ASSESSMENT OF FOREIGN DIRECT INVESMENT FLOWS INTO VIETNAM AFTER VIETNAM’S ACCESSION TO WTO

VIETNAM NATIONAL UNIVERSITY VNU UNIVERSITY OF ECONOMICS & BUSINESS Faculty of International Business & Economics INTERNATIONAL INVESTMENT Course code: INE4002–E* ASSESSMENT OF FOREIGN DIRECT INVESMENT FLOWS INTO VIETNAM AFTER VIETNAM’S ACCESSION TO WTO Full name: Phạm Thị Thanh Huyền Student ID: 18050483 D.O.B: 05/09/2000 Class: QH 2018E KTQT CLC1 Lecturers: PGS TS Nguyễn Thị Kim Anh ThS T ống Thị Minh Phương Hanoi, 05/2021 CONTENT LIST OF ACRONYMS i LIST OF FIGURE ii INTRODUCTION CONTENT I THEORETICAL BASIS ON FOREIGN DIRECT INVESTMENT (FDI) AND THE WORLD TRADE ORGANIZATION (WTO) Overview of foreign direct investment capital (FDI) 1.1 Definition 1.2 Characteristics 1.3 The role of FDI in the economy Overview of the World Trade Organization (WTO) 2.1 Definition 2.2 The function of WTO 2.3 Opportunities and challenges of Vietnam after joining WTO I SITUATION OF ATTRACTING FOREIGN DIRECT INVESTMENT OF VIETNAM AFTER WTO ACCESSION The situation of Vietnam's FDI attraction before WTO accession (period 1987 - 2006) The situation of attracting FDI into Vietnam after WTO accession 11 2.1 FDI increased in quantity 12 2.2 FDI quality is improved 17 Assessing the impact of FDI inflows on Vietnam after WTO accession WTO 18 II 3.1 Positive impact on the economy 18 3.2 Difficulties due to the double impact of FDI 21 SOLUTIONS TO ATTRACT FDI INFLOWS INTO VIETNAM 22 CONCLUSION 23 REFERENCES 24 A References in English 24 B References in Vietnam 24 LIST OF ACRONYMS NUMERICAL ABBREVIATION ENGLISH MEANING FDI Foreign Direct Investment WTO World Trade Organization UNCTAD BOT Build – Operate – Transfer USD United States dollar TNCs Transnational Corporation M&A Mergers & Acquisitions FTAs Free Trade Agreement GSO General Statistics Office of Vietnam 10 EU European Union 11 GDP Gross Domestic Product ORDER United Nations Conference on Trade and Development i LIST OF FIGURE Figure 1.1: Foreign direct investment in Vietnam from 1988 to 2004 10 Figure 1.2: FDI inflows into Vietnam and China compared to FDI flows into East, South and Southeast Asia 11 Figure 2.1: Number of projects, total registered capital and total realized capital of FDI capital into Vietnam in the period 2010 – 2019 12 Figure 2.2: Foreign investment attraction in the first months of 2020 13 Figure 2.3: Structure of FDI by investment form 14 Figure 2.4: FDI attraction in 2011 by investment form 14 Figure 2.5: Foreign direct investment in Vietnam by investment sector accumulated until December 2019…… ………………………………………………………… 15 Figure 2.6: FDI into Vietnam by investment partner 16 Figure 2.7: Vietnam's GDP growth over the years 19 ii INTRODUCTION Foreign direct investment (FDI) is considered as one of the factors with the most important contribution to economic growth, promoting socio-economic development, especially for developing countries including Vietnam Since the implementation of the renovation and opening-up process in 1986, Vietnam has considered attracting FDI as an important element in its overall economic development strategy FDI contributes to increasing labor productivity, developing technology, and raising the level of labor in our country In order to continue to develop rapidly and sustainably, the Party and State have enacted many legal and administrative reforms, and at the same time improved the efficiency and transparency in the implementation of regulations In particular, joining the World Trade Organization (WTO) is a very important step for Vietnam in the process of economic development and international integration After more than 200 negotiations, on January 11, 2007, the National Assembly of the Socialist Republic of Vietnam officially ratified the Protocol to join the World Trade Organization (WTO) Becoming a full member of the WTO has helped Vietnam's economy develop strongly, increasingly affirming the country's position in the international arena The accession to the WTO has opened up many new opportunities for Vietnam, especially in attracting foreign direct investment (FDI) However, besides the great development opportunities that are opened, Vietnam also faces many difficult challenges in the process of economic development In order to have a clearer view of the opportunities and challenges posed to Vietnam after joining the WTO, especially the issue of attracting foreign direct investment, I chose the topic "Assessment of foreign direct (FDI) flows into Vietnam after Vietnam's accession to WTO” The topic aims to analyze and evaluate the FDI inflows into Vietnam before and after joining the WTO, on that basis, to give appropriate solutions and recommendations to both improve the ability to attract FDI and improve the quality of FDI flows this capital CONTENT I THEORETICAL BASIS ON FOREIGN DIRECT INVESTMENT (FDI) AND THE WORLD TRADE ORGANIZATION (WTO) Overview of foreign direct investment capital (FDI) 1.1 Definition Foreign Direct Investment as defined by UNCTAD: “Foreign direct investment (FDI) is defined as an investment involving a long-term relationship and reflecting a lasting interest and control by a resident entity in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor (FDI enterprise or affiliate enterprise or foreign affiliate) According to the report of the World Trade Organization (WTO), foreign direct investment is defined: “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” According to the Law on Investment 2005: “Foreign investment is the bringing into Vietnam by foreign investors of cash capital and other lawful assets to conduct