Where to invest in Vietnam? Episode 1 – Quang Ninh Province
Vietnam in the recent years has become an appealing location for foreign investors mostly due to its advantages such as low labor cost, high economic growth and stable social and political environment. One of the first steps for the foreign investors when making a go-to decision in Vietnam is to answer the question of where to invest? In more specific, which provinces and cities provide the most suitable conditions for the investment such as favorable location, sufficient development of infrastructure, cost advantages, labor availabilities and so on? To answer this question, Access Vietnam shares our research and insights about provinces and cities of Vietnam in different articles with each episode focusing on one particular province/city. In this first episode, we will shed the light on Quang Ninh, which was the highest ranked province in the Provincial Competitive Index (PCI) conducted by the Vietnam Chamber of Commerce and Industry (VCCI) in 2017.
Where is Quang Ninh and why should I invest in Quang Ninh?
Quang Ninh is a coastal province, located in the Northeastern part of Vietnam and is 153 km away from Hanoi. It is the only province in Vietnam that shares both the land and sea border with China. It belongs to the Northern key economic region in Vietnam and it is the largest center of Vietnam in terms of coal resources, power industry, cement and other construction materials.
Since 2013, Quang Ninh has been in the top 5 ranked provinces and cities in the PCI and the reasons that make Quang Ninh as an attractive investing destination can be listed as follow:
1. Favorable location
Being right next to China makes Quang Ninh an ideal location for investors who wish to expand or relocate their production line from China to Vietnam. It takes about 8 hours to travel by land from Guangdong, China to Quang Ninh. The investors therefore can diversify the business risks by having factories in different locations while still enjoying the close proximity between their entities in Vietnam and China.
Quang Ninh is also a neighbor of Hai Phong city, which has the biggest and the most modern international seaport in the North of Vietnam. The two provinces are connected by the Highway 18 and a newly-built Halong-Hai Phong Highway. From the center of Quang Ninh, it is less than 2 hours to reach Hai Phong sea port.
In terms of the local supply chain, Quang Ninh is very close to other provinces where most of the industrial parks located such as Hanoi, Bac Ninh, Hung Yen, Hai Duong and Hai Phong. It is less than 2 hours of ride between Quang Ninh and those cities and provinces. The investors can benefit from the close distance between Quang Ninh and the suppliers, especially in the field of electronic and automobile production as those industries are well developed in the mentioned areas.
2. An abundant of high skilled workers
In 2016, the total population of Quang Ninh was recorded at 1.2 million people which is equal to almost 200 people per square kilometer. Not only benefited from relatively good amount of workforce supply, Quang Ninh is also known for the high level of technical skills from the workers especially in the fields of mining, mechanics and power industry. The province is home to 660 educational institutions with 13 district-level technical training centers, 1 provincial training center and 2 Universities.
In terms of labor cost, depending on areas of the province, the figures may vary. The main districts of Quang Ninh has relatively high labour cost with the minimum labor wages of 3,320,000 VND (~144 USD), whereas in other districts, this figure ranges from 112 USD to 126 USD. If compared to other provinces in Vietnam, the labor cost in Quang Ninh are in the middle to high range, which also demonstrates a better skill and education level of the workers in this province.
3. Enormous efforts from local authorities to support foreign investment
According to the PCI, Quang Ninh in the past five years has focused on administrative reform through the operation of the Center for Public Administration and the establishment of the Investment Promotion Department. This effort has played a critical role in shortening the time and reducing the costs for investors. This is reflected in the fact that only 6% of businesses in Quang Ninh surveyed in the PCI 2017 need to wait for more than one month to get the necessary licenses to start operation. More than 80% of enterprises evaluated that the staff are knowledgeable and helpful with clear guidance during the business registration process.
Quang Ninh is also effectively applying the Department and District Competitiveness Index (DDCI) to improve the efficiency of administration reform and the quality of the admin execution for the branches and lower levels of the authority. With the annual publication of the DDCI, it enables the leaders of departments and districts in Quang Ninh to reflect on their performance and improve the efficiency and accountability. The PCI survey in 2017 remarked that the percentages of respondents saying that ‘’provincial leaders have good policies but not good performance at district level’’ has fallen from 64% in 2014 to 58% in 2017.
Notably, in 2017, Quang Ninh province became the pioneer in utilizing the power of social networking, when establishing the DDCI Quang Ninh page on Facebook. This initiative helps the province to catch up and solve problems in the process of implementing administrative procedures right from the grassroots level before they accumulate into urgent and widespread problems.
4. Expat attractiveness
Expat attractiveness is also another strength of Quang Ninh as it is the top three location for tourists in Vietnam, only behind Hanoi and Ho Chi Minh City. It is well known for having the Ha Long bay, which is part of the 7 world wonders as well as many other attractions such as Yen Tu mountain, Co To island and so on. In 2017, the province welcomed 10 million tourist, of which 4.3 million are foreigners. From our experience working with foreign clients wishing to set up a factory in Vietnam, this factor does make the investors more confident in sending expat to work in Viet Nam.
What should I invest into Quang Ninh?
Overall, Quang Ninh welcomes foreign investment from all sectors, except for those that are prohibited or set as conditional by the government. Besides that, Quang Ninh offers different types of benefits and incentives for enterprises, especially those that are in the encouraging sectors of the province. Below is the list of encouraging sectors with the taxes incentives:
Other than the above list, Quang Ninh also offers other attractive incentives such as land leasing exemption for investments that belongs to the list of special encouraging sectors in Vietnam as stated in the circular 46/2014/ND-CP.
With all the above advantages and the benefits that the province offers, Quang Ninh has attracted more than 200 FDI projects with a total registered capital of 6.5 billion USD over the last 30 years. In the upcoming years, the province will continue to offer benefits to the foreign investors with the focus on environmental friendly production, infrastructure development and tourism with the aim to continue being the top listed location for both foreign and local potential investors.