INTERNATIONAL FINANCIAL

MANAGEMENT

Mid-term Presentation

The trend of FDI in the world related to the

restructuring of the international financial market
under the impact of economic recession.

Lecturer: MBA. Tang My Sang

Group 2:

Ngo Dinh Anh Thu

Nguyen Phuong Vy

Hoang Van Quynh

Nguyen Quynh Thuan Phat

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 CONTENT
I. DEFINITION OF FDI, FDI CAPITAL........................................................................3

1. Definition of FDI.........................................................................................................3

2. Definition of FDI Flow................................................................................................3

II. THE TRENDS OF FDI IN THE WORLD UNDER THE IMPACT OF

ECONOMIC RECESSION..................................................................................................4

1. The economic recession 2012 – 2013..........................................................................4

2. The trends of FDI under the economic recession 2012 – 2013.................................5

2.2. FDI inflows to selected regional and interregional groups, average 2005–2007,
2008–2013......................................................................................................................... 10

III. The trends of FDI under the economic recession 2020 – present..........................11

1. The economic recession 2020 - present....................................................................12

2. The trends of FDI under the impact of COVID – 19 Epidemic............................12

3. The International financial market under the impact of Covid – 19 Epidemic...16

IV. VIETNAM’S FDI MARKET...................................................................................20

1. Some advantaged situations.....................................................................................20

2. The situation of attracting Foreign Direct Investment (FDI) in Vietnam............21

3. SWOT Analysis of FDI market in Vietnam............................................................23

4. What does Vietnam need to do to attract FDI?......................................................24

5. Suggested solutions...................................................................................................25

REFERENCES...................................................................................................................27

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I. DEFINITION OF FDI, FDI CAPITAL
1. Definition of FDI
- According World Trade Organization (WTO), Foreign direct investment (FDI)
occurs when an investor based in one country (the home country) acquires an asset
in another country (the host country) with the intent to manage that asset.
- The management dimension is what distinguishes FDI from portfolio investment in
foreign stocks, bonds and other financial instruments. In most instances, both the
investor and the asset it manages abroad are business firms. In such cases, the
investor is typically referred to as the “parent firm” and the asset as the “affiliate” or
“subsidiary”.
- Examples of foreign direct investments include mergers, acquisitions, retail,
services, logistics, and manufacturing, among others.
2. Definition of FDI Flow
- FDI net inflow is defined as the total value of inward overseas direct investment
made by foreign entities, including non-resident investors.
- Inward foreign direct investments into the domestic country includes all assets and
liabilities exchanged between the foreign investors and enterprises based in the
domestic country, where the investment is being made.
- FDI net outflow is defined as the total value of outward overseas direct investment
made by the residents of the domestic country or reporting economy to businesses
based in foreign economies.
- Outward foreign investments include assets and liabilities exchanged between
investors based in a domestic country or reporting economy to foreign businesses
based out in different countries. Inward direct investment is also referred to as direct
investment abroad.

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II. THE TRENDS OF FDI IN THE WORLD UNDER THE IMPACT OF
ECONOMIC RECESSION
1. The economic recession 2012 – 2013
- The three-year European public debt crisis has forced
 Greece, Ireland, Portugal and Cyprus to seek relief from the international
community to avoid default.
 Spain and Italy are also at risk
 France was almost caught in a spiral, and the German economy - Europe's
leading - slowed significantly.
 Many European economies fell into recession and the Eurozone eventually failed to
avoid recession again in the third quarter of 2012.
- The "financial cliff" in the US: The world's largest economy grew fairly strongly in
2012 
- Deflation, slowing growth in world trade, weak domestic demand and declining
exports, especially to China (down as much as 14.5% in November 2012), are
pushing Japan into the risk of a fifth recession in 15 years. 
- Emerging economies that grow quite quickly such as China, India, Brazil, do not
keep their "form".
- The decline in exports was a key reason for a significant slowdown in asia's
developing economies
- Structural challenges, weaker investment and excess output have caused the region's
two growth engines, China and India, to lose momentum.
- However, the United Nations report noted that in contrast to other regions, the Asia-
Pacific economy in 2012 remained positive with an estimated growth rate of 5.6%,
although it was inevitably lower than the previous forecast of a 6.5%
increase.
- According to the World Bank (WB), the developing East Asia region (Indonesia,
Malaysia, Philippines và Myanmar), not taking into Account China, is a rare bright
spot for the global economy.
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 2. The trends of FDI under the economic recession 2012 – 2013
2.1. Global FDI flows

