Impact of the COVID-19 Pandemic on Investment Capital in Thai Nguyen Province, Vietnam

The COVID-19 pandemic has had a huge impact on investment capital in Thai Nguyen, including both domestic private businesses and businesses with foreign direct investment. In an effort to overcome the impact of the COVID-19 pandemic, Thai Nguyen province has proactively grasped difficulties and problems and has plans to support and create favorable conditions for businesses in the area, including FDI enterprises and production peace of mind. The results also show that Thai Nguyen proactively grasps the difficulties and problems of investors to promptly resolve, create and strengthen the trust of investors who have been implementing investment projects in the province.

Introduction

After the COVID-19 pandemic, Thai Nguyen’s investment environment is increasingly creating trust and attractiveness so businesses can feel secure in production and business and continue expanding potential projects. From there, investment capital from sources in the province is increasing. According to the Thai Nguyen General Statistical Office (2023), the total capital attracted in Thai Nguyen province was 46,876.6 billion VND in 2020; By 2022, the total capital attracted in the province will increase to 58,021.9 billion VND. In 2022, the total registered FDI capital in Thai Nguyen province will reach nearly 21,506.9 billion VND, an increase of 2.78% over the same period in 2021. This is the highest amount of realized FDI capital in 3 years (2020 to 2022). In Thai Nguyen, up to 13 countries are investing; of which, Korea leads with a total investment capital of more than 7.33 billion VND, Hong Kong ranks second with nearly 844.40 million VND, Singapore ranks third with a total registered investment capital of 493.68 million VND.

Although the investment capital attracted after the COVID-19 pandemic tends to increase, the increase is not high. This clearly shows the general short-term difficulties of the world economy, and Vietnam and Thai Nguyen province are facing many risks and fluctuations in 2022. The trend of investing abroad in developed countries has signs of slowing down even though the COVID-19 pandemic has been controlled, but due to the influence of a number of basic factors, such as Investor uncertainty and risks due to the impact of political conflicts in some countries around the world; Russia-Ukraine conflict, price pressure, and rising inflation; Global commodity demand tends to decrease; Global financial conditions tend to tighten; Supply chain disruptions have not been entirely resolved. These factors put significant downward pressure on global FDI capital flows in 2022, negatively affecting the foreign investment flows of major economies, especially Vietnam’s investment partners—the impact of reducing foreign investment attraction to Vietnam in general and Thai Nguyen province in particular.

In 2022, although FDI enterprises have positive assessments of the business environment in Thai Nguyen, such as reduced inspection and inspection activities, there are relatively positive changes in administrative procedure reform in many areas, unofficial costs continue to be eliminated, and labor quality and infrastructure quality have relatively straightforward improvements. However, some problems still need to be overcome, such as focusing on reforming administrative procedures where some businesses still encounter troubles regarding tax, fire prevention, import and export, investment registration, and insurance social danger. In addition, the Thai Nguyen province needs to create more favorable conditions for businesses to carry out procedures for implementing investment projects with construction projects such as construction licensing, fire prevention appraisal, and environmental impact assessment. Preventing and combating corruption and negativity must continue to be promoted, especially in some areas such as import-export, inspection, court proceedings, and land administrative procedures.

There is much research on the impact of the COVID-19 pandemic on investment capital. These were followed by a number of further studies, such as that of Umaret al. (2021), Erni and Tiyas (2022), Augustine (2022), and Jianget al. (2021). Erni and Tiyas (2022) determined the effect of herding behavior, accounting information, and information technology on investment decisions through investment interest during the COVID-19 pandemic. Augustine (2022) shows that The motivation of this paper stems from the point that the COVID-19 pandemic is purported to undermine the working capital management (WCM) of firms. However, empirical evidence about the relationship between WCM and COVID-19-exposed firms remains scanty.

Empirical Analysis and Discussion of Results

The Status of Investment in Thai Nguyen Province After the COVID-19 Pandemic

In recent years, with the philosophy of “accompanying investors and businesses,” Thai Nguyen province has promoted the work of attracting domestic and international investment, gradually bringing the locality to a position leading the country in attracting investment. In the context of the COVID-19 epidemic continuing to develop complicatedly, the People’s Committee of Thai Nguyen province has proactively built an operating scenario and directed all levels and sectors to focus on implementing the “dual goals” of epidemic prevention and development socioeconomic. From 2020 to 2022, investments increased from 46,876.6 billion VND to 58,021.9 billion VND. At the management level, the investment from local accounted for the largest proportion, at 61.37% in 2020 and 62.37% in 2022. By capital source, in 2020, the number of non-states was 22,251.2 billion VND, while in 2022, it was 25,472.4 billion VND. The information about the investment is shown in Table I.

