Investment promotion includes activities such as: Promotion and branding of the country or locality as an attractive investment destination, providing information about the investment potential of the country, supporting foreign investors in the process of researching and implementing investment projects. There are many effective models, methods, and practices of investment promotion around the world, aiming at attracting foreign investment into the country or encouraging businesses to invest abroad.
Investment promotion is an important activity for developing countries, aiming at attracting foreign investment to develop the domestic economy. The objectives of investment promotion are to increase foreign investment attraction and create favorable conditions for foreign investors to invest and do business in that country or locality.
Investment promotion can be carried out through the following forms, such as: Organizing conferences, seminars, and investment exhibitions; Inviting foreign investors to visit and explore investment opportunities; Providing investors with access to information about the market and investment policies; Providing attractive investment policies and incentives.
Investment promotion requires the coordination of many agencies, departments, and sectors within the country or locality. These agencies need to work closely together to provide foreign investors with complete and accurate information about the potential, strengths, and attractive investment environment of their country or locality. In the scope of this article, the author will present two examples of investment promotion methods and results achieved by one of the leading cities in South Korea and a country in the ASEAN region: Singapore.
Busan, South Korea
Busan is the second-largest city in South Korea, located in the south of the country. Busan has a number of investment potential, such as: a favorable geographical location, a gateway to the sea, modern infrastructure, abundant human resources, and attractive investment policies and incentives. To attract foreign investors, Busan has implemented a number of investment promotion activities, including: Organizing conferences, seminars, and investment exhibitions to introduce the city's investment potential to foreign investors. These events are often held in South Korea and other countries around the world, with the participation of hundreds of foreign investors who visit and explore investment opportunities. This helps investors to better understand the city's investment potential. In additional, it provides investors with access to information about the market and investment policies. Investment information is designed and produced professionally with high-quality images. This information is available through various channels, including websites, social media, and other publications. The main information includes attractive investment policies and incentives for foreign investors, such as tax exemptions, financial assistance programs, administrative support, and investment protection.
As per a report by the Korea Trade-Investment Promotion Agency (KOTRA) in 2023[1], Busan city attracted 11.3 billion USD of foreign investment in the first 8 months of 2023, an increase of 23% from the same period in 2022. This is a strong growth rate, especially in the context of the volatile global economy. In terms of structure, foreign investment projects in Busan in the first 8 months of 2023 focused on the following sectors: Manufacturing: 6.2 billion USD, accounting for 55% of total investment; Trade: 2.4 billion USD, accounting for 21% of total investment; Services: 2.7 billion USD, accounting for 24% of total investment. In terms of country of origin, the largest foreign investors in Busan in the first 8 months of 2023 were Japan: 4.2 billion USD, China: 3.3 billion USD, and the United States: 2.1 billion USD. The investment attraction situation in Busan in the first 8 months of 2023 shows that the city is becoming an increasingly attractive destination for foreign investors. This is a positive sign that the Busan economy is making strong progress. Based on the above data, there are a number of factors that have contributed to the strong growth of investment attraction in Busan in 2023, including: The open and attractive investment policies of South Korea; The favorable geographical location of Busan, which is an important gateway for trade between South Korea and the world; The modern and developed infrastructure of Busan; The abundant and high-quality labor force of Busan. With these advantages, Busan has the potential to attract even more foreign investment in the future.
The following specific lessons can be learned from Busan's approach:
There must be close coordination between local agencies, departments, and sectors to implement investment promotion activities. Information should be provided to foreign investors in a comprehensive and accurate manner about the local investment potential. The information should be professionally edited, produced, and designed, with a strong promotional aspect, and finally, information on attractive investment policies and incentives to attract foreign investors.
The Singaporean Approach to Investment Promotion
Singapore is one of the most successful countries in attracting foreign direct investment (FDI). As of 2022, Singapore has attracted over $1 trillion in FDI, ranking fifth in the world. Singapore's success is due to the creation of a favorable investment environment, including: a transparent legal and investment policy system, a well-integrated infrastructure, and a high-quality workforce. In addition to these factors, Singapore also has a number of innovative approaches to attracting FDI, including:
Creating special economic zones. Singapore has established special economic zones (SEZs), where foreign investors enjoy a number of incentives, such as tax breaks, administrative procedures, etc. Singapore's SEZs have attracted many large FDI projects, creating hundreds of thousands of jobs for the people.
Promoting innovation. Singapore has invested heavily in research and development (R&D), creating an environment conducive to start-ups and innovation. The Singapore government has also established venture capital funds to support start-ups.
Strengthening linkages with other markets. Singapore has joined many free trade agreements (FTAs), creating opportunities for foreign businesses to export goods and services to other markets. It has also established trade and investment centers in other countries to promote the country's investment potential.
Innovative Approaches of Singapore in Attracting FDI:
In addition to the traditional approaches to attracting FDI, such as creating a favorable investment environment and offering incentives, Singapore has also implemented a number of innovative approaches, including:
Establishing the Jurong Innovation District. The Jurong Innovation District is one of the largest SEZs in Singapore. This innovation district provides high-quality infrastructure and services to technology companies. The Jurong Innovation District has attracted many FDI projects from leading global technology companies, such as Intel, IBM, and Hewlett-Packard.
The Startup SG Program. The Startup SG Program is a government-funded program in Singapore that supports startups. The Startup SG Program provides funding, advice, and training to startups. The Startup SG Program has helped many Singapore startups to grow and succeed.
Building the Singapore Trade and Investment Center in Vietnam. The Singapore Trade and Investment Center in Vietnam is a center established by the Singapore Investment Promotion Agency (IPA). This center provides information and support to Singapore investors who want to invest in Vietnam. It has helped many Singapore businesses to succeed in investing in Vietnam.
As per to a report by the Singapore Economic Development Board (EDB), Singapore attracted $114.2 billion in foreign direct investment (FDI) in 2023, up 20.6% from 2022. This is the highest growth rate in 10 years. In terms of structure, foreign investment projects in Singapore in 2023 focused on sectors such as: Manufacturing: $60.9 billion, accounting for 53% of total investment; Trade: $27.8 billion, accounting for 24% of total investment; Services: $25.5 billion, accounting for 23% of total investment. In terms of country of origin, the largest foreign investors in Singapore in 2023 were: United States: $34.7 billion; China: $23.2 billion; Japan: $12.9 billion. The strong growth in FDI into Singapore in 2023 shows that the country remains an attractive destination for foreign investors. Some factors contributing to this growth include:
Stable and transparent business environment: Singapore has a stable legal and political system, managed by a capable and transparent government.
Business-friendly legal and policy system: Singapore has a business-friendly legal and policy system, including tax incentives, subsidies, and training support.
Simple and convenient administrative procedures: Singapore has simple and convenient administrative procedures, making it easy for investors to access the market.
Modern and developed infrastructure: Singapore has modern and developed infrastructure, including transportation, electricity, water, telecommunications, etc.
Abundant and high-quality labor force: Singapore has an abundant and high-quality labor force, trained to international standards.
Singapore's innovative approaches to attracting FDI have played a major role in the country's success. These approaches can be learned from and applied by other countries in the region and around the world[2].
Thanh Hieu
[1] Reference: https://www.investkorea.org/
[2] Reference: Reports by the Singapore Economic Development Board (EDB); reports by the World Bank (WB); reports by the Asian Development Bank (ADB); a number of articles from reputable magazines and newspapers such as The Economist, The Wall Street Journal, Fortune,...