FDI flows to developing economies reached a new high at $778 billion, accounting
for 54 per cent of global inflows, although the growth rate slowed to 7 per cent, compared
with an average growth rate over the past 10 years of 17 per cent. Developing Asia
continues to be the region with the highest FDI inflows, significantly above the EU,
traditionally the region with the highest share of global FDI. FDI inflows were up also in the
other major developing regions, Africa (up 4 per cent) and Latin America and the Caribbean
(up 6 per cent, excluding offshore financial centres)

Although FDI to developed economies resumed its recovery after the sharp fall in
2012, it remained at a historically low share of total global FDI flows (39 per cent), and still
57 per cent below its peak in 2007. Thus, developing countries maintained their lead over
developed countries by a margin of more than $200 billion for the second year running.

Developing countries and transition economies now also constitute half of the top 20
economies ranked by FDI inflows. Mexico moved into tenth place. China recorded its
largest ever inflows and maintained its position as the second largest recipient in the world.

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 FDI by transnational corporations (TNCs) from developing countries reached $454
billion – another record high. Together with transition economies, they accounted for 39 per
cent of global FDI outflows, compared with only 12 per cent at the beginning of the 2000s.
Six developing and transition economies ranked among the 20 largest investors in the world
in 2013. Increasingly, developing-country TNCs are acquiring foreign affiliates of
developed-country TNCs in the developing world.

The 9 per cent increase in global FDI inflows in 2013 reflected a moderate pickup in
global economic growth and some large cross-border M&A transactions. The increase was
widespread, covering all three major groups of economies, though the reasons for the
increase differed across the globe. FDI flows to developed countries rose by 9 per cent,
reaching $566 billion, mainly through greater retained earnings in foreign affiliates in the
European Union (EU), resulting in an increase in FDI to the EU. FDI flows to developing
economies reached a new high of $778 billion, accounting for 54 per cent of global inflows.
Inflows to transition economies rose to $108 billion – up 28 per cent from the previous year
– accounting for 7 per cent of global FDI inflows.

Developing Asia remains the world’s largest recipient region of FDI flows. All
subregions saw their FDI flows rise except West Asia, which registered its fifth consecutive
decline in FDI. The absence of large deals and the worsening of instability in many parts of
the region have caused uncertainty and negatively affected investment. FDI inflows to the
Association of Southeast Asian Nations (ASEAN) reached a new high of $125 billion – 7
per cent higher than 2012. The high level of flows to East Asia was driven by rising inflows
to China, which remained the recipient of the second largest flows in the world.

After remaining almost stable in 2012, at historically high levels, FDI flows to Latin
America and the Caribbean registered a 14 per cent increase to $292 billion in 2013.
Excluding offshore financial centres, they increased by 6 per cent to $182 billion. In contrast
to the preceding three years, when South America was the main driver of FDI flows to the
region, 2013 brought soaring flows to Central America. The acquisition in Mexico of Grupo
Modelo by the Belgian brewer Anheuser Busch explains most of the FDI increase in Mexico

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as well as in the subregion. The decline of inflows to South America resulted mainly from
the almost 30 per cent slump noted in Chile, the second largest recipient of FDI in South
America in 2012. The decrease was due to equity divestment in the mining sector and lower
reinvested earnings by foreign mining companies as a result of the decrease in commodity
prices.

FDI inflows to Africa rose by 4 per cent to $57 billion. Southern African countries,
especially South Africa, experienced high inflows. Persistent political and social tensions
continued to subdue flows to North Africa, whereas Sudan and Morocco registered solid
growth of FDI. Nigeria’s lower levels of FDI reflected the retreat of foreign transnational
corporations (TNCs) from the oil industry.

In developed countries, inflows to

Europe were up by 3 per cent compared with
2012. In the EU, Germany, Spain and Italy
saw a substantial recovery in their FDI
inflows in 2013. In Spain, lower labour costs
attracted the interests of manufacturing
TNCs. The largest declines in inflows were
observed in France, Hungary, Switzerland
and the United Kingdom.

