A LOOK INTO VIETNAM:

Prompting & Attracting FDI

 COURSE: INB 372
Section:03
Semester: Fall’19

Submitted to: Submitted By:

Adina Malik (ALK) 1. Kazi Jannatul Ferdous- 1811018630
Lecturer, 2. Sheikh Junaid Ahmed-1811510030
North South University, 3. Sanjida Ahmed Orna-1812034630
4. Zerin Tasnim Ahsan-1821088630
Dhaka, Bangladesh.
5. Sadia Ahmed-1831805630
VIETNAM:
A COUNTRY FULL OF POSSIBILITIES
TABLE of WHAT’S
INSIDE
CONTENT
- FUN FACTS ABOUT VIETNAM 01
- CULTURE OF VIETNAM 02
- THE POLITICAL, ECONOMICAL
& LEGAL SYSTEM OF VIETNAM 05
- REGIONAL ECONOMIC INTEGRATION 07
- KEY LOCAL COMPANIES, MNC’S
& RESOURCES 09
- LEVEL OF CPI EFFECTING FDI 11
- REFERENCES 13
 Fun Facts of Vietnam

1. Vietnam is shaped like the letter S

2. The Vietnamese finger gesture is unusual.

3. Kings of the cashew nut. Vietnam is the world's largest exporter of

cashew nuts, producing 37% of the global number.

4. White skin is considered perfection

5. Although Vietnam is a developing country, it has a literacy rate of 94%.

VIETNAM

Page 01
 CULTURE
of
Culture: It is a system of values and norms which is
VIETNAM
shared among a group of people and that when taken
together constitute a design for living. Vietnam is
mainly based on four values which are interrelated
with each other. It is a society which gives value to
their family and respects each other a lot.

1. Allegiance for family

2. Desire for a good name
3. Respect for other people
4.Love of learning

Norms: Norms are the social rules and guidelines that

prescribe appropriate behavior in particular situations
and can be further subdivided into Folkway and
Mores.
1) Dress up should always be respectful
The national dress of Vietnam is names as Ao Dai. The Their shorts should be below the knees
word ‘Ao’ means top or jacket and ‘Dai’ means long. and shoulders should be covered other-
Both men and women but most commonly women wise it seems to be disrespectful for
wear this traditional dress. Vietnamese people do everyone.
have a good social manner and respect for each other.
Law of Vietnam is strong if anyone gets caught for
going near to the border, gambling, blogging, taking
pictures of demonstrations, posting political stuff on
social media. These can lead them to suffer in jail.

Folkway: Folkway is a norm that organizes casual

interaction, emerging out of repetition, routines. It
engages them to satisfy their daily needs. Folkways
marks the distinction between rude and polite behav-
ior so they exert a form of social pressure that encour-
ages them to act and interact in a certain way.

2) Removing shoes while entering homes

and temples
It means they don’t like to wear shoes in
the house so take off their footwear before
coming in the house and they also strictly
maintain this rule before entering any
temple.

Page 02

3) Waiting for the old people to start
They love to show respect to their elders in
this way. Older people start to eat first and
then the other member of family.
4) Do not point the chopsticks to anyone
Pointing chopstick at anyone is very disre-
spectful. None should point chopstick at
anyone unless you want to make the other
person uncomfortable.

Mores: Mores are stricter then folkway. It determines what is moral or ethical behavior and also determines the
difference between right and wrong. mores exacts a greater force in shaping our interactions, beliefs, behavior,
values than do folkways.

Etiquette in Vietnam
1) Not to touch anyone’s head.
2) Not to touch someone in the shoulder.
3) Gifts should be given in colorful wrapped papers.
4) Dishes should be passed with both of the hands
5) Business cards should be given with both hands
and exchange in initial meeting.

Determinants of culture

Religion: Vietnam is officially an atheist state. But three religion is abided by other citizens which are Buddhism,
Taoism, and Confucianism.

