MINISTRY OF PLANNING AND INVESTMENT ACADEMY OF POLICY AND DEVELOPMENT GRADUATION THESIS Current situation and solutions for FDI capital attraction into VietNam Instructor: PhD. Le Huy Doan Student made: Nguyen Duc Thinh Student code: 5073106029 Class: KTĐN CLC 7A Hà Nội, tháng 6/2020 Protestation I assure that this is my own research, the research results are independent, no copying. The data in the dissertation is used honestly, the cited source has clear, transparent and inherited notes, developed from published documents, journals, research works. I take full responsibility for my pledge of honor.
Author Nguyễn Đức Thịnh Table of contents Chapter 1: literature review of foreign direct investment in VietNam. Definition of FDI .1 Definition of FDI in general .2 FDI under the Law on Foreign Investment in Viet Naw. The necessity and content of FDI attraction in VN. The need of FDI capital.
The content of FDI attraction. Creating capital mobilization plan. Capital attraction policies. Forms of FDI attraction.
Determinants of FDI attraction in VN. Politics – Society conditions. The development of infrastructures. Development of social infrastructure.
25 Chapter 2: Current situation attracting FDI capital into VietNam. An overview of FDI attraction .1 The amount of FDI capital registered, carried out and number of project .2 FDI capital classified by local and economic region .3 FDI capital by economic sectors.4 FDI capital by forms of investment .5 FDI capital by investment partners.6 FDI by regions .7 Contribution of FDI sector to VietNam economy .1 Contribution to overall growth of the country.2 Positive impact on trade balance .4 Renewing equipments, techonologies and improve production capacity .5 Improving the level of management and business administration.6 Utilizing Vietnam’s potential .7 Enhancing balance of payment. Factors affecting the FDI attraction in VN. Global trend of FDI investment.
Investment trend in VN. Policies for attracting FDi capital into VN.1 Policies for improving investment environment. 70 Chapter 3: Solutions to enhance FDI attraction in upcoming years.1 Bases for the formulation of solutions .1 VN development goal until the end of 2030 .2 Orientation to attract investment capital in some in some industries .2 Some solutions to attract FDI capital into VN .1 Solutions to improve investment environment .2 Solutions to improve human resources quality .3 Solutions for enterprises, organizations .1 Renovating the mechanism, organizing the management board of industrial parks, export processing zone and investment promotion centers.2 Enhancing management capcacity and brand reputation of domestic enterprises to develop joint ventures with foreign companies .3 Developing business development services and auxiliary production for industries and services. 95 List of tables Table 2.1 Foreign direct investment was licensed in the period of 1988 – 2018 divided by Year and Division (Accumulated to December 31, 2018) 31 Table 2.2 FDI capital by locality ( Accumulation of valid projects until December 31, 2018) 36 Table 2.3 Foreign direct investment is licensed according to economics (Accumulated to December 31, 2018) 39 Table 2.4 FDI capital in VN by forms of investment ( Accumultated to December,31 2018) 42 Table 2.5 FDI capital in VN by investment partners ( Accumulated to December,31 2018) 44 Table 2.6 FDI capital by regions ( Accumulated to December, 31 2018 )46 1 List of charts Chart 2.1 Foreign direct investment was licensed in the period of 1988 – 2018 divided by Year and Division (Accumulated to December 31, 2018) 33 Chart 2.2 Foreign direct investment is licensed according to economics ( Accumulated to December 31, 2018) 40 Chart 2.3 FDI capital in VN by investment partners ( Accumuated to December, 31 2018) 46 Chart 2.4 Number of projects in VN ( Accumulated to December, 31, 2018)49 Chart 2.5 Total capital registered ( Accumulated to December, 31, 2018)50 Chart 2.6 Number of employyes ( Thousand ) 56 Chart 2.7 Factors affecting the choice of investments 67 Chart 2.8 Global trend of FDI flow first half of 2018 72 2 List of abbreviations ID Abbreviations English meaning 1 IMF International Monetary Fund 2 UNCTAD United Nation Conference on Trade and Development 3 FDI Foreign Direct Investment 4 WTO World Trade Organization 5 GDP Gross Domestic Product 6 ODA Official Development Assistance 7 VAMC Vietnam Asset Management Company 8 PPP Public - Private Partnership 3 Introduction 1.
The reason to choose the topic Foreign direct investment (FDI) is an crucial part in the structure of investment capital of any country. For Vietnam, we are transforming towards a global trend, not only Industrialization and modernization but also "Sustainable development", because of these changing perceptions, economic transformation and integration also need to select capital sources and investors who are really interested in the issue of "Sustainable development" not only affecting Vietnam but also affecting the sustainable development of the whole world. Therefore, the attraction of foreign direct investment is even more important. Furthermore, Foreign direct investment has been considered as the key to each nation's economic growth.
This allows the host countries to attract modern technologies, advanced management experience, etc. to exploit their country's comparative advantages, boost exports, increase competitiveness, adjust and shift the economic structure in line with changing regional and world markets. The open door strategy to integrate our country's economy into the regional and world economy was implemented by our Party and State more than 10 years ago. One of the important contents of this strategy is the policy to attract foreign direct investment.