FDI flows to North America grew by

23 per cent as acquisitions by Asian investors helped sustain inflows to the region. The
largest deals included the takeover of the Canadian upstream oil and gas company, Nexen,
by CNOOC (China) for $19 billion; the acquisition of Sprint Nextel, the third largest
wireless network operator in the United States, by Japanese telecommunications group
Softbank for $21.6 billion, the largest deal ever by a Japanese company; and the $4.8 billion
acquisition of the pork producer Smithfield by Shuanghui, the largest Chinese takeover of a
United States company to date. FDI flows to the United States rose by 17 per cent, reflecting
signs of economic recovery in the United States over the past year.

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 Transition economies experienced a 28 per cent rise in FDI inflows, reaching $108
billion – much of it driven by a single country. The Russian Federation saw FDI inflows
jump by 57 per cent to $79 billion, making it the world’s third largest recipient of FDI for
the first time. The rise was predominantly ascribed to the increase in intracompany loans and
the acquisition by BP (United Kingdom) of 18.5 per cent of Rosneft (Russia Federation) as
part of Rosneft’s $57 billion acquisition of TNK-BP.

Global FDI outflows rose by 5 per cent to $1.41 trillion, up from $1.35 trillion in
2012. Investors from developing and transition economies continued their expansion abroad,
in response to faster economic growth and investment liberalization as well as rising income
streams from high commodity prices. In 2013 these economies accounted for 39 per cent of
world outflows; 15 years earlier their share was only 7 per cent. In contrast, TNCs from
developed economies continued their “wait and see” approach, and their investments
remained at a low level, similar to that of 2012.

FDI flows from developed countries continued to stagnate. FDI outflows from
developed countries were unchanged from 2012 – at $857 billion – and still 55 per cent off
their peak in 2007. Developed-country TNCs continued to hold large amounts of cash
reserves in their foreign affiliates in the form of retained earnings, which constitute part of
reinvested earnings, one of the components of FDI flows. This component reached a record
level of 67 per cent.

Investments from the largest investor – the United States – dropped by 8 per cent to
$338 billion, led by the decline in cross-border merger and acquisition (M&A) purchases
and negative intracompany loans. United States TNCs continued to accumulate reinvested
earnings abroad, attaining a record level of $332 billion. FDI outflows from the EU rose by
5 per cent to $250 billion, while those from Europe as a whole increased by 10 per cent to
$329 billion. With $60 billion, Switzerland became the largest outward investor in Europe,
propelled by a doubling of reinvested earnings abroad and an increase in intracompany
loans. Countries that had recorded a large decline in 2012, including Italy, the Netherlands
and Spain, saw their outflows rebound sharply. In contrast, investments by TNCs from

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France, Germany and the United Kingdom saw a substantial decline. TNCs from France and
the United Kingdom undertook significant equity divestment abroad. Despite the substantial
depreciation of the currency, investments from Japanese TNCs continued to expand, rising
by over 10 per cent to a record $136 billion.

Flows from developing economies remained resilient, rising by 3 per cent. FDI from
these economies reached a record level of $454 billion in 2013. Among developing regions,
flows from developing Asia and Africa increased while those from Latin America and the
Caribbean declined. Developing Asia remained a large source of FDI, accounting for more
than one fifth of the world’s total.

Flows from developing Asia rose by 8 per cent to $326 billion with diverging trends
among subregions: East and South-East Asia TNCs experienced growth of 7 per cent and 5
per cent, respectively; FDI flows from West Asia surged by almost two thirds; and TNC
activities from South Asia slid by nearly three
quarters. In East Asia, investment from
Chinese TNCs climbed by 15 per cent to $101
billion owing to a surge of cross-border M&As
(examples include the $19 billion CNOOC-
Nexen deal in Canada and the $5 billion
Shuanghui-Smithfield Foods deal in the United
States). In the meantime, investments from
Hong Kong (China) grew by 4 per cent to $92
billion. The two East Asian economies have
consolidated their positions among the leading
sources of FDI in the world. Investment flows
from the two other important sources in East
Asia – the Republic of Korea and Taiwan Province of China – showed contrasting trends:
investments by TNCs from the former declined by 5 per cent to $29 billion, while those by
TNCs from the latter rose by 9 per cent to $14 billion.

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 FDI flows from Latin America and the Caribbean decreased by 8 per cent to $115
billion in 2013. Excluding flows to offshore financial centres, they declined by 31 per cent
to $33 billion. This drop was largely attributable to two developments: a decline in cross-
border M&As and a strong increase in loan repayments to parent companies by Brazilian
and Chilean foreign affiliates abroad. Colombian TNCs, by contrast, bucked the regional
trend and more than doubled their cross-border M&As. Investments from TNCs registered
in Caribbean countries increased by 4 per cent in 2013, constituting about three quarters of
the region’s total investments abroad.