Education: It is divided into five levels which are preschool, primary school, secondary school, high school, and
higher education. Only five years of education is compulsory here but the literacy rate in Vietnam is 90 percent.

Language: The official language of Vietnam is Vietnamese and English is the second language there. Besides
some people also speaks French and Chinese as well. 85-90 percent people is Vietnamese speaker.

Political philosophy: In Vietnam all of the system is led by The Communist Party which is a one-party system.
It is called socially republic.

Economic philosophy: Vietnam has an open market economy. It is mainly based on services and agriculture.
Social structure: Private property is eliminated here. Peasants and workers are new. Dominance is there in social
order. The social system is developed in market economic form.

Page 03
Hofstede theory of culture:
To compare and contrast between nation the Hofstede theory was established. This theory has four
dimensions and they are Power Distance, Uncertainty Avoidance, Individualism versus Collectivism
and Masculinity versus Femininity.

Power Distance: It focuses on how the society deals with the fact that people are unequal in physical
and intellectual capabilities. The power distance of Vietnam is 70 which means hierarchical order is
accepted here.

Uncertainty avoidance: It is to measure which different culture socializes the member of a country to
accept ambiguous situations and tolerating uncertainty. Vietnam has a low score of 30 in it.

Individualism vs Collectivism: This focuses in between the relationship of individual and their fellows.
Vietnam has a score of 20 here. Which means it is a collectivistic society.

Masculinity vs Femininity: This looks at the relationship between gender work roles. In masculine
gender roles are sharply differentiated and in feminine gender roles are less differentiated. Vietnam
here is considered as a Feminine culture as it has a score of 40 in this dimension.

https://www.hofstede-insights.com/country-comparison/vietnam/

Uncertainty
Power Distance Collectivism Feminity
Avoidance

70 30 20 40

Page 04
 THE POLITICAL, ECONOMICAL & LEGAL SYSTEM OF
Vietnam
Political System
The political system that Vietnam follows is Totalitarianism.
And to be very specific, the country follows communist totali-
tarianism as the country has a communist government. Here,
the communist party monopolizes power. According to the
system, totalitarianism can be achieved through dictatorship.
And the system can or the totalitarian state can deny many
basic civil liberties to their population. Vietnam is one of the
world’s five remaining communist countries today. In this
political system of Vietnam, the president is the head of the
republic and the prime minister is the head of the govern-
ment. It has 3 branches and they are: the executive, the
legislative and the judiciary. The government and the presi-
dent administrate the executive. The legislative consists of
the national assembly of Vietnam and finally, the judiciary
comprises of the courts.
Communist Party
National Assembly Government
Plans &
Strategies
Ordinances
&Laws
Ministry of Health
Costs:
Vietnam is one of the most politically stable countries in
South East Asia. Its leadership does not welcome dissent.
Internal conflict is strictly controlled.
Risks:
Even though Vietnam has recovered from economic crisis well,
but the country is still risky to make investments there.
Because of government’s involvement with corruption the
country faces major issues in terms of foreign investment.
Lack of effectiveness of government is one of the major risks
of its political system. Vietnams fixed exchange rate policy
causes economic pressure to build. Social unrest as in
protests, strikes and land disputes affect in foreign businesses.
ECONOMIC System
Among 3 economic system, Vietnam used to follow com-
mand economy where the government of the country plans
everything about the economy which includes quantity and
price of goods/services to produce within. Here, all business
are state owned. The main objective is to mobilize economic
resources for public good. But Vietnam now has market
economy. They shifted from command economy to market
economy which has transformed the whole country from
being one of the poorest countries to a lower middle-income
country. In East Asia region, Vietnam is one of the most
dynamic emerging countries now. Vietnam’s growth over the
decades has been remarkable. More than 45 million people
were lifted out from poverty from 2002-2018 which is a big
gain for a country like Vietnam.
Costs:
A country faces economic costs when it lacks proper infra-
structure and support for doing a business. In Vietnam, due
to poor infrastructure and a lack of proper mechanisms for
private sector investment the country would prevent itself
from its swift international integration. Huge amount of
capital has been invested into the country’s infrastructure in
recent years but the infrastructure is not yet sufficient to
meet the country’s need for more growth
Risks:
It occurs when mismanagement of the economy affects the
profit and other goals of the business, maybe due to hyper-
inflation, government debt, bankruptcy, etc. Vietnam may
have transformed its economic system but the government
still controls many key industries. Also, due to early stage
market economy which means Vietnam stays at an early and
vulnerable stage of its economic development which is
riskier than developed markets.
Page 05
LEGAL System
Since 1975, Vietnam has had unified legal system and that is
Civil law. Means there is not much flexibility in this country’s
legal system. The judges can just apply these laws but
cannot change any of it.

