Present an overview of vietnams FDI attraction in the period 2010 2020 and propose solutions to increase FDI attraction in the coming time

Figure 2.1: Number of projects, total registered capital, and total realized capital of FDI inflows into Vietnam in the period 2010-2020 Source: Ministry of Planning and Investment 2019

VIET NAM GENERAL CONFEDERATION OF LABOR

TON DUC THANG UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION

MOCECONOMIC GROUP REPORT

TOPIC 2:

Present an overview of Vietnam's FDI attraction in the period 2010-2020 and propose solutions to increase FDI attraction

in the coming time

Instructor: MSc Tran Manh Kien Macroeconomics Class (Shift 3, Thursday) Group : 5

List of students performing:

HCMC, December, 2021

BẢNG ĐÁNH GIÁ MỨC ĐỘ HOÀN THÀNH CÔNG VIỆC

-Soạn nội dung Chương 3 (Đề xuấtgiải pháp)

100%

2 Lê Thị Nguyệt

Hương B20H0507

- Soạn nội dung Chương 1

- Soạn nội dung Chương 3 (Phươnghướng, mục tiêu, phát triển kinh tế-

xa hội gia đoạn 10-20, tầm nhìn 30)

100%

4 Phan Yến Nhi 720H1477

- Viết lời cảm ơn, lời mở đầu, kết luận

- Soạn nội dung Chương 1

- Làm word

100%

5 Phạm Thị Thu

Thoa B20H0603

-Soạn nội dung Chương 2 (Tổng quan

về diễn biến thu hút FDI tại việt nam2010-2020) 100%

TON DUC THANG UNIVERSITY

FACULTY OF BUSINESS ADMINISTRATION

*************

SCORING SHEET FOR ESSENTIAL MOCECONOMIC

SECTOR 1 SCHOOL YEAR 2021–2022Essay title: Present an overview of Vietnam's FDI attraction in the period 2010-2020 and propose solutions to increase FDI attraction in the coming time.

Implementation group: Group 5 Shift 3, Thursday) (

- Proper presentation of guidelines (fonts, page

numbers, table of contents, tables, )

- No typos, typographical errors, citation errors

- Various figures, illustrative graphs

- Beautiful presentation, clear style, not

Introduction: summarize the content and

structure of the essay 1,0

Part 1: Overview of the topic (theoretical basis) 2,5

Part 2: In-depth topic analysis 2,5

Part 3: Conclusion and topic solution 1,0

Letter

score: (round to 1 decimal)

December 10, 2021

Instructor grading

THANK YOUFirst of all, group 5 would like to thank Mr Tran Manh Kien, lecturer in charge ofMacroeconomics, who wholeheartedly taught us through each lesson, answered questionsabout knowledge as well as the report warmly love, specifically The knowledge acquiredduring the study is not only the foundation for the reporting process but also helps us tounderstand, have a more correct and profound understanding of economics Becauseknowledge is still limited, in the process of doing the test, mistakes will inevitably bemade Please give suggestions for the report so that we can improve it and learn from itfor the next time Finally, I wish you always have good health to continue to carry outyour noble mission of imparting knowledge to the next generation

LIST OF ABBREVIATIONS

1 FTA is an acronym for the phrase Free Trade Area, also known as

Free Trade Agreement This is a form of international association between countries in which tariff and non-tariff barriers are both reduced or eliminated Since then, gradually formed a unified trading market for goods and services

LIST OF IMAGES

Figure 2.1: Number of projects, total registered capital, and total realized capital of FDI inflows into Vietnam in the period 2010-2020 4Figure 2.2: Total registered FDI capital in Vietnam 8Figure 2.3: Structure of major FDI partners in Vietnam accumulated until 2020 10Figure 2.4: FDI attraction in the first months of 2021 (Unit: Billion USD) 12Figure 2.5: FDI in the first 2 months of 2021 15

TABLE LIS

Table 2.1: Amount of capital and FDI projects in Vietnam in the period 2010-2020 9