FDI flows from transition economies increased significantly, by 84 per cent, reaching
a new high of $99 billion. As in past years, Russian TNCs were involved in the most of the
FDI projects, followed by TNCs from Kazakhstan and Azerbaijan. The value of cross-
border M&A purchases by TNCs from the region rose significantly in 2013 – mainly as a
result of the acquisition of TNKBP Ltd (British Virgin Islands) by Rosneft; however, the
number of such deals dropped.

2.2. FDI inflows to selected regional and interregional groups, average 2005–
2007, 2008–2013

In 2013, APEC absorbed half of global flows – on par with the G-20; the BRICS
received more than one fifth. Among major regional and interregional groupings, two –
Asia-Pacific Economic Cooperation (APEC) countries and the BRICS (Brazil, Russian
Federation, India, China and South Africa) countries – saw a dramatic increase in their share
of global FDI inflows from the pre-crisis level. APEC now accounts for more than half of
global FDI flows, similar to the G-20, while the BRICS jumped to more than one fifth. In
ASEAN and the Common Market of the South (MERCOSUR), the level of FDI inflows
doubled and the EU, which are negotiating the formation of TTIP, saw their combined share
of global FDI inflows cut nearly in half over the past seven years, from 56 per cent during
the pre-crisis period to 30 per cent in 2013. The share of the 12 countries participating in the
TPP negotiations was 32 per cent in 2013, markedly smaller than their share in world GDP
of 40 per cent. RCEP, which is being negotiated between the 10 ASEAN member States and

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their 6 FTA partners, accounted for 24 per cent of global FDI flows in recent years, nearly
twice as much as before the crisisfrom the pre-crisis level. Many regional and interregional
groups in which developed economies are members (e.g. G-20, NAFTA) are all
experiencing a slower recovery.

Mixed trends for the megaregional integration initiatives: TPP and RCEP shares in
global flows grew while TTIP shares halved. The three megaregional integration initiatives
– the Transatlantic Trade and Investment Partnership (TTIP), the TransPacific Partnership
(TPP) and the Regional Comprehensive Economic Partnership (RCEP) – show diverging
FDI trends. The United States and the EU, which are negotiating the formation of TTIP, saw
their combined share of global FDI inflows cut nearly in half over the past seven years, from
56 per cent during the pre-crisis period to 30 per cent in 2013. The share of the 12 countries
participating in the TPP negotiations was 32 per cent in 2013, markedly smaller than their
share in world GDP of 40 per cent. RCEP, which is being negotiated between the 10
ASEAN member States and their 6 FTA partners, accounted for 24 per cent of global FDI
flows in recent years, nearly twice as much as before the crisis.

III. The trends of FDI under the economic recession 2020 – present

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1. The economic recession 2020 - present
- With the spread of Covid-19 becoming a full-blown pandemic disrupting supply
chains, mass layoffs, countless bankruptcies and business dissolutions, paralyzing
industries such as aviation and travel...
- The wave of closures in the retail industry is spreading, unemployment is increasing
rapidly, all delaying the recovery step during the epidemic period
- The urgent need to increase health spending coupled with a decline in tax revenues,
combined with a decline in export earnings and pending debt has exposed a fiscal gap
2- 3 trillion dollars in developing countries that the international community has so
far unresolved.
- Many countries have stepped up the implementation of blockade measures to prevent
epidemics, causing economic activities such as production, consumption, investment,
etc. to all decline.
- The global economic crisis caused by the trade war between the US and China can
cause great disturbances to the global supply chain, greatly affecting the development
progress of countries.

