy, society and environment. They are transfer pricing and tax evasion which cause losses to the state budget; the facts like created jobs are insufficient, average monthly incomes of workers in FDI enterprises are not commensurate with work intensity, workers have poor material and spiritual life, labor disputes and strikes tend to increase in FDI businesses, which affects the area’s order and security. Law violations are quite popular in FDI businesses, which cause bad effects on the environment and the health of community. 4. The causes of the mentioned limitations are: First, law systems and policies related to foreign direct investment are overlapped, deficient in synchronism and consistency; Second, planning about NKER is still limited and not really as efficient as it is supposed to be to meet the requirements of the area’s sustainable development; it fails to develop strategies for attracting FDI towards sustainable development; Third, the Government’s FDI management activities are insufficient; Fourth, the quality of NKER’s human resources is limited; the structure of sector employment still has unreasonable 29 factors; Fifth, the infrastructure is limited and poor; Sixth, supporting industries in NKER are not developed enough to lead FDI towards sustainable development. 5. To overcome limitations, weaknesses, and reduce negative effects of FDI on sustainable development of NKER, it is necessary to implement two main solutions comprehensively and effectively with specific solutions including: First, the group of solutions suggested by the Central Government: Keep on innovating and completing law systems and policies related to FDI’s operations towards sustainable developments; Develop FDI strategies and projects for attracting FDI towards sustainable developments; Improve the effects and efficiency of the Government’s management over the activities of foreign direct investment. Second, the group of solutions suggested by NKER authorities: Improve the quality of planning on space for economic developments of NKER towards sustainable development; Attract FDI into NKER with the aim of sustainable development; Have cooperation among ministries, branches and localities in NKER; Strengthen management over FDI businesses operating in NKER; Increase the quality of NKER’s human resources in order to meet the requirements of FDI towards sustainable development; Develop supporting industries; Build and upgrade economic-social infrastructure in a modern way to attract foreign investors. 6. The two groups of solutions require flexible and harmonious management activities from the Central Government to local authorities. However, in the trend of promoting the decentralization for managing investment activities, it is necessary to focus on strengthening coordination and management capacity for the local governments, especially the provincial ones./. THE LIST OF PUBLISHED SCIENTIFIC WORKS RELATED TO THE SUBJECT OF THE DISSERTATION 1. Tran Thi Tuyet Lan (2008), “Solving job for farmers having their lands reclaimed in Vinh Phuc province”, Journal of Labor and Social Affairs, no. 336, pages 39-42. 2. Tran Thi Tuyet Lan (2008). “The current relationship between salary and economic growth in Vietnam”, Journal for Labor and Social Affairs, no. 343+344, pages 69-71. 3. Tran Thi Tuyet Lan (2009), “The basic solutions for Vinh Phuc province to attract foreign direct investment towards sustainable development”, Asia-Pacific Journal, no. 264-265, pages 38-45. 4. Tran Thi Tuyet Lan (2012), “Solutions to improve the quality of economic space planning for Northern key economic region in order to attract foreign direct investment towards sustainable development”, Asian-Pacific Journal, no. 384. 5. Tran Thi Tuyet Lan (2012), “Environmental issues of FDI businesses in Vinh Phuc province – Solution orientations”, State Management Magazine, no. 203.