Fdi in Vietnam Motor Cycle Industry

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1. Introduction
The select Industry:
This project is based on FDI in Vietnam Motor cycle industry. FDI has been new phenomenon in the Vietnam's society. FDI has constructively and positively contributed to the development of Vietnam in many ways. The popularity of the motorcycle industry has come from the great demand for motorcycles in the Vietnamese market and the government's policy of promoting and attracting foreign investment. Particularly, the limitations on the importation of completed motorcycles and high tariff barriers in a long period contributed to encouraging the formation of domestic motorcycle assembly and production. Legally there are three forms for foreign investment in Vietnam: Business Corporate Contract (BCC), Joint Venture (JV) and 100% foreign invested company.

The reason for choosing Industry:
Not known for modern conveniences, Vietnam has an inconvenient transportation system.  This in itself has been an obstacle for the Vietnamese to overcome while advancing economically.  The main mode of transportation is that of the bicycle rickshaw, motor scooters and motorcycles remain the most popular forms of road transport in Vietnam's cities, towns, and villages although the number of privately owned automobiles is also on the rise, especially in the larger cities. At the end of 2006, Vietnam had 972,912 registered automobiles and 18,615,960 registered motorcycles in circulation. Compared with those in 1995, this number has increased by 2.86 times for automobiles and 5.2 times for motorcycles. The circulation of both two transport means rose very rapidly, especially motorcycles. Motorcycle is used as a personal mean of transport due to its convenience, mobility, flexibility and suitability with the current condition of road transportation, especially in urban areas with short and narrow roads. Demand for people’s travel is mainly short and medium trips (less than 10 km).

The reasons for choosing the country:
The potential of growth and contribution of the Motor cycle industry is tremendous in Vietnam, as compared to other countries. Now a day’s Vietnam is popularly known as the “new Asian tiger”. During the period 1995-2005, the Vietnamese economy continued to operate under the market mechanism with socialist orientation, achieving relatively high growth of 8% or higher in consecutive years. As a result, the speed of urbanization as well as demand for trips and commercial transport also increased. When the economy develops, people’s income also rises. Since public transport systems are currently underdeveloped, people tend to possess personal means of transport such as motorcycles and automobiles to satisfy their travel demand. Urbanization is currently proceeding rapidly in Vietnam, especially in cities under central administration such as Hanoi, HCMC, Da Nang, etc. This has led to high pressure on transport infrastructure development and caused many problems to residents like congestion, dust, air emission, noise, and downgraded ecological environment.

2. PEST Analysis
3.1. Political Analysis:
3.2.1. System of government: The Socialist Republic of Vietnam is a single-party state. A new state constitution was approved in April 1992, replacing the 1975 version. The central role of the Communist Party was reasserted in all organs of government, politics and society. Although the state remains officially committed to socialism as its defining creed, the ideology's importance has substantially diminished since the 1990s. 3.2.2. Government policies:

* FDI policies for Motor cycle industry: Vietnam FDI policy has become liberal in recent years. Vietnamese government foreign Investment law (FIL) reflects the "open door policy” to attract foreign direct investment on the basis of equal cooperation and mutual benefit. Motorcycle industry is one of the biggest industries in Vietnam and has set a target to become a major motorcycle manufacturer in the...
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