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 CỦA

hoàn thành-Soạn nội dung Chương 2 (Thu hút

vốn FDI vào việt nam trong giai đoạn

hậu đại dịch covid-19) 100% -Soạn nội dung Chương 3 (Đề xuất giải pháp)

- Soạn nội dung Chương 1

- Soạn nội dung Chương 3 (Phương 100%

hướng, mục tiêu, phát triển kinh

tế-xa hội gia đoạn 10-20, tầm nhìn 30)-Soạn nội dung Chương 2 (Tình hìnhviệt nam trong giai đoạn 2010-2020)

( Định hướng tăng cường thu hút FDIcủa nhà nước)

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

- Làm word-Soạn nội dung Chương 2 (Tổng quan

về diễn biến thu hút FDI tại việt nam

TON DUC THANG UNIVERSITY

FACULTY OF BUSINESS ADMINISTRATION

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

SCORING SHEET FOR ESSENTIAL MOCECONOMIC SECTOR 1 SCHOOL YEAR

2021–2022

Essay title: Present an overview of Vietnam's FDI attraction in the period

2010- 2020 and propose solutions to increase FDI attraction in the

numbers, table of contents, tables, )

Introduction: summarize the content and

structure of the essay

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Part 3: Conclusion and topic solution 1,0

be made Please give suggestions for the report so that we can improve it and learn from

it for the next time Finally, I wish you always have good health to continue to carry out your 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 8

Figure 2.3: Structure of major FDI partners in Vietnam accumulated until 2020 10

Figure 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

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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.For developing countries, FDI inflows are especially important for growth andinternational economic integration, because this is an external force supplementingcapital, technology, management capacity, business ability, ability to organize andparticipate in global supply chains As for Vietnam, we are currently changingaccording to the general trend of the world, developing more and more, on the path ofindustrialization and modernization of the country However, the starting point is a bitlow compared to other countries in the world, economic resources are weak and small;this is one of the great obstacles to the development process Therefore, themobilization 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 the contribution of this economic sector to Vietnam's increasing GDP, our country has made remarkable achievements in attracting FDI into development socio-economic development Although impressive FDI investment results, Vietnam is still not the most attractive country for foreign investors in the ASEAN region In addition, the impact of Covid-19 the epidemic has caused a significant decrease in FDI inflows into Vietnam since

2019 The consequences of the pandemic on the country's economy are an opportunity for The Government to assess the resilience, vulnerable sectors of the economy, and methods to cope with uncertainties, thereby taking appropriate solutions to effectively attract and maintain foreign investment in Vietnam, serves the industrialization process of the country It is thought that in the coming time, the Government and relevant ministries, branches, and localities need to implement some solutions to "retain" and promote 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 FDI with higher added value and a more developed economy Therefore, our group chose the topic "Presenting

an overview of Vietnam's FDI attraction

in the period 2010-2020 and proposing solutions to increase FDI attraction in the coming time" 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 takecontrol of this property

To explain FDI in more detail, the World Trade Organization gives adefinition: Foreign Direct Investment (FDI) occurs when an investor from onecountry (the host country) acquires an asset in the host country With anothercountry (the country attracting the investment) comes the right to manage theassets 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 be businesses In such cases, the investor is often referred to as the parent company and the 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

controlling the 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

of investors

Depending on the laws of each country, the proportion of capital contribution between the parties changes accordingly The profits and risks of the

investors also correspond 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 an enterprise, 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 the most suitable decision to bring the highest profit.

FDI enterprises are often enterprises with technology attached to investors for main investment recipient countries, so host countries can access

advanced technology through 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 thelevel of risk they present, the control and commitment of the resources theyrequire, and the return 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, they have a high level of responsibility and good skills

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

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

2

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

Supplementing capital for domestic socio-economic development, promoting economic 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 climate presents Or merely internal squabbles and fights over philosophical differences.

Facing many burdens in the new political environment, armed conflict is one of them Or simply internal disputes and conflicts about differences in traditional thinking If the enterprise invests abroad, the domestic investment capital will be lost It makes it difficult to find capital for development and puts pressure on the country 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 2010-20201.The situation of Vietnam in the period 2010-2020

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

In the period 2010 - 2019, FDI inflows into Vietnam tended to increase interms of the number of projects, the amount of registered capital, and theamount of implemented 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, the flow of foreigndirect investment (FDI) into Vietnam has continuously increased In 2010,realized investment capital reached 11 billion USD, in 2015 it reached 14.5billion USD, and in 2016 it reached 15.8

4

billion USD By the end of 2017, Vietnam will have attracted over 25,000 foreigndirect investment projects with a total registered investment of more than 333billion USD Up to now, 129 countries and territories have invested in Vietnam.FDI projects have been present in 63 out of 63 localities FDI capital has alsobeen invested in 19/21 production and business lines in Vietnam (Ministry ofFinance, 2018) According to the Foreign Investment Department - Ministry ofPlanning and Investment, in 2019, FDI capital into Vietnam reached 38.95 billionUSD, up 7.2% compared to 2018 In which, the number of projects registered tocontribute newly granted investment registration certificates is 3883, with avalue of 16.75 billion USD, making Vietnam one of the most attractive countriesfor foreign 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, and purchased shares of foreign investors reached 28.53 billion USD, equal to 75% over the same period in 2019 The realized capital of foreign direct investment projects is estimated 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 activities were affected The realized investment capital of foreign investment projects in 2020 decreased compared to 2019 but the reduction level has been improved improved (down 2% from 2019) Many foreign-invested enterprises are gradually recovering and maintaining good production and business activities while expanding projects.