Table I. Investment at Current Prices in Thai Nguyen Province

Indicator	2020		2021		2022
	Total capital (bill. dongs)	Structure (%)	Total capital (bill. dongs)	Structure (%)	Total capital (bill. dongs)	Structure (%)
1. By management level	46,876.6	100.00	52,057.2	100.00	58,021.9	100.00
- Central	1,094.0	2.33	1,293.6	2.49	325.2	0.56
- Local	28,763.5	61.37	29,838.9	57.32	36,189.8	62.37
- Foreign-invested	17,014.1	36.30	20,924.7	40.20	21,506.9	37.07
2. By capital source	46,876.6	100.00	52,057.2	100.00	58,021.9	100.00
- State	7,606.3	16.23	8,181.1	15.72	11,042.6	19.03
- Non-state	22,251.2	47.47	22,951.4	44.09	25,472.4	43.90
- Foreign-invested sector	17,014.1	36.30	20,924.7	40.20	21,506.9	37.07

Thai Nguyen General Statistical Office (2023) has shown that the index of investment at constant 2010 prices decreased in the year 2020 and the year 2022 in Thai Nguyen province, Vietnam. In the year 2020, this index was 115.2, and the rate was around 102 compared to the year 2022.

The index of investment is illustrated in Table II.

Table II. Index of Investment at Constant 2010 Prices in Thai Nguyen Province

Indicator	2020	2021	2022
1. By management level
- Central	143.3	115.7	22.9
- Local	103.6	100.8	111.9
- Foreign-invested	139.5	120.3	92.9
2. By capital source
- State	120.4	104.4	125.0
- Non-state	100.2	100.3	102.2
- Foreign-invested sector	139.5	120.3	92.9
Total	115.2	108.3	102.0

After the COVID-19 pandemic, although there were still many difficulties, the Thai Nguyen province always applied preferential policy mechanisms on the principle of creating maximum conditions for investors to implement investment projects in the market locality. Businesses and investors come to Thai Nguyen and want to implement investment projects because the province has all the necessary elements, some of which are competitive advantages in the production and business process. That must include factors as follows:

1. The central geographical location of the region and synchronously invested infrastructure (transportation, telecommunications, electricity, etc.) are comparative advantages that not all localities have. Investors have seen and appreciated these two factors of Thai Nguyen.
2. Favorable natural conditions, few natural disasters, and abundant resources allow Thai Nguyen to develop a multi-sector and multi-sector economy. Therefore, investors coming to Thai Nguyen will have many opportunities to choose investment fields and when implementing projects, they will hardly encounter difficulties caused by natural disasters.
3. The special attention of the Party, State, Government, relevant ministries and branches to Thai Nguyen province creates opportunities for Thai Nguyen province to gradually develop, affirming Thai Nguyen to become an economic center, culture, health, education of the northern mountainous and midland regions.
4. Thai Nguyen province has mechanisms and policies to attract investment and business according to each specific industry and field; Mechanisms that are no longer appropriate are always reviewed, abolished, and replaced with more appropriate policies to support and develop businesses and investors.
5. Investment promotion and investment invitation work receive special attention from provincial leaders; Every year, the province issues investment promotion plans to inform and promote the province’s potential and advantages. Propaganda documents and publications introducing preferential investment mechanisms and projects inviting investment into the province are continuously updated. Investment seminars to support investment, dialogue, and listening to solve difficulties for businesses are regularly organized by the province both domestically and abroad, creating the image of Thai Nguyen as an ideal destination for businesses. Investors.
6. Thai Nguyen province has human resources, qualified and highly skilled workers in well-trained fields, fully meeting the recruitment requirements of investors.
7. Reforming administrative procedures to attract investment is always given special attention. In recent times, Thai Nguyen province has always identified administrative reform in attracting investment as one of the important solutions to create a favorable environment to attract resources for development investment, meeting career requirements. industrialization, modernization and international economic integration.
8. Thai Nguyen province has developed and issued a project to improve the investment environment through the periods 2011–2015 and 2016–2020 to meet new requirements, ensuring an increasingly better and perfect business environment. As a result, Thai Nguyen has been in the top position in the Provincial Competitiveness Index (PCI) for many consecutive years.