LIST OF TABLES

CHAPTER 1: THEORETICAL BASIS 1

1 What is FDI? 1

2 The main features of FDI 1

3 Forms of FDI 2

4 Methods of entry of FDI 2

5 The role of FDI 2

a) Positive effects of FDI 2

b) Negative effects of FDI 3

CHAPTER 2: DEVELOPMENTS OF VIETNAM'S FDI ATTRACTION IN THE PERIOD 2010-2020 4

1 The situation of Vietnam in the period 2010-2020 4

2 An Overview of FDI Attractions in Vietnam in the period 2010-2020 7

a) In the field of investment 9

b) Regarding investment partners 10

c) Conclusion 11

3 Attracting FDI into Vietnam after the COVID-19 epidemic 11

a) FDI inflows since the COVID-19 outbreak 11

b) What should Vietnam do to attract sustainable growth of FDI in the post-COVID-19 period? 13

c) After COVID, Opportunities, and Challenges, in FDI Attraction in Vietnam: 15

4 Consequences 16

CHAPTER 3: STRATEGIES FOR INCREASING FDI ATTRACTION IN THE FUTURE 18 1 Orientation to enhance the State's FDI attraction 18

2 Direction, goals and vision for economic development in the coming time 20

3 Proposed solution 21

Currently, foreign direct investment (FDI) is an important part of the investmentcapital structure of a country, playing an important role for all countries in the world Fordeveloping countries, FDI inflows are especially important for growth and internationaleconomic integration, because this is an external force supplementing capital, technology,management capacity, business ability, ability to organize and participate in global supplychains As for Vietnam, we are currently changing according to the general trend of theworld, developing more and more, on the path of industrialization and modernization ofthe country However, the starting point is a bit low compared to other countries in theworld, economic resources are weak and small; this is one of the great obstacles to thedevelopment process Therefore, the mobilization and use of foreign direct investment(FDI) is an extremely important step

Looking back on the 30-year journey of attracting FDI, it is undeniable that thecontribution of this economic sector to Vietnam's increasing GDP, our country has maderemarkable achievements in attracting FDI into development socio-economicdevelopment Although impressive FDI investment results, Vietnam is still not the mostattractive country for foreign investors in the ASEAN region In addition, the impact ofCovid-19 the epidemic has caused a significant decrease in FDI inflows into Vietnamsince 2019 The consequences of the pandemic on the country's economy are anopportunity for The Government to assess the resilience, vulnerable sectors of theeconomy, and methods to cope with uncertainties, thereby taking appropriate solutions toeffectively attract and maintain foreign investment in Vietnam, serves the industrializationprocess of the country It is thought that in the coming time, the Government and relevantministries, branches, and localities need to implement some solutions to "retain" andpromote foreign investment attraction Therefore, to learn more about our country's FDI,

as well as offer solutions and strategic changes to strengthen FDI flows and attract FDIwith higher added value and a more developed economy Therefore, our group chose thetopic "Presenting an overview of Vietnam's FDI attraction

in the period 2010-2020 and proposing solutions to increase FDI attraction in the comingtime" as an essay

CHAPTER 1: THEORETICAL BASIS1.What is FDI?

FDI (Foreign Direct Investment) is a form of long-term investment by anindividual or organization from one country to another by setting up a factory orbusiness establishment The aim is to achieve long-term interests and take control ofthis property

To explain FDI in more detail, the World Trade Organization gives a definition:Foreign Direct Investment (FDI) occurs when an investor from one country (the hostcountry) acquires an asset in the host country With another country (the countryattracting the investment) comes the right to manage the assets The managerial aspect

is what separates FDI from other financial tools

In most cases, both the investor and the assets he or she manages abroad will bebusinesses In such cases, the investor is often referred to as the parent company andthe assets are referred to as the subsidiary or branch of the company

2.The main features of FDI

 Bring profits to investors

 Depending on the regulations of each country, the investor must contribute aminimum amount of capital to be able to participate in controlling or controllingthe investment enterprise

