Bac Giang’s economic transformation has been nothing short of remarkable, and at the heart of this evolution lies the compelling story of Foreign Direct Investment (FDI). In this article, we delve into Bac Giang‘s journey through the lens of FDI, exploring how this northern Vietnamese province has emerged as a magnet for foreign capital. We’ll navigate the intricate dynamics that shape its FDI landscape, offering insights into the economic contributions, societal transformations, and the challenges and opportunities that define Bac Giang’s FDI arena. Join us as we unravel the FDI landscape in Bac Giang, a province poised for growth and development.

Bac Giang in Focus

Exploring Bac Giang’s Geographical and Economic Landscape

Bac Giang, strategically positioned in the Northeastern region of Vietnam, holds a key place along the Lang Son – Hanoi – Ho Chi Minh City – Moc Bai economic corridor, which forms part of the North-South Economic Corridor stretching from Nanning, China, to Singapore. This province shares its borders with the capital city – Hanoi – and neighboring provinces such as Bac Ninh, Hai Duong, Lang Son, Quang Ninh, and Thai Nguyen. Additionally, it stands adjacent to the dynamic “development economic triangle” encompassing Hanoi, Hai Phong, and Quang Ninh.

Bac Giang boasts a well-connected and convenient transportation network, featuring an extensive system of highways, waterways, and railways. This infrastructure facilitates the movement of goods and people, enhancing accessibility for businesses and investors alike.

Furthermore, Bac Giang has invested significantly in its information technology infrastructure, ensuring high-speed internet connectivity and effective communication. The ongoing development of the Bac Giang International Logistics Center is poised to further bolster the province’s logistical capabilities, offering an efficient gateway for trade and commerce.

The Historical Context of FDI in Bac Giang

As of November 15, 2023, the Bac Giang Provincial People’s Committee reports a significant achievement, successfully securing a converted investment capital exceeding 3 billion USD. This figure is three times higher than the same period the previous year, setting an all-time record for FDI influx. Notably, 88 FDI projects have received approval with registered capital exceeding 1,500 million USD, reflecting a staggering 3.46-fold increase compared to the same period in the preceding year and marking the highest level of FDI recorded.

Additionally, Bac Giang has witnessed an increase in capital for 44 existing FDI projects, with additional registered capital nearing 1,200 million USD. This represents almost double the amount reported for the entire year in 2022.

To date, Bac Giang province is home to a cumulative total of 551 FDI projects, boasting registered capital exceeding 10.8 billion USD. The implemented capital of these FDI projects is estimated to reach approximately 1,300 million USD.

When it comes to attracting FDI investment, Bac Giang ranks fifth in the country, following prominent regions like Quang Ninh, Hai Phong, Hanoi City, and Ho Chi Minh City. The FDI projects primarily concentrate on manufacturing and processing electronic components, textiles, garments, and logistics. Bac Giang has succeeded in attracting investment from 30 countries and territories, with China leading the way as the largest investor, contributing over 227 projects and a total capital infusion of approximately 5.14 billion USD. Following closely is Korea, with nearly 300 projects and registered capital amounting to about 2.1 billion USD.

Impact of FDI on Bac Giang’s Economic Development

Enhancing GRDP and Driving Economic Growth

One of the most striking impacts of foreign direct investment (FDI) in Bac Giang is its substantial contribution to the province’s Gross Regional Domestic Product (GRDP) and overall economic growth. Investment-attracting projects have increasingly emerged as the primary drivers of economic growth, particularly in the industrial and service sectors. This transformative journey is evident when examining key economic indicators over the years.

As per the Bac Giang Provincial People’s Committee, in the year 2000, the province’s GRDP stood at 10,508 billion VND (current prices), with investment projects accounting for 8.2% of the province’s GRDP. Subsequently, from 2001 to 2005, Bac Giang maintained an impressive average annual economic growth rate of 8.2%. By 2015, the province’s GRDP soared to 55,448.4 billion VND. During the 2016-2020 period, the GRDP growth rate accelerated to an impressive 13.8% per year. The agriculture, forestry, and fisheries sectors contributed 11,699.1 billion VND, while the construction industry made a substantial leap to 25,624.4 billion VND, including 20,042.1 billion VND from the industrial sector and 5,582.3 billion VND from construction. Importantly, the role of investment projects in contributing to the province’s GRDP remained pivotal, constituting a substantial 51% of the GRDP, and this ratio continued to surge, reaching an impressive 63.4% by 2020.

Land Utilization Efficiency and State Budget Revenue

Efficiency in land use is another dimension to assess the impact of investment projects in Bac Giang, particularly when considering the state budget revenue generated per unit of land area. Analyzing the trends over the years reveals that while there has been an increase in the efficiency of land use by investment projects, the results are not yet optimal. As reported by the Bac Giang Provincial People’s Committee, in 2005, state budget revenue from investment projects amounted to 0.32 billion VND per hectare. By 2010, this figure had decreased slightly to 0.3 billion VND per hectare. However, a positive shift occurred in 2015, with revenue climbing to 0.42 billion VND per hectare. In the most recent data from 2020, there was a substantial increase, with state budget revenue reaching 0.65 billion VND per hectare.

Challenges and Opportunities in Bac Giang’s FDI Arena

Bac Giang’s FDI Prospects

Bac Giang Province offers substantial opportunities for investors. In 2022, it jumped 29 places in the Provincial Competitiveness Index (PCI), ranking second nationwide. Bac Giang currently hosts eight industrial zones spanning around 1,967.46 hectares, with plans to expand to over 10,000 hectares by 2030. This expansion includes 29 industrial zones covering about 7,000 hectares, 20 new and expanded zones totaling nearly 5,700 hectares, and 63 industrial clusters over 3,000 hectares. Key sectors such as electronics, solar energy batteries, textiles, and more are in focus.

Mr. Mai Son, Vice Chairman of the Provincial People’s Committee, ensures that the government is proactive in supporting foreign investors, establishing special task forces to address issues promptly, and maintaining close relationships with businesses.

Overcoming Investment Challenges

Despite these opportunities, challenges persist. Lengthy land allocation and lease procedures, slow dossier processing, and complex construction-related procedures can create delays. Limited planning quality, frequent adjustments, and inconsistencies between various planning criteria pose additional hurdles. Addressing these challenges is crucial for Bac Giang’s continued growth as an attractive FDI destination.

Final Thoughts

The future of foreign direct investment (FDI) in Bac Giang holds immense promise. With remarkable contributions to the province’s economy, FDI has transformed Bac Giang into an attractive destination for investors. As Bac Giang embarks on its journey toward further economic development and innovation, opportunities are ripe for those looking to invest in this dynamic region. To seize these prospects and navigate the evolving landscape of foreign investment, consider partnering with Viettonkin, your trusted ally, to unlock the full potential of Bac Giang‘s investment opportunities. Explore how Viettonkin can assist you in making strategic direct investing decisions and ensuring a successful foreign capital journey in Bac Giang.