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Challenges in implementing decentralization of foreign direct investment management in Viet Nam – case study of the Hung Nghiep Formosa Ha Tinh Steel project in Ha Tinh province

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  • Au Thi Tam Minh

    (Researcher/lecturer of the Institute of State and Law – Ho Chi Minh National Academy of Politics, 135 Nguyen Phong Sac, Ha Noi, Viet Nam)

Abstract

Over the past decades, an increasing number of developing countries in Asia have experimented with decentralization in varying degrees to achieve good governance and promote democracy. In Viet Nam, even though decentralization has been limited to de-concentration (or administrative decentralization), foreign direct investment (FDI) management is vigorously decentralized at the provincial level and has proven to be problematic. In one instance, it led to an environmental disaster in 2016. The objective of the present paper is to explore the factors resulting in ineffective decentralization of FDI management in Viet Nam, focusing on the challenges that the local government has been dealing with under the decentralization set-up, in particular with respect to environmental protection. Drawing on the case study of the Hung Nghiep Formosa Ha Tinh Steel project in Ha Tinh province, it is argued that Viet Nam continues to lack the essential prerequisites for effective decentralization. It is the time for Viet Nam to reconsider the policy of decentralization in the area of FDI management. Bearing in mind that economic development is vital, it should go hand in hand with environment protection in order to ensure the country’s sustainable development.

Suggested Citation

  • Au Thi Tam Minh, 2019. "Challenges in implementing decentralization of foreign direct investment management in Viet Nam – case study of the Hung Nghiep Formosa Ha Tinh Steel project in Ha Tinh province," Asia-Pacific Sustainable Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 26(2), pages 83-105, December.
    • Handle: RePEc:unt:japsdj:v:26:y:2019:i:2:p:83-105
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    More about this item

    Keywords

    decentralization; foreign direct investment management; Hung Nghiep Formosa Ha Tinh Steel project; environmental protection; sustainable development;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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