 Countries that want to attract FDI must have a clear legal corridor to promoteeconomic development, avoiding the case that FDI only serves the purposes ofinvestors

 Depending on the laws of each country, the proportion of capital contributionbetween the parties changes accordingly The profits and risks of the investors alsocorrespond to this ratio

 The income of investors depends on the business results of enterprises

 The investor is the person who decides the production and business process of anenterprise, so it is responsible for the profit and loss situation of that enterprise.Regardless of the investor, when investing, they have the right to decide the

market, the form of management, and the measuring technology that can make themost suitable decision to bring the highest profit.

 FDI enterprises are often enterprises with technology attached to investors for maininvestment recipient countries, so host countries can access advanced technologythrough which to learn experience and techniques

3.Forms of FDI

 Investment in the means of operation

 Acquisitions and mergers

 Equity Security

 Reinvested capital

 Internal loan or internal debt transaction

 Resource search capital

 Efficient search capital

 Market search capital

4.Methods of entry of FDI

Methods of entering foreign markets or entry strategies vary in terms of the level ofrisk they present, the control and commitment of the resources they require, and thereturn on investment they promise

There are two main types of market entry modes:

 Equity regime, including joint ventures and wholly-owned subsidiaries

 Unfair regimes include export agreements and contracts

5.The role of FDI

a) Positive effects of FDI

 Because foreigners are the ones who directly manage and manage capital, theyhave a high level of responsibility and good skills

 Taking use of plentiful mineral and labor resources Increase the amount ofemployment available and invest in high-quality training

 Expanding the consumption market entails a large scale of production, increasedproduction, and reduced product costs in line with consumers' incomes

 Avoid protectionist trade barriers and trade fees in the host country.

 Supplementing capital for domestic socio-economic development, promotingeconomic growth

 This will result in significant budget revenue for both parties

b) Negative effects of FDI

The benefits of FDI are apparent, but we must not overlook its drawbacks Earlyunderstanding of the negative aspects of a situation, particularly in business, will beadvantageous in developing the appropriate strategies and directions

The following common negative impacts of FDI cannot be avoided:

 Armed conflict is one of the numerous challenges that the current political climatepresents Or merely internal squabbles and fights over philosophical differences

 Facing many burdens in the new political environment, armed conflict is one ofthem Or simply internal disputes and conflicts about differences in traditionalthinking If the enterprise invests abroad, the domestic investment capital will belost It makes it difficult to find capital for development and puts pressure on thecountry to create jobs, which can lead to the risk of economic recession

 Domestic policies may be changed because when making investment requirements,investors often take measures to lobby the state in their favor

 In the process of competition between enterprises, there will be a continuouschange of capital flows, leading to the economic balance being shifted

CHAPTER 2: DEVELOPMENTS OF VIETNAM'S FDI

ATTRACTION IN THE PERIOD 2010-2020

1.The situation of Vietnam in the period 2010-2020

According to the financial health ranking of 66 emerging economies by TheEconomist (2020), Vietnam ranks 12th, in the safe group after the COVID-19pandemic, with stable financial indicators This is a great opportunity for Vietnam toattract foreign direct investment (FDI) while multinational corporations are looking forsafe destinations to re-establish production bases after the COVID-19 pandemic 19

In the period 2010 - 2019, FDI inflows into Vietnam tended to increase in terms ofthe number of projects, the amount of registered capital, and the amount ofimplemented capital, especially in the period 2016 – 2019

Figure 2.1: Number of projects, total registered capital, and total realized capital of FDI inflows into Vietnam in the

period 2010-2020

Source: Ministry of Planning and Investment (2019)