The highlight in 2020 is adjusted investment capital reaching over $6.4 billion, up 10.6% over the same period in 2019 There were 1,140 projects registered to adjust investment capital, down 17.5% compared to the same period last year with the same period Regarding newly registered capital, there were 2,523 new projects granted investment 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 ofcapital contribution and share purchase by foreign investors, down 37.6% overthe same period, the total value of contributed capital was $7.47 billion, down51.7 % over the same period The structure of the value of capital contribution

to buy shares in total investment capital also decreased compared to the sameperiod in 2019, from 40.7% in 2019 to 26.2% in 2020

Foreign investors have invested in 19 industries and sectors, in which the processing and manufacturing industries lead the way with a total investment capital of 13.6 billion USD, accounting for 47.7% of the total registered investment capital The field of electricity production and distribution ranked second with a total investment capital of over 5.1 billion USD, accounting for 18% of the total registered investment capital Next are the fields of real estate business, whole, sale, and retail, with a total registered capital of nearly 4.2 billion USD and over 1.6 billion USD In 2020, 112 countries and territories invested in Vietnam, with Singapore leading the way with a total investment of nearly USD 9 billion, accounting for 31.5% of total investment capital in Vietnam Korea ranked second with a total investment capital of over 3.9 billion 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 total investment capital Next are Japan, Taiwan, Hong Kong In terms of the number of new projects, Korea ranks first with 609 projects China ranked second, with 342 projects Japan ranked third with 272 projects Hong Kong ranked fourth with 211 projects 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 of 4.36 billion USD, accounting for 15 3% of total investment capital Bac Lieu province ranked second with 01 large projects with an investment capital of 4 billion USD, accounting for 14% of total registered investment capital Hanoi ranked third with nearly 3.6 billion USD, accounting for 12.6% of total investment capital Next is Ba Ria - Vung Tau province, Binh Duong, Hai Phong city In terms of the number of new projects, Ho Chi Minh City still leads with 950 projects Hanoi city ranked second with 496 projects Bac Ninh province ranked third with 153 projects).

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The export turnover of the foreign investment sector continued to increase andincreased more strongly than in the first 11 months of 2020 Exports, includingcrude oil, reached 202.4 billion USD, up 9.2% over the same period, accounting for72.3% of export turnover Exports excluding crude oil reached $200.8 billion, up9.6% over the same period in 2019, accounting for 71.7% of the country's exportturnover in 2020 The imports of the foreign investment sector reached 167.8 billionUSD, up 12.3% over the same period and accounting for 64.3% of the total importturnover of the whole country In general, in 2020, the foreign investment sectorhas a trade surplus of 34.6 billion USD including crude oil, and a trade surplus of 33billion USD excluding crude oil, making up for the deficit of 15.6 billion USD of thedomestic sector 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 Lieu Thermal Power Center (Singapore), with a registered investment capital

of USD 4 billion and the goal of producing electricity from liquefied natural gas (LURC grant dated 16/02) in January 2020)

Southern Vietnam Petrochemical Complex (Thailand) project in Ba Ria-VungTau province, increased investment capital by 1,386 billion (adjusted

investment certificate issued on April 18, 2020)

The West Lake West Urban Area Project (Korea) in Hanoi City has been revised to increase investment capital by more than 774 million USD

(adjusted investment certificate issued on June 29, 2020)

Project Pegatron Vietnam (Taiwan), 481 million USD investment capital with the goal of manufacturing game equipment, phone accessories, smart

speakers, game controllers, and computer types in Hai Phong city (issued with the Investment Certificate on October 30, 2020)

Radian Jinyu (Vietnamese) Tire Factory Project, USD 300 million investment

by Chinese investors in Tay Ninh province to produce all-steel TBR tires (issued with IRC 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, increasingslightly from 19.89 billion USD in 2010 to 21.92 billion USD in 2014 Since 2015,the total registered FDI in Vietnam has risen The South has witnessed a steadyrise in population If overall investment capital in Vietnam was 22.7 billiondollars in 2015, it has risen to 38.95 billion dollars by 2019

Due to the impact of the COVID-19 pandemic, the global economy wasseriously affected, so foreign investment capital registered in Vietnam had asharp 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 14.5 billion USD to20.38 billion USD, while realized FDI increased from 14.5 billion USD to 20.38billion USD; the number of newly registered investment projects increased from1,843 in 2015 to 3,883 in 2019

The broad impact of the COVID-19 epidemic will have an impact onenterprise production and business operations, whether small, retail, or big, andhence FDI initiatives Both registered capital and newly registered projectsdeclined in Vietnam, although realized

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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, withthe processing and manufacturing industry attracting the most attention With totalfreshly and extra registered capital varying between USD 13 and USD 24 billion, itaccounts for a significant portion of overall registered investment capital (40 – 70percent) In addition, real estate, wholesale, and retail, as well as power generationand distribution, are among the businesses that get foreign direct investment

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