(Tiểu luận) present an overview of vietnams fdi attraction in the period 2010 2020 and propose solutions to increase fdi attraction in the coming time

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:
1. B20H0480 - Võ Trà Giang
2. B20H0507 - Lê Thị Nguyệt Hương
3. B20H0531 - Trần Thị Thùy Linh
4. 720H1477 - Phan Yến Nhi
5. B20H0603 - Phạm Thị Thu Thoa

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HCMC, December, 2021

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BẢNG ĐÁNH GIÁ MỨC ĐỘ HỒN THÀNH CƠNG VIỆC
CỦA CÁC THÀNH VIÊN
STT

Họ tên

MSSV

Nhiệm vụ

Mức

hoàn thành

-Soạn nội dung Chương 2 (Thu hút
vốn FDI vào việt nam trong giai đoạn
1

Võ Trà Giang

B20H0480

hậu đại dịch covid-19)

100%

-Soạn nội dung Chương 3 (Đề xuất
giải pháp)
- Soạn nội dung Chương 1
2

Lê Thị Nguyệt
Hương

- Soạn nội dung Chương 3 (Phương

B20H0507

hướng, mục tiêu, phát triển kinh tế-

100%

xa hội gia đoạn 10-20, tầm nhìn 30)
-Soạn nội dung Chương 2 (Tình hình
3

Trần Thị Thùy
Linh

việt nam trong giai đoạn 2010-2020).
-Soạn nội dung chương 3

B20H0531

100%

( Định hướng tăng cường thu hút FDI
của nhà nước).
- Viết lời cảm ơn, lời mở đầu, kết luận

4

Phan Yến Nhi

720H1477

- Soạn nội dung Chương 1

100%

- Làm word
-Soạn nội dung Chương 2 (Tổng quan
5

Phạm
Thoa

Thị

Thu

về diễn biến thu hút FDI tại việt nam

B20H0603

2010-2020)

TON DUC THANG UNIVERSITY

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độ

100%


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 coming time.
Implementation group: Group 5 (Shift 3, Thursday)
Evaluate:
Ord
er

Point Poi No
ladder nt te

Criteria

Form of presentation:
- Proper presentation of guidelines (fonts, page
numbers, table of contents, tables, ...)
1

- No typos, typographical errors, citation errors
- Various figures, illustrative graphs
- Beautiful presentation, clear style, not

0,5
0,5
1,0
1,0

obscure
2

Content:
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

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Part 3: Conclusion and topic solution

1,0

Total score

10

Letter
score: .................................................................................
(round to 1 decimal)
December 10, 2021
Instructor grading

THANK YOU
First of all, group 5 would like to thank Mr. Tran Manh Kien, lecturer in charge of
Macroeconomics, who wholeheartedly taught us through each lesson, answered questions

about knowledge as well as the report warmly. love, specifically. The knowledge acquired
during the study is not only the foundation for the reporting process but also helps us to
understand, have a more correct and profound understanding of economics. Because
knowledge is still limited, in the process of doing the test, mistakes will inevitably 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.

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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.

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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.........................................................4
Figure 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)................12
Figure 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

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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)
3.

Conclusion.........................................................................................................11
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 postCOVID-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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PREAMBLE
Currently, foreign direct investment (FDI) is an important part of the investment
capital structure of a country, playing an important role for all countries in the world. For
developing countries, FDI inflows are especially important for growth and international
economic integration, because this is an external force supplementing capital, technology,
management capacity, business ability, ability to organize and participate in global supply
chains. As for Vietnam, we are currently changing according to the general trend of the
world, developing more and more, on the path of industrialization and modernization of
the country. However, the starting point is a bit low 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, 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 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

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

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CHAPTER 1: THEORETICAL BASIS
1.What is FDI?
FDI (Foreign Direct Investment) is a form of long-term investment by an
individual or organization from one country to another by setting up a factory or
business establishment. The aim is to achieve long-term interests and take control of
this 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 host
country) acquires an asset in the host country. With another country (the country
attracting 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 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 a
minimum 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 promote
economic 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
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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 the level of
risk they present, the control and commitment of the resources they require, 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.
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 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. Early
understanding of the negative aspects of a situation, particularly in business, will be
advantageous 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 continuous
change of capital flows, leading to the economic balance being shifted.

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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 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 in terms of
the number of projects, the amount of registered capital, and the amount 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 foreign direct investment (FDI) into Vietnam has continuously
increased. In 2010, realized investment capital reached 11 billion
USD, in 2015 it reached 14.5 billion USD, and in 2016 it reached 15.8
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billion USD. By the end of 2017, Vietnam will have attracted over
25,000 foreign direct investment projects with a total registered
investment of more than 333 billion 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 also been invested
in 19/21 production and business lines in Vietnam (Ministry of
Finance, 2018). According to the Foreign Investment Department Ministry of Planning and Investment, in 2019, FDI capital into
Vietnam reached 38.95 billion USD, up 7.2% compared to 2018. In
which, the number of projects registered to contribute newly granted
investment registration certificates is 3883, with a value of 16.75
billion USD, making Vietnam one of the most attractive countries for
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
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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 capital
contribution and share purchase by foreign investors, down 37.6% over the same
period, the total value of contributed capital was $7.47 billion, down 51.7 % over the

same period. The structure of the value of capital contribution to buy shares in total
investment capital also decreased compared to the 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 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 and
increased more strongly than in the first 11 months of 2020. Exports, including crude
oil, 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% over
the 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, up
12.3% over the same period and accounting for 64.3% of the total import turnover of
the whole country. In general, in 2020, the foreign investment sector has a trade
surplus of 34.6 billion USD including crude oil, and a trade surplus of 33 billion USD
excluding crude oil, making up for the deficit of 15.6 billion USD of the domestic
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-Vung Tau
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).

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6. An Overview of FDI Attractions in Vietnam in the period
2010-2020
Registered FDI capital varied constantly from 2010 to 2014, increasing slightly
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 steady rise in
population. If overall investment capital in Vietnam was 22.7 billion dollars in 2015, it
has risen to 38.95 billion dollars by 2019.
Due to the impact of the COVID-19 pandemic, the global economy was seriously
affected, 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 14.5

billion USD to 20.38 billion USD, while realized FDI increased from
14.5 billion USD to 20.38 billion USD; the number of newly registered
investment 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 and
newly registered projects declined 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, with the
processing and manufacturing industry attracting the most attention. With total freshly
and extra registered capital varying between USD 13 and USD 24 billion, it accounts
for a significant portion of overall registered investment capital (40 – 70 percent). In
addition, real estate, wholesale, and retail, as well as power generation and

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
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