Report on Hai Duong's FDI 2014

Report on Hai Duong’s FDIin the year of 2014 and planning in the year of 2015 According to the document no 9193/BKHĐT-ĐTNN dated 8th December 2014 of Ministry of Planning and Investment

Report on Hai Duong’s FDI

in the year of 2014 and planning in the year of 2015

According to the document no 9193/BKHĐT-ĐTNN dated 8th December

2014 of Ministry of Planning and Investment concerned about the report on FDI in the fourth quarter, the whole year and 2015 forecast, DPI would like to present as follows:

There are now 289 FDI projects from 24 nations and territories, with the total

registered capital of 6.380,5 mil USD (146 projects with the capital of 3.035,1mil USD inside IZs, 143 projects with the total capital of 3.345,4 mil USD outside

IZs).

I Foreign direct investment situation in 2014:

1 Investment certificate issuance:

1.1.Investment certificate issuance:

In 2014, HaiDuong People's Committee issued Investment Certificates for

36 projects with the total registered capital of 395 mil USD (17 projects outside IZs with the capital of 71,9 mil USD, 18 projects outside IZs with the capital of

323 mil USD)

FDI attraction in 2014 has achieved stunning results, increased both quantity and investment capital scale compared to the same period of 2013 (increased 75%

in terms of project number and 6,3 times compared to the same period of 2013) Compared to 2013, it appeared some projects of big capital scale such as: Project of Dai An International Hospital An VN-Canada with capital of $225 million, project of Chung Jey footwear of 13 million USD, Project SD Global of 19.5 million USD, project heavy industrial Mes-UBI of 14 million USD, Company c Leong HUP Feedmill of 27 million USD

In general, investors focused mainly on some familiar nations such as Korea, Japan, China, Malaysia, Canada no investors from Europe and large corporations Among the projects approved in 2014, Canadian investors had the largest capital, accounting for 57.2% of the new investment capital; Korea ranks

first in the number of projects, accounting for 40% project quantity Investment field of new projects mainly focused on the industrial sector: clothing, footwear, components assembly, mechanical processing manufacturing, mold

1.2 Adjustment of investment certificate

In 2014, adjusting 92 projetcs, of which 27 projects increasing capital with

the increased capital of 163,6 mil USD (18 projects inside IZ with the increased capital of 141,5mil USD, 09 projects outside IZ of 22,1mil USD).

Beside the newly registered capital, the project increased capital contributed

a lot to the total attracting capital In comparison with 2013, there is an increase of both projects number and increasing capital in 2014 (rising 63% of projects number and 487,3% of increasing capital) It does affirms the effectiveness of investment activity and the trust of investors in Haiduong investment environment

The increased capital is mainly from Japanese businesses It is about 72,7 mil USD, occupying 44,4% of total increased one For example, Brother company increases 35 mil USD; Canada increases 35 mil USD, making up 21,4% of the total The rest is from Korean, Hongkong, USA, British Virgin Islands projects

So, both newly issued and increased in 2014 attracting 558,6 mil USD, 3,2 times compared to that of 2013.

1.3 Projects withdrawing and ending of operation

In 2014, Hai Duong withdrew 2 FDI projects with total investment capital of

7 million USD (in which there was 1 projects outside Industrial Zones and 1 projects inside Industrial Zones)

The non and slow implemented projetcs still exist Some projects just level site, build wall around but do not continue performing Some projetcs did came into operation but ceased because of finance limit and bad management During the follow-up management process, provincial annual inspection plan and classifying projects is needed to consider withdrawing, especially the project of land renting

If investors do not implement, land will be withdrew to transfer to other investors

2 Project implementation

2.1 Implementing Capital

a.Implemeting situation in the year 2014

Total investment capital in 2014 of FDI’s enterprises reached 244 mil USD, equal to 79,4% compared to that of 2013 (307,4 million USD), therefore, total investment capital implement in the local reached 2.930 million USD, accounted for 46% of the total registered investment capital of 6.378,5 million USD

b.Evaluation

2014 FDI capital attraction got positive results but disbursement was still limited and incommensurate with total registered capital of FDI business in the province Although the project was granted in the year and last year came into operation, a number of major projects implemented are still pretty slow compared

to deployment schedule

2.2 Manufacturing situation

a) Turnover, export, budget’s collection and labour

- The turnover in the year 2014 reached: 3.700 million USD

- Export value reached: 2.800 million USD

- State’s budget collection reached: 138 million USD

- Labour attraction: 18.000 people

b Evaluation

Along with the gradual stabilization of economic situation, production and business activities of FDI enterprises in 2014 became more active by increasing capital, expanding business scale., decreasing inventories and rising orders Some typical enterprises such as: Tropic Mitall, C Brother, Mizyho Precision Co., Ebara Pumps company, company US feed

Although in May, it happened the demonstration of a number of components too excited by the tense situation in the Eastern Sea, causing concern to Chinese, Taiwan investors, provincial leaders timely intervened and insure security order

so that investors can be comfortable to continue their business FDI business activities results in the province continue to grow compared to that of 2013 In details:

Turnover was estimated to reach 3.700 mil USD, increasing 8,3 % compared to

the same period of 2013 (3.414 mil USD); of which export turnover reached 2.800 mil USD, rising 8,3% compared to that of 2013 (2.584 mil USD).