investment activities” and “Direct investment is a form of investors invest capital and participate in the management of investment activities” 1.2 Characteristics Foreign direct investment has the following salient features:  Firstly, investors must contribute a minimum amount of capital according to the regulations of each country The Law on Foreign Investment of Vietnam stipulates that foreign investors must contribute at least 30% of the legal capital of the project  Second, the division of management rights of enterprises depends on the level of capital contribution If the enterprise contributes 10% of capital, the enterprise is completely operated and managed by foreign investors  Third, investors' profits depend on business results and are distributed according to capital contribution ratio after tax payment and dividend payment  Fourth, FDI is implemented through the construction of new enterprises, the acquisition of all or part of existing enterprises or the merger of enterprises  Fifth, FDI is not only associated with capital movement but also associated with technology transfer, knowledge and management experience transfer and creating new markets for both investors and recipients  Sixth, FDI is now associated with international business activities of multinational companies 1.3 The role of FDI in the economy FDI plays an extremely important role in the economy, making a significant contribution to socio-economic development Firstly, FDI adds capital to the economy: FDI not only adds capital for development investment but also is a more stable capital flow than other international investment flows, because FDI is based on a long-term perspective limited on the market, on growth prospects and does not create debt for the host country's government, so it is less inclined to change in adverse circumstances Second, FDI creates a large source of budget revenue: For developing countries, or for many localities, the tax rate that foreign-invested companies must pay is considered an important source of budget revenue Third, FDI provides new technology for development Foreign investment (especially FDI) is seen as an important source for developing the technological capabilities of the host country This role is reflected in two main aspects: the transfer of available technology from outside and the development of technological capabilities of the research and application facilities of the host country These are important goals expected by the host country from foreign investors Fourth, FDI helps develop human resources and create jobs: Human resource development and job creation are important factors in promoting economic growth The objective of foreign investors is to maximize profits, strengthen their position and maintain a competitive position in the world market Therefore, they are particularly interested in taking advantage of cheap labor in host countries The number of direct workers in FDI enterprises is increasing rapidly in developing countries Besides, FDI also has a positive impact on human resource development of the host country through investment projects in the field of education and training Individuals working for foreign-invested enterprises have the opportunity to learn and improve themselves when accessing technology and advanced management skills FDI enterprises can also have a positive impact on improving human resources in other companies with which they have relationships, especially customer companies Overview of the World Trade Organization (WTO) 2.1 Definition The World Trade Organization (WTO) is an international organization headquartered in Geneva, Switzerland Established and operating since January 1, 1995, the WTO has the function of overseeing trade agreements between member countries according to trade rules, with the goal of establishing and maintaining a free trade, favorable and transparent world 2.2 The function of WTO According to the Marrakesh Agreement establishing the WTO, this organization has five basic functions as follows: Facilitating the implementation, administration and implementation of the objectives of this Agreement and other Multilateral Trade Agreements, as well as Plurilateral Agreements To provide a forum for negotiations among Member States on their commercial relations on matters covered by the WTO Agreements, and to implement the results of such negotiations Settlement of disputes between member countries on the basis of Dispute Settlement Rules and Procedures Conduct trade policy review through the Trade Policy Review Mechanism To achieve greater consistency in global trade policymaking, the WTO will, as appropriate, coordinate with the IMF, the World Bank and their agencies 2.3 Opportunities and challenges of Vietnam after joining WTO Vietnam officially became a full member of WTO on 11/01/2007 The accession to the WTO has opened up many new opportunities for the country's development, and at the same time put Vietnam in front of difficult challenges that need to be overcome Opportunities: First: when joining the WTO, Vietnam has access to markets for goods and services in all member countries with reduced import taxes and service industries, without discrimination Second: With the completion of the economic legal system in accordance with the socialist-oriented market mechanism and the transparent implementation of management institutions in accordance with WTO regulations, Vietnam's business environment is becoming more and more complex further improved Thirdly: Joining the WTO, Vietnam enjoys an equal position as other members in making global