Impact of the COVID-19 Pandemic on Investment Capital Mobilization in Thai Nguyen Province

To get outstanding results in attracting investment capital, in addition to the “favorable weather and favorable terrain” factors. Recently, the Thai Nguyen provincial government has also promoted administrative reform and improved provincial competitiveness (PCI) and public administration management index, improving the province’s business investment environment and contributing to the spread of state policies, increasing the attention of local authorities at all levels to attract domestic and foreign investors, large economic corporations, and medium and large enterprises. Small: At the same time, capital sources should be mobilized to improve infrastructure, especially transportation infrastructure and key industrial zones such as Diem Thuy, Yen Binh, and Nam Pho Yen.

In addition, the province has issued many policies to encourage and support investors with actual financial and professional capacity, especially those interested in the areas the province focuses on. Investment, especially in high technology, supporting industries, electronics, mechanical manufacturing, textiles and garments... All levels of government have actively accompanied investors, ensuring a secure and sustainable environment, creating peace of mind for investors to operate, developing sustainable production and business, and having a long-term attachment to Thai Nguyen.

In early 2022, Samsung Electro-Mechanics Vietnam Co., Ltd., (SEMV Company) opened the wave of increasing investment capital and expanding production in Thai Nguyen by adjusting to increase the project’s total investment in Yen Binh Industrial Park an additional 920 million USD. This is the largest capital increase of a foreign enterprise operating in Vietnam in the first six months of 2022. The highlight in attracting FDI investment in 2022 in the province is the transition from “quantity to quality.” This shows that FDI projects increasingly shift from extensive to in-depth investment, with large amounts of investment capital, using modern, environmentally friendly technology.

Although attracting foreign direct investment (FDI) in recent months has decreased due to the severe impact of the fourth COVID-19 pandemic, most economic experts believe that Vietnam is still an attractive investment destination for foreign investors when labor and investment incentives are still considered attractive factors for investors. The number of investment projects in the province tends to decrease in 2020–2022. In 2020, there were 20 projects compared to 5 projects in 2022. In addition, the number of registered and implemented capital has decreased in 2021 and tends to increase in 2022.

Table III shows foreign direct investment projects licensed in Thai Nguyen province, Vietnam.

Table III. Foreign Direct Investment Projects Licensed in Thai Nguyen Province

Indicator	Unit	2020	2021	2022
- Number of projects	Project	20	15	5
- Registered capital	Mill. USD	366.01	111.34	320.00
- Implemented capital	Mill. USD	304.21	210.69	433.82

Currently, FDI enterprises in the province are facing many difficulties. That is the risk of supply chain disruption, production costs that are too high combined with the inconsistent application of epidemic prevention and control regulations between localities, and the risk of temporary labor shortage or lack of input materials for recovery. In production service, product sales revenue declines. Many businesses, especially those with foreign experts and foreign workers, are heavily affected by COVID-19 when the labor supply is short. Labor costs during this period are also higher when businesses invest in more masks and antiseptic water and implement workplace safety measures to avoid virus infection.

In the context of the COVID-19 pandemic negatively impacting the production and business situation of Vietnamese enterprises, the government has drastically directed and promptly issued many mechanisms, policies, and solutions to support people’s businesses, including Decree No. 52/2021/ND-CP dated April 19, 2021, of the government on extending the deadline for paying value-added tax, corporate income tax, personal income tax, and land rent in 2021. To ensure the rights of taxpayers, Thai Nguyen province has carried out many timely implementation activities for taxpayers.

Conclusions and Recommendation

When the COVID-19 pandemic disrupted many global production and supply chains, leading to a decline in global FDI capital flows and a decline in FDI capital invested in Vietnam. In 2020, FDI capital flows of multinational corporations from developed countries decreased by more than half, to 347 billion USD-the lowest value since 1996 (Ashutosh, 2021). This is also a good opportunity for Vietnam and Thai Nguyen province. The trend of prioritizing shifting production from foreign countries to domestic or nearby countries is gradually increasing to improve the proactiveness of many countries in the supply chain, leading to increased competition in attracting investment. The impacts caused by the pandemic on the country’s economy are also an opportunity to assess the economy’s resilience, vulnerable sectors, and ways to respond to uncertainties. From, have appropriate solutions to attract and effectively maintain investment capital for Thai Nguyen province, serving the province’s socioeconomic development process. Promote measures to attract investment capital, especially FDI, which is an urgent requirement in the context of global supply chains undergoing restructuring and development movements in the context of recovery of the world economy.

In the context of global investment capital being heavily affected by COVID-19, having new partners has proven the attractiveness of Vietnam’s investment destination. One of the solutions to increase investment attraction in Thai Nguyen province in the coming time that needs attention is to open up new markets. With the trust of the international community and foreign investors in the Vietnamese market and Thai Nguyen province, the province needs to quickly take advantage of opportunities and exploit them effectively to promote internal resources and take advantage of external resources for economic development.