+ Import achieved 1.800 USD, increasing 2,9% compared to the same period

of 2013 (1.748 mil USD).

+ Tax and and State's budget collection estimated to achieve 138 mil USD increasing 11,6% compared to that of 2013 (123,7 mil USD)

Attracting 18.000 labourers, increasing the total labourers to 142.000 people Beside above positive results, there are still a lot of limitations in FDI business activities: Just focus on processing, assembly, raw material input maily imported causing low added value Some business activities are unstable, others do not obey strictly environment protection, fire explosion prevention, labour, report regulations In addition, price transfering, tax avoidance still exist in some enterprises

2.3 Difficulties and obstacles

- The biggest difficulty in attracting investment is having little chance to approach and select high quality, big capital, high technology projects So, most of projects are small and medium capital, low technology, little contribution to State's budget Moreover, there are not many investors getting to know about the potential investment environment and investment promotion policies meet difficulties of the province State's budget is still limited so that a few promotion investment activities are organized

- At present, there is a case that some enterprises after receiving IC not implementing projects or just leveling site, some others coming into operation but stopping, some others ending operation time and investors running away from VN leaving assets invested or debt However, no regulations about bankrupcy solution, dissolution, operation ending are used for these cases Honourly request MPI to propose to the Government to regulate clearly about dissolution and liquidation of assets without investors as well as legal demonstration procedure and investors' financial potential

- Due to the difficult economic situation, some enterprises demands to lease their warehouses and some investors tends to chose available warehouses to set up their business However, leasing warehouses raising obstacles to State's management Some enterprises lease warehouses without permission, some rent warehouses without registration Most of renting warehouse projects are small scale, temporary operation leading to labour competition, environment pollution,

-Some enterprises are in loss in many years but continue to expand business and turnover increasing steadily According to economic experts, these enterprises transfer price to avoid tax causing State's budget collection loss Request Tax Department strengthens to supervise these loss enterprises and the goverment to adopt legal policies to strictly address

II Planning on the year of 2015

1 Key Criteria

- Attracting capital: 200 mil USD (150 mil USD of newly issued, 50 mil USD of increasing)

- Implemented capital: 200 mil USD

- Turnover: 3.800 mil USD

- State's budget collection: 100 mil USD

2 Orientations

- Attracting projects of high quality, high technology, clean, competitive products, big capital, high social economic effectiveness, job solution, and high contribution to State's budget

- Focus on attracting manufacturing industry, develop supplementary competitive industry to increase added product value, enhance competitiveness and effectiveness in intergration Concentrate on mechanical, device manufacturing such as cars, motobiles, electronic components to approach high technology and produce modern industrial products made in Hai Duong

-Promote to expand investment scale, renew technology, diversify investment objectives to be suitable with foreign investment regulations and plan

of industry and product development

- Do not receive small scale investment, low economic effectiveness, poor technology, environment pollution projects

- In terms of investors: Need to attract multinational corporations of financial potential, Japanese, Korean, European, USA investors

- Promote foreign investors to build up social economic infrastructure structure especially traffic buildings, water and electricity supply, hospital, schools, vocation schools, relaxation areas

3 Tasks and solutions

a Administration procedure

- Continue to reform administration along with supervising and controlling investment activities, officers' responsibility in solving investment procedure, land, construction, ex-import, labour, environment to facilitate investors in implementing projects At the same time, make dossiers solution time, list of investment certificate documents open and transparent to create a favourable condition for investors, enhance the attraction of investment environment

- Facilitate investors in doing business, closely corporate with enterprises, make investors trust in provincial policies and develop their business activities

b Investment management

- Speed up registered capital disbursement of investment certificate issued projects, facilitate investors in administrative procedure, site leveling, especially projects of big capital in past years such as Hai Duong thermal project, textile Pacific, Tinh Loi, Dai An international hospital Support, supervising issued IC projects to insure suggested progress Strictly address vilolated cases

- Corporate and address difficulties, speed up building up progress of infrastructure of industrial zones: Lai Cach, Cam Dien, Luong Dien, expanding Dai An

- Review and supervising land using efficency and projects using lot of land

- Strictly withdraw projects not implementing or slow implementing

c Investment promotion

- Pay much attention to investment promotion to the key orientation Strengthen promoting investment with giant multinational corporations as long as make detailed promotion plan and participate in Central investment promotion activities

- Take at desk promotion into considerations, enhance supporting the implementation of IC issued projects, address difficulties for investors, take investors'trust Therefore, advertising investment environment via investors

- Continue to update, complete DPI's website introducing about foreign investment

- Actively approach and attract investment of satellite enterprises invested in Viet Nam such as Samsung, LG

Above is the report of 2014 foreign direct investment and plan in 2015 Hai Duong’s DPI hope continue to receive the consideration and guidance from Ministry of Planning and Investment./

Receivers:

- As above;

- HD People Committee (to report);

- Board management of IZs;

- Administrative office,

Foreign relation Bureau

DIRECTOR (Signed and Sealed)

Vuong Duc Sang