2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
FDI investment and Projects (2001-2010)
Sum of FDI (Million USD) Sum of Projects
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However, regardless of the improvement from 2005-2010, FDI of Tay Ninh still had a big gap behind other developed neighbor regions. (Table 8)
Table 8: Comparison of FDI attraction from the cities in Southeast Vietnam until 2010 (The GENERAL STATISTICS OFFICE of Vietnam, 2018)
As mentioned above, Tay Ninh was not famous for industrial development even though the local government tried to industrialize the city over the years, the speed of moving from Agriculture to Industry in its GDP structure was not too fast. Furthermore, most of the FDI investment focused on industry sector (over 80%) and this tendency was not only happen in Tay Ninh but also in other neighbor cities and when it came to industrialization, Tay Ninh could not compete with other industrialized cities. Therefore, the BEZ was the most FDI attracting factor of Tay Ninh.
4.1.2.3. Economic Policies and Technology Transfer.
4.1.2.3.1. Economic Policies
As discussed above, the socio-economic development of Tay Ninh mostly relied on the development of the economy of the BEZ which helped (1) increasing PCI ranking (2) attracting FDI (3) Creating more new jobs (4) boosting the industrialization process and changing the GDP structure. To explain the development of the BEZ from 2001 to 2010, it’s crucial to investigate the
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economic policies of the local government. Therefore, I will focus on describing and analyzing the BEZ economic policies only.
To improve the competitive advantages of the BEZ, the local government had published many good policies to attract investors in both private sector and FDI, also with customers who visited the BEZ to boost the trade.
Specifically, according to the decision of the Vietnam Government on the BEZ economic policies (2004, 2007, 2009):
1. To Products and Services:
- Products, services from Cambodia will not be charged import tax when they are imported to the BEZ and Vice versa.
- Excise products, services will not have to pay excise tax when being imported to the BEZ or exported from the BEZ to Cambodia. (Liquor, tobacco etc)
- Assembling products which used 100% Vietnam materials will not have to pay export tax.
- All the products, services in the BEZ will be free of VAT (Value-Added-Tax)
- Imported materials, products which are used for production inside the BEZ will be free of import tax in 5 years.
2. To investors
- All investment projects on the BEZ will get the maximum privileges of Vietnam government according to the investment law and order.
- Free of income tax in 4 years for all projects starting when they have income which have to pay income tax. Decrease 50% income tax for the next 9 years and they can choose to pay only 10% on the total income with the income tax in the next more 15 years
- Projects which provide new production chains, upgrade technology, sustainable production, improve the environment will not have to pay tax on their profit in 5 years.
Decrease 50% in the next 9 years.
- Investors, individuals who invest on the BEZ will not have to pay land tax in 11 years and will have to pay only 30% from the 12th year.
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- The Tay Ninh government will have the authority to approve any investment projects that is below 40 million USD.
- People (Foreigners and Vietnamese) who are working in the BEZ will have to pay only 50% of their income tax
3. To Individual customers
- Starting from 2004, there were a lot of free duty stores open in the BEZ and customers were allowed to buy 500.000 VND/person/day. In 2008, the limitation was change to 500.000 VND a week until 2012.
As a result, until 2011, the BEZ had attracted 34 investors with 47 projects, 6.417 billion VND and 219.1 Million USD for FDI, directly created 25000 new jobs with 60% for local citizens. (Vu and Do, 2012). The improvement in the PCI ranking of Tay Ninh (as mentioned above) was directly inherited from the economic policies of the BEZ.
However, regardless of promising results in the first 6 years since these policies were published in 2004, they showed a lot of disadvantages which were manipulated by local people and the BEZ will witnessed a downgrade by this situation in the next 8 years from 2010 to 2018.
4.1.2.3.2. Technology transfers
To evaluate the technology transfers of the region, I relied on the report of (Le, 2012) in which she used the calculation system to consider the current technology index of companies in the region via Technoware (T), Humanware (H), Infoware (I) and Orgaware (O) and contribution index.
These indexes rely on information from companies, assessment from economic experts, experiences of local government, and assessment tendency. Due to the limitation of this part on only technology transfers, I will hereby analysis Technoware (T) and Infoware (I)
Specifically:
- Technoware (T): Including these factors, technology transfers, the matching of devices with the demanded technology, the synchronization of production chain, current usage of these technology, duration of technology.
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- Infoware (I): levels of implementation of information technology into production and works, the importance of used information. Levels of updating, storing and transferring information.
Accordingly, the research of Le (2012) calculated and assessed on these technology transfer factors based on information from The Department of Science and Technology of Tay Ninh. However, the result was not promising. Let’s take a look at Table 9.
The T (Technoware) Index of Tay Ninh could not impress the author as it was too low (2.4). it means that the transferring and implementation if new technology into production chains of factories, companies of Tay Ninh were remarkable low. The FDI section came the highest T index with 2.74 but it was still low in comparison with other indexes even though this is the section which has foreign participants.
The I (Infoware) Index was slightly better when it reached 4.43 at the medium level and could not make it as the expectation.
No Section T Index I Index
1 FDI 2.74 5.21
2 State Enterprises 2.30 4.63
3 Private Sector 2.27 4.11
Table 9: The evaluation of T and I index from The Department of Science and Technology of Tay Ninh (2011)
Economically, the first ten years after the establishment of the BEZ witnessed a remarkable growth in the socio-economic development of Tay Ninh, especially with the achievement in the economy by becoming the fastest growing economy in the region. The BEZ played a very important role in these achievements and development by boosting to the movement between GDP economic sections (from industry and agriculture to service). As a result, the general GDP, GDP per capita and GNI per capita of Tay Ninh experienced the highest growth rate ever which changed Tay Ninh from one of the poorest cities of the region to an over standard of living city of the country.
The economic policies and investment environment of Tay Ninh were highly evaluated with efforts from local government. However, regardless of these highlighted points in the economy, human
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capital and social capital, the technology transfer could not grow as expected. Moreover, the economic policies of the BEZ which helped boosting the investment environment left some unanswered questions about their sustainability.
4.2. From 2011 to 2018.
4.2.1. Knowledge Economy and Human Capital
As we all know, the world economic crisis (2008-2012) happened as one of the worst depression in economic history and Vietnam was not the exception. The GDP growth rate of the country from 2008 to 2012 experienced a slight decrease from about 7% to 5.2% (as the lowest point in 2012) then started to gradually recover to 7% in 2018. In general, the Vietnam economy has recovered to its stable growth ra from 2012 until now and not too much fluctuation.
However, Chart 8 shows the fact that Tay Ninh’s economy was not as good as the country. When the whole country recovered and kept moving forward with a rising tendency in its GDP growth rate years by years, Tay Ninh witnessed a worried downgrade in GDP growth rate especially in the period of time 2013-2016 when it plumed the bottom at 7.6% (2016).
13.50%
2011 2012 2013 2014 2015 2016 2017 2018
Tay Ninh GDP Growth Rate Vietnam GDP Growth Rate
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CHART 8: GDP Growth rate of Tay Ninh in comparison with Vietnam’s, collected by author from