Costs:
The cost of doing a business increases if the legal system of
the country is strong. Vietnam maintains strict rules and
regulations in case of crime, environmental protection, tax
collection and even workplace safety.

Risks:
Legal risk is when there is a chance of a partner to break the
contract or take over the property rights. Vietnam is well
known for its honest copyright and licensing system.

CPI OF VIETNAM
CPI which is known as Corruption Perception Index was published by
Transparency International (TI). It has been annually ranking countries or
territories by their perceived levels of corruption. The CPI ranks 180
countries in the world currently on a scale from 100 (very clean) to 0
(highly corrupt). As in, if the score of CPI is high the country is much likely
to be clean in terms of corruption and on the other hand, if the score of
CPI of a country is low in any country the country is much likely to be
corrupted. In 2018, Vietnam scored 33 out of 100 on the Corruption
Perception Index reported by Transparency International (TI) which
means the country is highly corrupted.

References:
http://vietnamembassy-usa.org/vietnam/poli-
Dropping 2 points compared to 2017, Vietnam scored 33 points out of tics
100 ranking 117 out of 180 countries surveyed. To help calculate (constitutional and political system, n.d.)
Vietnam’s CPI, 8 data sources were considered. However, in public
sectors of Vietnam, corruption is perceived highly serious. https://www.worldatlas.com/arti-
cles/the-economy-of-vietnam.html
(the economy of vietnam, n.d.)
GNI (Gross National Income)/capita:
As we know that, GNI per capita means gross national income divided by https://www.thebalance.com/a-guide-to-in-
midyear population. As of 2016, the latest value for GNI per capita (con- vesting-in-vietnam-1979036
stant 2010 US$) in Vietnam was 1691.45. Over the past 27 years, this
indicators value has fluctuated between 1691.45 in 2016 and 419.38 in https://www.voan-
1990. According to World Bank national accounts data, the value was ews.com/east-asia-pacific/local-communi-
2360 in year 2018. ties-weigh-cost-vietnams-economic-growth

Page 06
 Levels of Economic Integration: Trade liberalization and regional economic integration have
recently accelerated in East Asia, where several free trade areas have been established o
are under negotiation.

REGIONAL
ECONOMIC
INTEGRATION
OF VIETNAM

Vietnam became the member of ASEAN in 1995. The Association of Southeast Asian Nations
(ASEAN) is an intergovernmental organization aimed primarily at promoting economic
growth and regional stability among its members.

Page 07
There are currently 10 members states, Indonesia, Malaysia,
Philippines, Singapore, Thailand, Brunei, Laos, Myanmar,
Cambodia and Vietnam.

TRADE: Vietnam, after acquiring ASEAN membership in 1995,

has signed a bilateral trade package with the United States and
participated in the China‐ASEAN free trade area.

