INTERNATION INVESTMENT SITUATION ANALYSIS AND IMPLICATIONS FOR VIETNAM

MID-TERM ASSIGNMENTSubject: International Economics INTERNATION INVESTMENT: SITUATION ANALYSIS AND IMPLICATIONS FOR VIETNAM Group 4 - Class: K56CLC4 Lecturer: Mrs.. This report was prese

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MID-TERM ASSIGNMENT

Subject: International Economics

INTERNATION INVESTMENT: SITUATION ANALYSIS AND IMPLICATIONS FOR VIETNAM

Group 4 - Class: K56CLC4 Lecturer: Mrs Trần Nguyên Chất

Group members:

Nguyễn Thị Ngọc Phượng Huỳnh Nhật Quang

Đỗ Thị Hoàng Quyên Trương Trần Nhật Quỳnh

Ho Chi Minh, January 2019

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Table of Contents

I An overview of international investment 3

1 The concepts of investment, foreign investment, international investment 3

1.1 Investment 3

1.2 Foreign investment 3

1.3 International investment 3

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III ODA graduation and the impact to Viet Nam economy 10

1 ODA graduation of Viet Nam 10

2 Analyze the impact of ODA graduation in Viet Nam: 11

2.1 SWOT model: 11

2.2 Negative effects of ODA graduation 12

2.3 Positive effect of ODA graduation: 14

IV Major problems about ODA in Vietnam 15

1 ODA disbursement in Vietnam 15

1.1 Slow capital disbursement 15

1.2 Reasons for the slow disbursement process 16

2 The management and using of ODA in Vietnam 17

2.1 Shortcomings in ODA use and management 17

2.2 Corruption in economic infrastructure projects using ODA capital 1

V Solution for Viet Nam about ODA problems 19

1 General orientations for solution 20

1.1 ODA management 20

1.2 Attracting and speeding up ODA disbursement rate 21

1.3 Enhance capacity of implementing projects by ODA 21 1

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2 Specific policies and plans to improve the effectiveness of ODA investment are being implemented in future: Public private partnership (PPP) 22

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This report was presented by group 4 at the subject International Economics, with a fundamental aim to have some situation analysis and implications for international investment in the case of Viet Nam The term “international investment” also refers to the international flows of financial resources, which are divided into two flows: Official flow (Foreign Aid) and Private flow Our report would pay more attention

in the Foreign Aid, which mainly focuses on the realistic activities and management of Official Development Assistance (ODA) in Vietnam

In recent years, ODA has been an effective source of support for Vietnam’s development in terms of economic goals, the processes of innovation, industrialization and modernization; however; the movement of Vietnam into “lower income country” and the problem of inefficient ODA utilization have been notably taken into account by the Government The report would concentrate on analyzing these situations and expecting certain implications for the case of Vietnam.

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I An overview of international investment

1 The concepts of investment, foreign investment, international investment

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expenditure on new capital goods (goods that are not consumed but instead used in future production) Such investment is the source of new employment and economic growth.

b In finance: Investment refers to the purchase or ownership of a financial asset with the expectation of a future return either as income (such as dividends), or as capital gain (such as a rise in the value of the stock).

c Legal definitions of investment: Found in law and legal agreement, focus on the issue of property, notwithstanding the productive or financial nature of the investment, unless specific limitations are made.

1.2 Foreign investment

Foreign investment involves capital flows from the border of one country to another, granting extensive ownership stakes in domestic companies and assets Foreign investment denotes that foreigners have an active role in management as a part of their investment A modern trend leans toward globalization , where multinational firms

have investments in a variety of countries.

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1.3 International investment

International investment is investing via a wide range of potential strategies, to capitalise on advantages offered outside your home country and create capital movement across borders It’s an investment approach that increasing numbers of international professionals and expatriates are exploring, particularly since it has become far easier to do so with the emergence of index trackers and exchange-traded funds (ETFs).

