Factors Affects Investment Decisions of Enterprises into Vietnam's Economic Zones

Abstract

Vietnam has 16 coastal economic zones (EZs) in operation. These economic zones have attracted more than 300 FDI projects with a total investment of over US $ 39 billion and 840 domestic investment projects with a total investment of nearly 566 trillion dong. However, the development of Vietnam's economic zones has not had the breakthrough as set out. Therefore, it is necessary to seek solutions to attract investment for the development of EZs. This paper uses a probit regression model to quantify the factors affecting the investment decision of the enterprise in the economic zone. The results of the study have described the characteristics of "target customers" who have a higher probability of investing in EZs than those of other firms. The results also show the factors that influence the initial decision. Private firms in order are (i) Competitive input costs; (Ii) Incentives (iii) local institutions; (Iv) Geographic location. Infrastructure and human resources inside and outside the EZ are not different enough so there is no basis for concluding the impact on the investment decision. Factors that have the opposite effect are communication and habitat. Based on the results of this study, the author proposes measures to attract enterprises to invest in EZ