After 30 years of opening up to attract foreign investment, theflow of foreign direct investment (FDI) into Vietnam has continuouslyincreased In 2010, realized investment capital reached 11 billionUSD, in 2015 it reached 14.5 billion USD, and in 2016 it reached 15.8

billion USD By the end of 2017, Vietnam will have attracted over25,000 foreign direct investment projects with a total registeredinvestment of more than 333 billion USD Up to now, 129 countriesand territories have invested in Vietnam FDI projects have beenpresent in 63 out of 63 localities FDI capital has also been invested

in 19/21 production and business lines in Vietnam (Ministry ofFinance, 2018) According to the Foreign Investment Department -Ministry of Planning and Investment, in 2019, FDI capital intoVietnam reached 38.95 billion USD, up 7.2% compared to 2018 Inwhich, the number of projects registered to contribute newly grantedinvestment registration certificates is 3883, with a value of 16.75billion USD, making Vietnam one of the most attractive countries forforeign investors

 Vietnam's attraction situation from 2019 to 2020: FDI attraction in

2020 will reach 28.53 billion USD

According to a report by the Ministry of Planning and Investment, as of December

20, 2020, the total newly registered capital, adjusted and contributed capital, andpurchased shares of foreign investors reached 28.53 billion USD, equal to 75% overthe same period in 2019 The realized capital of foreign direct investment projects isestimated at 19.98 billion USD, equal to 98% over the same period in 2019

Due to the impact of the COVID-19 pandemic, production and business activitieswere affected The realized investment capital of foreign investment projects in 2020decreased compared to 2019 but the reduction level has been improved improved(down 2% from 2019) Many foreign-invested enterprises are gradually recovering andmaintaining good production and business activities while expanding projects

The highlight in 2020 is adjusted investment capital reaching over $6.4 billion, up10.6% over the same period in 2019 There were 1,140 projects registered to adjustinvestment capital, down 17.5% compared to the same period last year with the sameperiod Regarding newly registered capital, there were 2,523 new projects grantedinvestment registration certificates, down 35% over the same period, total registered

capital reached 14.65 billion USD, down 12.5% over the same period last year 2019.For capital contribution and share purchase, there were 6,141 times of capitalcontribution and share purchase by foreign investors, down 37.6% over the sameperiod, the total value of contributed capital was $7.47 billion, down 51.7 % over thesame period The structure of the value of capital contribution to buy shares in totalinvestment capital also decreased compared to the same period in 2019, from 40.7% in

2019 to 26.2% in 2020

Foreign investors have invested in 19 industries and sectors, in which theprocessing and manufacturing industries lead the way with a total investment capital of13.6 billion USD, accounting for 47.7% of the total registered investment capital Thefield of electricity production and distribution ranked second with a total investmentcapital of over 5.1 billion USD, accounting for 18% of the total registered investmentcapital Next are the fields of real estate business, whole, sale, and retail, with a totalregistered capital of nearly 4.2 billion USD and over 1.6 billion USD In 2020, 112countries and territories invested in Vietnam, with Singapore leading the way with atotal investment of nearly USD 9 billion, accounting for 31.5% of total investmentcapital in Vietnam Korea ranked second with a total investment capital of over 3.9billion USD, accounting for 13.8% of total investment capital China ranked third with

a total registered investment capital of 2.46 billion USD, accounting for 8.6% of totalinvestment capital Next are Japan, Taiwan, Hong Kong In terms of the number ofnew projects, Korea ranks first with 609 projects China ranked second, with 342projects Japan ranked third with 272 projects Hong Kong ranked fourth with 211projects Foreign investors have invested in 60 provinces and cities across the country

in 2020, in which, Ho Chi Minh City takes the lead with a total registered capital of4.36 billion USD, accounting for 15 3% of total investment capital Bac Lieu provinceranked second with 01 large projects with an investment capital of 4 billion USD,accounting for 14% of total registered investment capital Hanoi ranked third withnearly 3.6 billion USD, accounting for 12.6% of total investment capital Next is BaRia - Vung Tau province, Binh Duong, Hai Phong city In terms of the number of newprojects, Ho Chi Minh City still leads with 950 projects Hanoi city ranked secondwith 496 projects Bac Ninh province ranked third with 153 projects)