2. The trends of FDI under the impact of COVID – 19 Epidemic

2.1. Global FDI flows
- The COVID-19 crisis will
cause a dramatic fall in FDI.
Global FDI flows are
forecast to decrease by up to
40 per cent in 2020, from
their 2019 value of $1.54
trillion.
- The pandemic is a supply,
demand and policy shock
for FDI. The lockdown

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 measures are slowing down existing investment projects. The prospect of a deep
recession will lead MNEs to re-assess new projects.
2.2. FDI flows vary by region
- Among developed countries, FDI flows to Europe are expected to fall by 30 to 45
per cent, significantly more than those to North America and other developed
economies (with falls of 20 to 35 per cent on average), because the region entered the
crisis on a relatively more fragile footing. In 2019, flows to developed economies as a
group increased by 5 per cent to $800 billion.
- FDI flows to Africa are forecast to fall by 25 to 40 per cent in 2020. The negative
trend will be exacerbated by low commodity prices. In 2019, FDI flows to Africa
already declined by 10 per cent to $45 billion.
- Flows to developing Asia will be severely affected due to their vulnerability to supply
chain disruptions, the weight of GVC-intensive FDI in the region and global
pressures to diversify production locations. FDI is projected to fall by 30 to 45 per
cent. In 2019, FDI flows to the region declined by 5 per cent, to $474 billion, despite
gains in SouthEast Asia, China and India.
- FDI in Latin America and the Caribbean is expected to halve in 2020. Investment
prospects are bleak because the pandemic compounds political turbulence and
structural weaknesses in several economies. In 2019, FDI in Latin America and the
Caribbean grew by 10 per cent to $164 billion.
- FDI flows to economies in transition are expected to fall by 30 to 45 per cent. The
decline will largely undo a recovery of FDI to the region in 2019
- The outlook for FDI in structurally weak and vulnerable economies is extremely
negative. Many least developed countries (LDCs) are dependent on FDI in extractive
industries, tourism, and landlocked developing countries.are disproportionally
affected by supply chain blockages. In 2019, FDI inflows to LDCs declined by 6 per
cent to $21 billion, representing just 1.4 per cent of global FDI.

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 FDI Inflows, Top 10 host economies in 2019
United States 246

China 141

Singapore 92

Netherlands 84

Ireland 78

Brazil 72

Hong Kong 68

United Kingdom 59

India 51

Canada 50

0 50 100 150 200 250 300

FDI Outflows, Top 10 home economies in 2019

Japan 227

United States 125

Netherlands 125

China 117

Germany 99

Canada 77

Hong Kong 59

France 39

Korea 36

Singapore 33

0 50 100 150 200 250

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 2.3. Trends in greenfield investment projects and Cross-border M&As by
sector
 Greenfield Investment
- Announced greenfield projects in manufacturing decreased by 14 per cent to $402
billion. Despite the decline in extractive industries, announced investments in the
manufacturing of coke and refined petroleum products rose by 12 per cent, to $94
billion.

 Cross – border M&As

- Cross-border M&A sales in developed countries declined by 40 per cent in 2019, to
$411 billion. The decline of cross-border M&As in 2019 was much stronger than the
14 per cent decrease in total M&A activity (including domestic deals) worldwide,
continuing the trend of the last few years in the relative unpopularity of cross-border
expansions and consolidations through deals. The fall in global cross-border M&As
sales was deepest in the services sector, followed by the manufacturing sector.

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 3. The International financial market under the impact of Covid – 19 Epidemic
3.1. In Africa
- The economic and investment implications
for FDI of the pandemic will be further
compounded by the oil glut in global markets,
which is causing extremely low oil prices as
well as declining commodity prices in general
- Although the pandemic will affect all
industries, several services industries are
being hit disproportionally, including
aviation, hospitality, tourism and leisure in
2019.

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- There was a notable downward trend in the first quarter of 2020 in announced
greenfield investment.
3.2. In Asia
- The pandemic has highlighted the dense
interconnection of economies and factories in
Asia and with other parts of the world. Work
stoppages in China have significantly
disrupted the supply chain of many factories
in East and South-East Asia. - The pandemic
has also underscored the vulnerability of
these supply chains, and the important role of
China and other Asian economies as global
production hubs.
- The decline was driven mostly by a 13 per
cent drop in investment in East Asia,
primarily in Hong Kong, China and the
Republic of Korea. Inflows to China rose
marginally and reached an all-time high of
$141 billion.
- The number of M&As dropped by 35 per
cent in April 2020 from the monthly
average of 2019.
- Following high inflows in 2019, South-
East Asia has not been spared the impact
of the pandemic. The region is
experiencing a significant economic
slowdown, including a major disruption
of production and supply chains in many
industries.

