FDI in Vietnam

Topics: Unemployment, Investment, Economy Pages: 22 (6362 words) Published: October 29, 2010

1. FDI and its importance in the economy in Vietnam2
1.1 An introduction to FDI in Vietnam2
1.2 FDI distribution by sector 5
1.3 FDI contribution to Vietnam economy 6
2. Incentives and regulations to attract FDI in Vietnam10 2.1 Regulations 10
2.2 Incentives 11
3. These obstacles need to be reformed to attract FDI in Vietnam 13

Final Exam

1. Meaning of Money 18

Functions of money 18

2. a. Name 3 tools of monetary policy 19

b. Name tools of fiscal policy 19

3. Definition “natural rate of unemployment” 19


Adam University
Executive Master of Business Administration
BUS 503 Applied Business Economics


Vietnam has been quite successful in attracting FDI inflows since the inception of economic reform in 1986. The inflow of FDI has contributed significantly to the economic development of Vietnam. Over the past year, the Vietnamese Government has attached importance to attracting foreign investment. The Government has incessantly improved investment environment to create favorable conditions for domestic and foreign enterprises, with special focus on realizing the legislation construction programs.

In 2005 in particular, Vietnam's National Assembly adopted 14 laws-the highest number of laws to be adopted in a year up to now, including the General Investment Law and the Unified Enterprise Law-and has been debating 8 draft laws for approval in the coming session.

As a result, foreign investment flows to Vietnam have recovered, especially since 2004. Generally, over the past five years, Vietnam has attracted over USD 18 billion of newly-registered FDI and USD 13.6 billion of realized FDI which have contributed to increasing development investment capital, production capacity and export value of the economy. It is estimated that foreign-invested economic sector is contributing 14% to GDP, more than 20% of the total social investment capital and more than 1/3 of the total export turnover of the country (not including crude oil). Over the last five years, the sector has contributed about USD 1 billion/year to the state budget, directly generated about 800,000 jobs and indirectly about 2 million others.

Based on the above statement, you are required to:

1. What are FDI and its importance to Vietnam economy?(40%) 2. What are the incentives and regulations to attract FDI to Vietnam?(30%) 3. What are the impediments that need to be lifted to attract FDI to Vietnam? (30%) 1. FDI and its importance in the economy in Vietnam:

1.1 An introduction to FDI in Vietnam
FDI stands for Foreign Direct Investment. Simply speaking it is an investment with overseas money. WTO defines it as “a company from one country making a physical investment into building a factory in another country. It is the establishment of an enterprise by a foreigner.” More specifically, FDI is a cross-border corporate governance mechanism through which a company obtains productive assets in another country. The FDI relationship consists of a parent enterprise and a foreign affiliate, which together form a multinational corporation. Unlike other Asian countries, FDI is a recent phenomenon in Vietnam. After the Vietnam War, Vietnam suffered a decade-long of economic difficulties due to the crippling effect of the War combined with the poor economic policies of a centrally planned economy. Especially, the disastrous policies on price control, wage settings and super loose monetary, the so-called “Gia-Luong-Tien” devised by poet To’ Huu~. These policies produced hyperinflation of 774.7% in 1986. At the 6th Party Congress in 1986, the Vietnamese Communist Party launched a comprehensive economic reform program “Doi Moi” to transform Vietnam from a centrally planned economy to a “Socialist-oriented” market...
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