The export turnover of the foreign investment sector continued to increase andincreased more strongly than in the first 11 months of 2020 Exports, including crudeoil, reached 202.4 billion USD, up 9.2% over the same period, accounting for 72.3%

of export turnover Exports excluding crude oil reached $200.8 billion, up 9.6% overthe same period in 2019, accounting for 71.7% of the country's export turnover in

2020 The imports of the foreign investment sector reached 167.8 billion USD, up12.3% over the same period and accounting for 64.3% of the total import turnover ofthe whole country In general, in 2020, the foreign investment sector has a tradesurplus of 34.6 billion USD including crude oil, and a trade surplus of 33 billion USDexcluding crude oil, making up for the deficit of 15.6 billion USD of the domesticsector helping to have a trade surplus of nearly 19 billion USD

 Some big projects in 2020

 Bac Lieu liquefied natural gas power plant project is managed by the Bac LieuThermal Power Center (Singapore), with a registered investment capital of USD 4billion and the goal of producing electricity from liquefied natural gas (LURCgrant dated 16/02) in January 2020)

 Southern Vietnam Petrochemical Complex (Thailand) project in Ba Ria-Vung Tauprovince, increased investment capital by 1,386 billion (adjusted investmentcertificate issued on April 18, 2020)

 The West Lake West Urban Area Project (Korea) in Hanoi City has been revised toincrease investment capital by more than 774 million USD (adjusted investmentcertificate issued on June 29, 2020)

 Project Pegatron Vietnam (Taiwan), 481 million USD investment capital with thegoal of manufacturing game equipment, phone accessories, smart speakers, gamecontrollers, and computer types in Hai Phong city (issued with the InvestmentCertificate on October 30, 2020)

 Radian Jinyu (Vietnamese) Tire Factory Project, USD 300 million investment byChinese investors in Tay Ninh province to produce all-steel TBR tires (issued withIRC on August 21st) January 2020)

6 An Overview of FDI Attractions in Vietnam in the period 2010-2020

Registered FDI capital varied constantly from 2010 to 2014, increasing slightlyfrom 19.89 billion USD in 2010 to 21.92 billion USD in 2014 Since 2015, the totalregistered FDI in Vietnam has risen The South has witnessed a steady rise inpopulation If overall investment capital in Vietnam was 22.7 billion dollars in 2015, ithas risen to 38.95 billion dollars by 2019

Due to the impact of the COVID-19 pandemic, the global economy was seriouslyaffected, so foreign investment capital registered in Vietnam had a sharp decrease,reaching only 28.53 billion USD, down 25% compared to 2019

Figure 2.2: Total registered FDI capital in Vietnam

Source: Author's compilation from Foreign Investment Department

Between 2015 and 2019, registered capital climbed from 14.5billion USD to 20.38 billion USD, while realized FDI increased from14.5 billion USD to 20.38 billion USD; the number of newly registeredinvestment projects increased from 1,843 in 2015 to 3,883 in 2019.The broad impact of the COVID-19 epidemic will have an impact

on enterprise production and business operations, whether small,retail, or big, and hence FDI initiatives Both registered capital andnewly registered projects declined in Vietnam, although realized

capital only decreased marginally, reaching 98% in comparison to

2019

Table 2.1: Amount of capital and FDI projects in Vietnam in the period 2010-2020

Source: Author's compilation from Foreign Investment Department

a) In the field of investment

Foreign investors have invested in 19 industries between 2010 and 2020, with theprocessing and manufacturing industry attracting the most attention With total freshlyand extra registered capital varying between USD 13 and USD 24 billion, it accountsfor a significant portion of overall registered investment capital (40 – 70 percent) Inaddition, real estate, wholesale, and retail, as well as power generation anddistribution, are among the businesses that get foreign direct investment

By the end of 2019, the processing and manufacturing industry will have garneredthe most investor interest, accounting for 59 percent of total registered capital with a