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- Investment commitments in Indonesia and Viet Nam declined by 10 %.
- Market-oriented investment in construction, real estate, hospitality and other services
will also be significantly affected by the economic slowdown.
- Longer term, a few countries with low labour cost advantages (e.g. Indonesia and
Viet Nam) could fare relatively better as MNEs pick up operations. They could
benefit from MNE decisions to diversify geographical risks and build more resilient
supply chains.
- Relocations of investment by MNEs to avoid the trade tensions between the United
States and China helped push up FDI. Companies such as Intel (United States),
Nintendo (Japan) and Kyocera (Japan) have relocated operations from China to Viet
Nam.
3.3. In Latin America and Caribbean
- FDI for 2020 is expected to halve. Commodity exporters in the region face a double
shock of collapsing prices and lower volumes of exports to major trading partners.
Investment in extractives, the largest FDI sector in the region, already tumbled in the
first quarter and is not expected to recover this year.
- Flows to the tourism industry, a key services sector industry in many economies of
the region, especially in the Caribbean, are also sinking.

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 3.4. In Transition Economies
Outward FDI from economies in
transition is expected to continue its
decline in 2020 and 2021, as economic
recessions in home economies and the
low oil prices affect the capacities of
MNEs from the region to invest abroad.
3.5. In Developed Economies
The value of cross-border M&A
purchases by MNEs in developed countries
actually fell by 34 per cent, mainly in
manufacturing and services.
Cross-border M&A sales fell sharply in
chemicals and chemical products and in
financial services.

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 - Several developed countries have introduced or are considering measures aimed at
protecting critical domestic infrastructure and other sensitive industries
- Earnings forecasts for 2020 of the top MNEs based in developed countries show an
average downward revision since the outbreak of 39 per cent.

IV. VIETNAM’S FDI MARKET

1. Some advantaged situations

- In 2020, due to the impact of the covid-19 pandemic, the global supply chain will be
seriously affected. Besides, the influence of trade war between the US and China,
the shift of production out of China took place quickly. In which, there are four areas
that corporations tend to shift to Vietnam to set up company and make investment
are information technology and high technology, electronic equipment, e-commerce
and logistics, consumer goods, and retail.
- Vietnam, with the advantage of being close to China, is favorable for the movement
of investment and machinery. Besides, having policies to attract FDI from Vietnam
will make it easier for international investors to transfer investment. Some big global
corporations have started recruiting, searching for supply chains, and Vietnam is one
of the destinations in the transition
- Within 9 months from 2020, Vietnam also participates in many Free Trade
Agreements such as CPTPP, EVFTA, etc. that facilitate trade relations with many
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 countries and regions in the world, which will make cooperation more favorable. In
addition, the stability in the value of Vietnam currency is also a strong point in
attracting international investment

- According to a report in 2019, Vietnam’s labor costs are also lower than that of
Thailand, Malaysia and Indonesia, in addition, the labor force in Vietnam is
increasingly abundant and the quality of labor is increasing
- In addition, with the application of supportive policies such as reduction of corporate
income tax, import and export tax, land rental assistance, labor supply, and
administrative procedures, Vietnam deserves to become be best investment
destination in the world, for international companies to make investment, establish
company and obtain investment registration certificate.

2. The situation of attracting Foreign Direct Investment (FDI) in Vietnam

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- According to Ministry of Planning and Investment, until 08/20/2020, total newly
registered capital, adjusted and contributed capital to buy shares of foreign investors
reached 19.54 billion USD, equaling 86.3% compared to the same period in 2019.
Investment in implementing FDI projects was estimated at 11.35 billion USD, equal
to 94.9% over the same period in 2019.
- Vietnam's FDI tends to decrease, which is mainly due to the outbreak of the Covid-
19 pandemic. As of August 20, 2020, the total newly and adjusted registered capital
of foreign investors reached 19.54 billion USD, equaling 86.3% over the same
period in 2019.

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- Although newly registered capital and adjusted capital increased more than the same
period last year, the contributed capital of foreign investors in the form of joint-
venture continued to decrease, reducing the total investment capital attracted in the
first 8 months of 2020.
- In which, the newly registered capital: there were 1,797 new projects granted
investment registration certificates (down 25.3% over the same period in 2020), total
registered capital reached US$ 9.73 billion (increased 6.6% over the period in 2020)
Investment capital increased mainly because the Bac Lieu liquefied natural gas
(LNG) power plant project was granted a new investment registration certificate
with a total investment of 4 billion USD (accounting for 41.1% of the total
registered capital)
- There were 718 times of registered projects that wanted to change investment capital
(down 20.9% compared to the same period in 2020). The total additional registered
capital reached over 4.87 billion USD (up 22.2% compared to the same period in
2020). During 2020, adjusted capital in the 8 months of 2020 increased due to the
adjustment of the South Vietnam Petrochemical Complex Project in Ba Ria - Vung
Tau (Thailand).