trade policy, has the opportunity to fight to establish a new and more just economic order more reasonable and conditional to protect the interests of the country and of enterprises Fourth: Joining the WTO and integrating into the world economy also promotes the domestic reform process, ensuring that Vietnam's reform process is more synchronized and effective Fifth: Along with the great achievements of historical significance after 20 years of Doi Moi, joining the WTO will enhance our position in the international arena, creating conditions for Vietnam to effectively implement the policy foreign Affair Challenges: First: Competition will be more intense, with more "rivals", on a broader, deeper scale Second: In the world, the "distribution" of the benefits of globalization is uneven Countries with less developed economies benefit less In each country, the "distribution" of benefits is also uneven A part of the population benefits less, and is even negatively impacted by globalization; the risk of bankruptcy of a part of enterprises and the risk of unemployment will increase, the gap between rich and poor will be stronger That requires the right welfare and social security policies; must thoroughly grasp and well implement the Party's policy: "Economic growth goes hand in hand with hunger eradication and poverty reduction, realizing social progress and justice right in each development step" products in the world In particular, Vietnam is considered the most stable FDI attraction in ASEAN with progress in both quantity and quality of FDI 2.1 FDI increased in quantity Immediately after Vietnam joined the WTO in 2007, FDI into Vietnam has increased tremendously, up to 21.3 billion USD (up 77.8% compared to 2006 and 1.7 times higher than the target) set by the Ministry of Planning and Investment is 12 billion USD) According to Mr Phan Huu Thang, Director of the Foreign Investment Department, Ministry of Planning and Investment, in 2007, including both new and increased capital, attracting foreign direct investment reached 20.3 billion USD, an increase of nearly billion USD, 70% compared to 2006, almost equal to the total foreign investment since the Law on Foreign Investment in Vietnam 1987 to 2008 Besides, the highlight in attracting foreign investment in 2007 is investment projects have focused on the areas that Vietnam prioritizes to attract foreign investment to serve the process of industrialization and modernization of the country such as high-tech projects, new urban areas, current And by 2008, the registered FDI capital reached a record of 71.7 billion USD The Foreign Investment Agency called it "a huge step forward" In 2009, due to the impact of the global financial crisis, according to statistics of the Ministry of Planning and Investment, FDI inflows into Vietnam decreased significantly, to only 23.1 billion USD This figure is only 30% compared to the same period in 2008, but it is also a fairly high level of commitment in the context of the global economic downturn 12 Figure 2.1: Number of projects, total registered capital and total realized capital of FDI capital into Vietnam in the period 2010 - 2019 (Source: Ministry of Planning and Investment (2019)) According to statistics from the Foreign Investment Agency (Ministry of Planning and Investment), in the period 2010 - 2019, Vietnam has 21,077 licensed FDI projects with a total capital of 252,988 million USD Specifically, in the period 2011-2016, realized FDI capital reached about 84 billion USD, equal to 4.55 times in 1991-2000 period and 1.43 times 10 years earlier (2001-2010 period) average attraction value of 12 billion USD/year In 2017, registered foreign investment capital in Vietnam reached nearly 36 billion USD, while realized FDI was estimated at 17 billion USD, the highest since the implementation of the Doi Moi policy in 1986 Foreign investment, by the end of 2020, total registered FDI capital reached over 400 billion USD, realized capital reached 234 billion USD (equivalent to 58.5% of total registered capital) In which, although it took years (2011 - 2014) in the period 2011 - 2020 and in 2020, FDI attraction did not increase, but in the period of years 2015 - 2019 continuously increased both in terms of new investment, investment expansion and especially buying shares from foreign investors, so the total registered capital, additional capital and share purchase reached over 270 billion USD, equaling 67.5%; realized capital reached USD 156 billion, equaling 66% of Vietnam's more than 30 years of attracting FDI Figure 2.2: Foreign investment attraction in the first months of 2020 (Source: Vietdata) 13 a Structure by form of investment If in previous years, the investment form of FDI projects in the form of 100% foreign capital accounted for a high proportion, in recent years, the investment trend has been to buy shares or merge, acquire enterprise (M&A) Figure 2.3: Structure of FDI by investment form (Source: Foreign Investment Department – Ministry of Planning and Investment 2007) In 2015 and 2016, respectively, over 86% and 80% of licensed FDI projects were implemented in the form of establishing economic organizations with 100% foreign capital However, in the following years, M&A activities were paid more attention by foreign investors, specifically: 2017, accounting for 17.02%; in 2018, accounting for 27.78%; in 2019, accounting for 56.4% of total registered capital Figure 2.4: FDI attraction in 2011 by investment form 14 (Source: Foreign Investment Department - Ministry of Planning and Investment) b Structure by investment sector In the