1. A definition of FDI
According to Article 2, Law on Foreign Investment in Vietnam 1996, “FDI means the transfer of capital in money or any asset into Vietnam by foreign investors to carry out investment activities in accordance with the provisions of this Law”.
Foreign investor means a foreign economics organization or a foreign individual investing in Vietnam.
In another way, FDI is a kind of investment in which foreign investors contribute their capital to a project, directly manage and execute its operation and production for the purpose of profit, in the mean time, being responsible for his contributed capital as well as business activities. The process is carried out under Law on Foreign Investment’s provisions.
With its own nature, over development history, FDI has become an effective economic cooperation form. It is not only welcomed all over the world but it is also roughly competed by the countries.
2. Vietnam's Policy to Attract FDI
The VIth Congress of the Vietnamese Communist Party made a turning-point decision in the country's development strategy to build a market-oriented economy under the state control. The Vietnamese Communist Party and State, while attempting to mobilize all domestic resources, pursue the policy of deepening international economic relations to seek new opportunities for the country's economic co-operation and development. As part of foreign economic relations activities, foreign direct investment (FDI) was put high on the agenda. As domestic capital raising possibilities are limited, FDI constitutes an important part to the Vietnamese economy. On December 29, 1987, at its second session, the VIIth National Assembly passed the Law on Foreign Direct Investment in Vietnam. Up to now, it has been revised four times in 1990, 1992, 1996 and May 2000. The introduction of the Law on Foreign Direct Investment was a landmark in the development of Vietnam's foreign economic relations. The main principles of FDI in Vietnam are stated in Article 1: "The State of the Socialist Republic of Vietnam welcomes and encourages foreign organizations and nationals to invest capital and technology in Vietnam on the basis of respect for national independence and sovereignty, full observance of the Laws of Vietnam, equality and mutual benefit. The State shall guarantee the ownership of the invested capital and other rights of the foreign investors, and extend to the latter favorable conditions and easy formalities." After the introduction of the Law on Foreign Direct Investment, other legal documents were enforced including Decree No.18 in 1993 on the forms of enterprises, international organizations and individuals investing and receiving FDI in Vietnam; Decree No.10/CP in 1998 on the simplification of investment procedures; Decision No. 53/QD-TTg in 1999 on investment priorities... The major goal of Vietnam's FDI policy is to attract capital, advanced technology, and management skills in order to effectively develop the country's potential, increase savings, improve people's living standard and realize the cause of modernization and industrialization. 3. FDI's role in Vietnam
+ FDI helps adjust the economic structure towards industrialization and modernization, develop production forces and enhance economic competitiveness and efficiency. FDI sector currently accounts for nearly 35% of the industrial output and has considerably contributed to the high growth of industrial production, more than 10% since 1990. The annual growth rate of the FDI industrial sector has been double digit. Many FDI enterprises have advanced technology and modern business operations. FDI has also helped establish the system of Export Processing Zones and Industrial Estates. + FDI plays an active role in the Doimoi process and helps strengthen Vietnam's international economic integration. With the participation of foreign investors in Vietnam, its economic...