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 - Capital contribution, share purchase: There were 4,804 times of joint stock
brokerage by foreign investors (down 8.2% compared to the same period in 2020),
the total value of contributed capital was 4.93 billion USD (equivalent to 51.8% over
the same period in 2020). The structure of the value of capital contribution and share
purchase in total capital investment also decreased significantly compared to the
same period in 2019 (from nearly 42% in 8 months of 2019 to 25.2% in 8 months of
2020).
- Foreign investors have invested in 18 sectors, in which the processing and
manufacturing industry leads the way with a total investment of more than 9.3
billion USD, accounting for 47.7% of the total registered capital investment. The
field of electricity production and distribution ranked second, with a total
investment of over 4 billion USD, accounting for 20.6% of the total registered
capital investment
- Among countries that have been investing in Vietnam: Singapore is the leading
country with total investment capital of 6.54 billion USD, accounting for 33.5% of
total investment capital in Vietnam; Korea ranked second with total investment
capital of 2.97 billion USD, accounting for 15.2% of total investment capital. China
ranked third with a total registered investment capital of 1.75 billion USD,
accounting for nearly 9% of total investment capital. Next are countries: Japan,
Thailand, Taiwan…

3. SWOT Analysis of FDI market in Vietnam

- By analyzing SWOT model of Vietnam in terms of FDI attraction, we are going to

determine what the strengths, the weaknesses, the opportunities, and also the Threats
of Vietnam in order to find out effective and suitable strategies to gain the investors’
attention around the world. Furthermore, Vietnam’s economy has to minimize the
threats and improve its weaknesses to get rid of forecasted issues in near future.

STRENGTH WEAKNESS
 Suitable location  Lack fully oriented stable development
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 Abundant labor forces  High-qualified labor forces demand
 Low-cost production  Long time for procedures
 Low labor cost  Corruption & bureaucracy
 Stable politicy  The Infrastructure is still being completed
OPPORTUNITY THREAT
 Growing good reputation  High competitive region
 WTO’s member (2006)  Some environmental issues
 EVFTA, RCEP agreement
 Less impacted by Covid-19
 Encouraged by government
 Supportive policies related to tax
incentive

4. What does Vietnam need to do to attract FDI?

- Companies looked for some key factors when considering direct investment in a
country.
- They wanted good supply of labour with skills and experience, logistics convenience
in places they set up new factories so that they could easily ship in raw materials and
ship out finished products, minimal bureaucratic obstacles to setting up and
operating factories, and political and economic stability.
- Vietnam scored well in most of these aspects, and quickly improves in areas it did
not.
- But there were several things it could do to become more attractive to investors.
- Its logistics costs continued to be high, and it needed to quickly build and improve
physical infrastructure to rise in the World Bank Logistics Performance Index from
its current 45th position.

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- Government also needed to improve the country’s position in the World Bank’s
ease of doing business rankings by streamlining the bureaucratic processes related to
setting up and operating a business.
- “In the most recent World Bank survey, Vietnam ranks 70th out of 190 countries,
ahead of countries like Indonesia, and the Philippines but behind Malaysia and
Thailand.”
- The Government’s recently announced ‘fast track’ initiative to speed up the
licensing of FDI projects was a good example of the steps it could take to reduce red
tape and bureaucratic hurdles companies faced.
- The Government should consider promoting quality FDI by setting up an Investment
Promotion Agency (IPA) to actively market Vietnam’s advantages as an FDI
destination around the world.
- The Government tended to approach FDI reactively and only worked with foreign
companies that approached it though the Ministry of Planning and Investment and
other relevant Government departments had become more aggressive in following
potential leads.
- Next, Vietnam’s vocational training needs to be significantly improved to ensure
that the workforce could perform tasks that require higher skill levels, and the
country needed to invest in R&D and improve technical universities.
- Finally, the Government could encourage the formation of industrial clusters around
desirable industries such as electronics.
- This strategy would have the dual advantage of maximising Vietnam’s benefit from
FDI investments and giving firms more confidence to locate their higher value-
added activities in the country.

5. Suggested solutions
- Firstly, The National Assembly and the Government need to refine the legal system
and administrative procedures on foreign investment in a synchronous, consistent,
easy-to-understand, and easy-to-implement manner.