Benefits: The regional economic integration generally has a

positive impact. It both enhances welfare and improves
income‐distribution for Vietnam. Household income and
consumption increase, and poor and rural household groups
benefit more than urban high income groups.
ASEAN Free Trade Agreement

Total Export-Import in Vietnam (2003-2012)

Page 08
KEY LOCAL COMPANIES,
MNC’s & RESOURCES
5 Important Local Companies of Vietnam
Name of Company Industry Logo

1. Petrolimex Oil & Gas

2. Sabeco Brewery Consumer goods
3. VietinBank Financials
4. Vietnam Electricity Utilities
5. Viettel Telecommunications

5 Multinational Companies (MNC) Operating in Vietnam

Name of Company Industry Logo

1. Nissan Automotive
2. KFC Restaurant
®

Telecommunications
3. NOKIA Equipment Networking
Equipment Mobile phones
Consumer electronics

4. Bridgestone Corp. Auto and Truck parts

5. Intel Computing and

Communications

Page 09
Multinational Companies in Vietnam
Vietnam has become an area of decision for global partnerships to grow their assembling capacities in gadgets
and semiconductor areas. Organizations, for example, Intel has fabricated their biggest plants in Vietnam.
In 2012, Vietnam authorized 1,100 new ventures and affirmed 435 existing undertakings enlisting to expand
capital, bringing the absolute estimation of the recently authorized and added money to $13 billion, identical to
84.7% of a year ago aggregate.

As of December 2012, the nation is home to 14,522 legitimate outside contributed ventures with capital totaling
$210 billion. Assembling and handling are the most appealing ventures to outside financial specialists. By
December 15, 2013, 98 nations and domains had put resources into 14,489 Vietnamese activities with a com-
plete enlisted speculation capital of $213.6 billion.

Japan was the biggest financial specialist in Vietnam, representing 13.6% of the all-out enlisted capital.

1. Nissan is extending a vehicle-building focus.

2. Bridgestone Corporation, the world's biggest tire creator, has set up assembling in this nation.
3. Anheuser-Busch, Starbucks, KFC, GE, Nike and Intel have all put resources into Vietnam.
4. A few cutting edge worldwide enterprises have set up nearness in Vietnam including Nokia; is a yet
the prevailing player in the Vietnamese versatile market.
5. Outside banks have generous nearness in Vietnam, with 50 remote organizations working by means
of branch workplaces and five entirely possessed bank backups.

Attractiveness for International Business

Beforehand China, Hong Kong and Taiwan were known for modest work, and numerous remote organizations
decided to fabricate their items in these nations. Notwithstanding a stable world of politics, Vietnam today
offers the worldwide network an incentive that is difficult to overlook.

Key Resources
1. Vietnam is luxuriously supplied with mineral riches, holding a portion of the world's biggest stores of bauxite
(seven percent of world stores) and tungsten (expected to have seven percent of world creation in 2013) and
huge stores of uncommon earths titanium and iron metal. Other mineral assets incorporate copper, gold, nickel,
lead, chromite and manganese. Assets are to a great extent undiscovered the same number of stay unexplored.

2. Vietnam positions third in Southeast Asia for oil assets. Vietnam is supplied with huge stores of mass and
specialty minerals including bauxite, uncommon earths, titanium, phosphate, coal and iron metal.

3. Except for coal, most of current mining ventures are little in scope, speaking to an undiscovered open door
for advancement on an enormous scale.

4. While Vietnam's mining industry has been developing at a fast pace, the industry comprises just 1.9 percent
of Vietnam's GDP in 2010. Possession for metals and minerals is profoundly divided. Open doors for global
partnerships are ready in this division.

Page 10
LEVEL OF CPI
EFFECTING FDI

The CPI is known as the Corruption Perception Index

which determines the level of corruption and to what
Figure 1: The graph shows the CPI of Vietnam from year 2010- 2018
extent a country is corrupted. The CPI has a scale of
100 (very clean) to 0 (highly corrupt). The CPI affects
the whole economy as a whole.