Attracting foreign direct investment not only aims to solve the shortage of capital for social development investment but also to create more jobs for workers and to supply the host country's economy with advanced machines and processes, produces many high-quality and high-tech products, contributes to the country's economic development, creating synergy for industrialization and modernization. Since the Law on Foreign Investment in Vietnam (December 29, 1987) up to now, the attraction of FDI in Vietnam has achieved important 4 achievements. However, in the 1997-1999 period, FDI inflows into Vietnam were unstable and continuously decreased. This is the result of many impacts, including objective effects such as: the impact of the financial and financial crisis in some countries in the region and in the world along with the keen competition in the field of FDI attraction of neighboring countries such as China, Thailand, Malaysia,etc.
or the impacts within the investment environment of Vietnam. From 2000 to now, FDI capital has showed signs of recovery but still not equal to the highest level in 1996. This situation of life requires us to have proper assessments of FDI over the years to quickly come up with effective and scientific solutions. in order to create an attractive investment environment and be able to compete with other countries in the region.
Therefore, the author chooses the topic "Current situation and solutions to attract foreign direct investment into Vietnam" in order to analyze the real situation of FDI, the results and results are achieved at the same time. Given the limitations, there are some main reasons and proposing solutions to enhance the ability to attract FDI as well as improve the efficiency of using FDI capital in Vietnam in the coming time to meet request "Sustainable development". Research purpose and mission This topic will analyze the current situation of FDI in VN, results as well as point out limitations those are still existed. Plus, providing some main reasons and proposing solutions to enhance the ability to attract FDI as well as improving efficiency of FDI capital utilization in VN in the coming time in order to meet requirements for economic development.
Research methods The thesis uses qualitative research methods, system analysis, comparison, collation, logical reasoning methods. to clarify and concretize the content of 5 the research and collect critically and selectively research findings related to the topic at the same time. Scope of study - The concept, forms, roles and development trends of FDI - The situation of FDI attraction in Vietnam in recent years, the achieved results as well as the limitations - Proposing some basic solutions to increase the attraction of FDI into Vietnam and improve the performance of foreign-invested enterprises 5. Structure of dissertation Chapter 1.
literature review of foreign direct investment in VietNam Chapter 2. Current situation attracting FDI capital into VietNam Chapter 3. Solutions to enhance FDI attraction in upcoming years Conclution References Appendix 6 Chapter 1: literature review of foreign direct investment in VietNam 1. Definition of FDI 1.1 Definition of FDI in general To understand the concept of "foreign direct investment" we firstly Must understand what is "foreign investment".
The term "foreign investment" was first mentioned in international legal and economic curricula, first in France in 1955, and then used in seminars on economic cooperation. Internationally and officially go into agreements, laws on investment. However, due to complicated specific characteristics and due to the rich movement of real money, this concept is constantly being added. adjusted to be more realistic.
―At the seminar of the Henxky International Law Association 1966, People have tried to come up with the most common concept of foreign investment to differentiate it from the economy received from outside. Accordingly, "Foreign investment is the movement of capital from the country of the investor to the country where the user invests without making quick accounting", Then, through discussion the Association came up with a concept below. The general outline is as follows: "Foreign investment is the movement of capital from the country of the investor to the country of investment user for the purpose of establishing here a certain manufacturing or service enterprise" U, With This concept, the investment in a country necessarily linked With the establishment of an enterprise or a production or service establishment in the host country, some other forms of investment are not excluded, such as: progressive lending. of banks, sponsors for programs, programs, or projects.
This is the limitation of this concept compared to the requirement of economic cooperation in the current era. 7 The concept of foreign investment is understood and operated by different countries. In developed capitalist countries, foreign investment is the delivery of valuables economic things from one country to another in order to receive revenue, including rights to pledge, profit, brand and enterprise names. In general, the concept of foreign investment is extensive, only the process of transferring capital from a country to another in order to receive revenue, the rule is the revenue must be higher than the revenue that investers receive from domestic countries, and it must higher than the interest rate from depositing money to the bank.
So investing to foreign countries is very importance to make use of younger workforce, abundant resources and dmoniate the import-export market. Therefore the widespread notion of investment exists as a necessity. On the other hand, many developing countries use the concept of foreign investment as direct investment, like using capital, real estate, equipments to built, expand production, business and services. Hence, foreign investment is considerd as direct investment in many developing countries, exclude indirect investment.
Because direct investment brings capital, up-to- date technologies which replace old technologies, create jobs, increase living standard. In contrast, indirect investment also brings capital in but goes with no plan to utilize it, plus the lack of experience of controlling skills of a large number of developing countries, as a consequence many countries can not pay their loans. With these reasons, increasing use of foreign investment is suitable to many developing countries. This policy has been and is still the most popular in the open economy policy of many countries nowadays.
Along with the process of globalization, regionalize economic life, foreign direct investment is no longer a new matter to the whole world nowadays.