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- Building outstanding institutions, preferential policies, international competition to
create favorable business conditions to attract large projects, national key projects,
high-tech projects, etc. to attract investors. Besides, Việt Nam should establish R&D
centers and innovation centers to have more new potential projects that attract
foreign investors.
- Secondly, usual inspection and supervision to create favorable conditions for
enterprises to operate effectively, promoting coordination among state management
agencies to avoid overlapping in inspection and examination; strengthen post-
inspection with FDI projects after being licensed.
- Thirdly, Vietnam should focus on creating an educated and high-qualified
workforce, especially related to High Tech and R&D, so that Foreign corporations
can make use of local Workforce helping investors not only save their money but
also their time.
- Last but not least, Vietnam should spend budget on upgrading the infrastructure
system, especially traffic, seaports... in order to create favorable conditions for
investors in the process of conducting investment activities in Vietnam, because
Investors always want a perfect logistical system.
- Finally, Vietnam should not offer overly generous tax breaks. Invested countries
often use a range of tax incentives to attract foreign investment, and of course who
does not like tax incentives? But offering overly generous tax breaks is not critical
for Việt Nam to be successful in attracting FDI. According to the IMF, tax
incentives are “not critical” to attracting FDI and “…cannot substitute for political
stability, good macroeconomic fundamentals, the availability of infrastructure, and a
sound legal framework.”

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 REFERENCES
1. https://www.investopedia.com/terms/f/fdi.asp
https://www.wto.org/english/news_e/pres96_e/pr057_e.htm
2. Kinh tế thế giới năm 2012: “Đi qua bóng tối” | Báo Dân trí (dantri.com.vn)
3. Những mảng xám của nền kinh tế toàn cầu 2012 | Tạp chí Tuyên giáo (tuyengiao.vn)
4. World Investment Report 2014 (unctad.org)
5. https://www.antconsult.vn/foreign-investor-in-vietnam/the-advantages-of-attracting-
fdi-to-vietnam-in-2021.html/amp
6. http://tapchicongthuong.vn/bai-viet/thuc-trang-thu-hut-von-dau-tu-truc-tiep-nuoc-
ngoai-vao-viet-nam-giai-doan-2010-2020-80266.htm
7. https://www.vietnam-briefing.com/news/fdi-in-vietnam-year-in-review-and-outlook-
for-2021.html/
8. https://www.crowe.com/vn/insights/doing-business-in-vietnam/foreign-direct-
investment-(fdi)-in-vietnam
9. https://www.vietdata.vn/tinh-hinh-thu-hut-von-dau-tu-nuoc-ngoai-fdi-fii-5-thang-
dau-nam-2020-2040743145
10. https://vietnamnews.vn/economy/749545/what-vn-needs-to-do-to-attract-quality-fdi-after-
covid-19.html
11. https://tapchitaichinh.vn/su-kien-noi-bat/thu-hut-nguon-von-fdi-vao-viet-nam-va-nhung-van-de-
dat-ra-hien-nay-330589.html?
fbclid=IwAR0r4udQMP72Ijij7WdKT9CT8xDv2lfvY8I0IieaVyOb3mwxQDg8rfyNFfs
12. https://unctad.org/system/files/official-document/wir2020_en.pdf
13. https://unctad.org/system/files/information-document/diae_gitm34_coronavirus_8march2020.pdf
14. https://data.worldbank.org/indicator/BM.KLT.DINV.CD.WD?
end=2019&most_recent_value_desc=false&start=1970&type=shaded&view=chart&year=2019
15. https://tapchitaichinh.vn/su-kien-noi-bat/cac-yeu-to-anh-huong-toi-viec-thu-hut-dong-von-dau-tu-
nuoc-ngoai-tai-viet-nam-330984.html
16. http://www.talawas.org/talaDB/showFile.php?res=12823&rb=0502
17. https://www.investopedia.com/ask/answers/06/greenfieldvsacquistion.asp

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 CONTRIBUTION
Student Name ID student Contribution Points

1. Ngô Đình Anh Thư 195082471 Content part 1 + ppt 25%

2. Hoàng Vân Quỳnh 195082291 Content part 2 + word 25%

3. Nguyễn Phương Vy 195082397 Content part 3 + word 25%

4. Nguyễn Quỳnh Thuận Phát 195081731 Content part 4 25%

Total: 100%

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