2 Taxonomy of international financial flows

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II Official Development Assistance - the case of Viet Nam

1 The historical framework of ODA

After the Second World War, the world economy fell into a serious crisis In order to revive the world economy, many international financial institutions were established at this time One of the plans for economic reconstruction at the time was the Marshall Plan, a precursor

of a form of official development assistance, intended to assist European countries in restoring a war-torn economy devastated.

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In Paris, the Organization for Economic Co-operation and Development (OECD)

was formed to implement the Marshall Plan Participants in the Paris conference agreed on the objectives of the European Economic Co- operation Organization, including:

- Improve the living standards and working conditions of member countries.

- Achieve high economic growth and sustainability, maintain

Initially, the OECD focused only on aid to warring countries in World War II and war-torn countries Once the economies of these countries have been restored, aid is extended to other countries for the purpose of promoting economic development around the world.

During the Cold War, developing countries belonging to the socialist side, including Vietnam, received almost no direct aid from

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Flows of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective, and which are concessional in character with a grant element of at least 25 percent (using a fixed 10 percent rate of discount) By convention, ODA flows comprise contributions of donor government agencies, at all levels, to developing countries (“bilateral ODA”) and to multilateral institutions ODA receipts comprise disbursements by bilateral donors and multilateral institutions.

In other words, ODA needs to contain the three elements:

(a) undertaken by the official sector (official agencies, including state and local governments, or their executive agencies);

(b) with promotion of economic development and welfare as the main objective;

(c) at concessional financial terms (if a loan, having a grant element of at least 25 percent).

3 ODA activities & management and the impacts on Viet Nam

3.1 An overview of ODA activities in Viet Nam

3.1.1 Significant ODA projects

Since the reconnection with international financing institutions in

1993, Vietnam has attracted a large amount of ODA and ODA has

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significantly contributed to infrastructure construction, poverty reduction, institutional reform,

and socio-economic development Amongst all of Vietnam’s ODA donors, Japan has been the largest bilateral one for the last two decades In recent years, ODA has been an effective source of support for Vietnam’s development, especially as Vietnam is still a poor country and needs to attract outside capital to achieve its economic goals, namely the processes of innovation, industrialization and modernization Between 1996 and 2000, Japan’s ODA accounted for

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linking Hanoi to Hai Phong, the national highway 1A from Hanoi to Vinh and Ho Chi Minh City to Can Tho and Nha Trang, and the Metro Line No.1 - a 20-km metro line, which connects Ben Thanh Market in the city’s District 1 and Suoi Tien Park in District 9, passing through Di An town in Binh Duong province Other major projects have also been implemented such as My Thuan Bridge, the Hai Phong and Sai Gon seaport upgrade, the Cai Lan deep-water port construction, the Tien Sa and Da Nang port restoration, the construction of many electric factories such as Phu My 1, Phu My 2, Ham Thuan-Da Mi, Song Hinh, Nhim, Pha Lai 2, Tra Noc et cetera, and the 500 kV North-South line as well as the 220KV line installation from Playku-Phu Lam to Tao Dan-Nha

Be

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In mid-August 2018, the Ministry of Investment and Planning (MPI) issued a warning against borrowing from the Official Development Assistance (ODA) source in its report on ODA attraction, management and use over the next two years The ministry urged that if Việt Nam continued borrowing without careful consideration, the country could fall into an “ODA and preferential loan trap”.

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the ADB, Vietnam will need to secure loans from the International Bank for Reconstruction and Development with interest rates of 3-4% on

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Tiêu đề	International Investment: Situation Analysis And Implications For Vietnam
Tác giả	Nguyễn Thị Ngọc Phượng, Huỳnh Nhật Quang, Đỗ Thị Hoàng Quyên, Trương Trần Nhật Quỳnh
Người hướng dẫn	Mrs. Trần Nguyên Chất
Trường học	Foreign Trade University
Chuyên ngành	International Economics
Thể loại	mid-term assignment
Năm xuất bản	2019
Thành phố	Ho Chi Minh

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Số trang	63
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