FDI is known as Foreign Direct Investment. It is one of

the significant reason for a greater economic growth.
Because FDI brings capital, technology, and resourc-
es. This also creates job in the host country thus
reducing unemployment. The level of competition
increases which drives down cost as a result the
companies have to be more productive, innovative Vietnam had a CPI of 27 out of 100 is the year 2010, and
and efficient to save their profit margin. 33 out of 100 in the year 2018. It clearly shows that it
has improved but poorly in the last eight years. It
However, the CPI of a country affects FDI. One of the
reached the highest point in 2017 that is 35 out 100 but
reason for low level of FDI in some countries is
again dropped in the following year.
because of high level of corruption. Corruption is the
misuse of public power for private benefit. Before
The CPI level is unattractive for FDI inward. However, in
investing abroad, a company looks into the CPI of the
Vietnam, the FDI has increased upto 5.4% from 2000 to
host country, if the CPI is 0 or below 40 it is unat-
2015 despite of the unattractive CPI. Almost 45% of the
tractive. Corruption destroys the image and quality of
total industrial production value is from FDI sector.
the country’s economy.

Page 11
The FDI has improved Vietnam’s banking sector,
service sector a lot. Also, FDI in tourism has
changed the overall infrastructure of urban and
coastal areas. Initially the health and education
sector did not attract FDI, but later were invested
to provide better medical care and serve the
needs of the high-income population and foreign-
ers there.
Despite of the bad CPI level, Vietnam still can
acquire FDI because it is continuously developing its
infrastructure, which in turn is reducing the trans-
portation cost, faster movement of resources thus
faster service, more efficient. This helps in making it
easier to do business. Moreover, Vietnam is improv-
ing its legal system for example better Intellectual
Property Rights protection. This in turn, builds trust
and faith in the country’s economy and attracts FDI.

However, if it had a better CPI, it would have gained a lot more FDIs than now.

The pictures below shows how Vietnam has improved its infrastructure.

The left picture shows the infrastructure of Vietnam in early 1990 and the right picture
shows the infrastructure of Vietnam in 2019.

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References
• Nakra, P. (2019). The Transformation of Vietnam. Retrieved 21 December 2019, from https://www.shipping-
solutions.com/blog/the-transformation-of-vietnam

• The Vietnamese Value System - Vietnamese Culture and Tradition. Retrieved 21 December 2019, from
http://www.vietnam-culture.com/articles-18-6/The-Vietnamese-Value-System.aspx

• Guide, V. (2019). Vietnam - Language, Culture, Customs and Etiquette. Retrieved 21 December 2019, from
https://www.commisceo-global.com/resources/country-guides/vietnam-guide

• List of companies of Vietnam. (2019). Retrieved 21 December 2019, from https://en.wikipe-

dia.org/wiki/List_of_companies_of_Vietnam?fb-
clid=IwAR2-1nZTdGCj_lTB5VrEwEz4qr0u-1TQdYs_tqg_vkmP3u72Swe6ibhYbRc

• CONSTITUTION AND POLITICAL SYSTEM | Embassy of the Socialist Republic of Vietnam in the United States.
(2019). Retrieved 21 December 2019, from http://vietnamembassy-usa.org/vietnam/politics

• Pariona, A. (2019). The Economy Of Vietnam. Retrieved 21 December 2019, from https://www.worldat-
las.com/articles/the-economy-of-vietnam.html

• Vietnam Foreign Direct Investment [1996 - 2019] [Data & Charts]. (2019). Retrieved 21 December 2019, from
https://www.ceicdata.com/en/indicator/vietnam/foreign-direct-investment

• Vietnam Consumer Price Index CPI Growth [1996 - 2019] [Data & Charts]. (2019). Retrieved 21 December
2019, from https://www.ceicdata.com/en/indicator/vietnam/consumer-price-index-cpi-growth

• D. (2019). EU signs free trade agreement with Vietnam | DW | 30.06.2019. Retrieved 21 December 2019, from
https://www.dw.com/en/eu-signs-free-trade-agreement-with-vietnam/a-49418833

• Why Vietnam (2019). Retrieved 21 December 2019, from https://www.whavietnam.com/why-viet-

nam-c10.html

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