period 2011 - 2019, the processing and manufacturing industry received the largest amount of FDI from foreign investors, accounting for 44% to 69.9% of total registered investment capital This is also the field that accounts for a large proportion of registered capital both in terms of registration of new investment projects, expansion investment projects and capital contribution and share purchase According to a statistical report of the Foreign Investment Department (Ministry of Planning and Investment), in 2019, FDI invested the most concentrated in the field of processing and manufacturing industry with a total capital of 24.56 billion USD, accounting for 64.6% of total registered investment capital, bringing the total accumulated investment capital in this field to 214.2 billion USD, accounting for 59.1% of total investment capital In 2020, Vietnam has 19 investment sectors, in which the processing and manufacturing industry leads the way with a total investment capital of 13.6 billion USD, accounting for 47.7% of the total registered investment capital Figure 2.5: Foreign direct investment in Vietnam by investment sector accumulated until December 2019) (Source: GSO) 15 Thus, based on the above data, it can be seen that FDI tends to concentrate more and more on a few key industry groups, associated with the roadmap to cut tariffs and open up attractive investment fields according to the schedule commitments are increasingly open in FTAs From 2001 up to now, FDI capital has focused mainly on processing and manufacturing industries FDI inflows invested in the manufacturing and processing sector accounted for 59% of capital structure and 50.3% of project structure However, looking at the fluctuation of FDI inflows into Vietnam, it shows that foreign investors are targeting some service industries of Vietnam such as real estate business; wholesale and retail, repair of automobiles, motorcycles and motorbikes; professional, scientific and technological activities and prominently the arts, entertainment and entertainment industries In contrast, some industries have a decreasing degree of FDI attraction The strongest of which are the production and distribution of electricity, gas, hot water, steam, air conditioning and the mining industry c Structure by investment partner According to statistics of the Foreign Investment Agency (Ministry of Planning and Investment), in the period 2010 - 2019, 135 countries and territories have invested in Vietnam, of which South Korea is the largest investor with total registered investment capital up to 54.809 billion USD (accounting for 22.06% of total investment capital); Singapore ranked second with a total registered investment capital of nearly 43 billion USD (accounting for 17.2% of total investment capital) Singapore ranked third with 16 Figure 2.6: FDI into Vietnam by investment partner (Source: Ministry of Planning and Investment 2017) registered investment capital in Vietnam reaching 35,391 billion USD (accounting for 14.25% of total investment capital) Followed by Hong Kong, China, Taiwan , … 2.2 FDI quality is improved After joining the WTO, not only did the quantity increase but the quality of FDI inflows into Vietnam also improved significantly In recent years, Vietnam is considered a "good land" for high-quality FDI inflows According to the statistics of the Foreign Investment Agency, right after Vietnam joined the WTO, the total registered FDI capital from the EU jumped from 5.41 billion USD in 2007 to 10.49 billion USD in 2008, which is an increase of 93.89% and accounts for 16.4% of the total registered FDI capital of the whole year 2008 With a total of 1.88 billion USD of newly registered capital, additional capital contribution and share purchase In 2018, the EU has nearly 25 billion USD of more than 2000 valid FDI projects in Vietnam The Netherlands, France, Luxembourg, Germany are the largest group of investors in Vietnam among EU members The highlight of FDI projects from the EU is that most of them are high-quality FDI flows, typically including high-tech investment projects from Ericsson, ABB, and Bosch In the last two years, the trend of technology companies pouring into Vietnam is increasing Major investors in the first wave of technology companies such as Samsung and LG are continuously expanding their investment and business activities in Vietnam Not only investing in production, both Samsung and LG are gradually turning our country into their R&D center In addition, there are a number of technology names that are also having investment projects in Vietnam Specifically, Universal Global Technology (Taiwan), a member of ASE Holding Technology Group, has decided to invest in a factory to manufacture and assemble electronic circuit boards for watches, phones and headphones to supply Lenovo, Sony…in Hai Phong At the same time, there are also other projects that have just received investment registration certificates: Ja Solar PV Vietnam photovoltaic cell technology project of investor Ja Solar Investment (HongKong); Risesun New Material Vietnam Factory Project and Vietnam Kodi New Material Factory Project of investor Risesun Investment Pte.Ltd (Singapore) The total investment capital of these projects is nearly 300 million USD 17 Not only large technology corporations in Asia have poured into Vietnam, recently, technology "giants" in Europe have also begun to pay attention to Vietnam more than before For example, Foxconn - a leading manufacturer and outsourcer for Apple, Microsoft, Sony is expected to invest $270 million to build a Fukang Technology Factory in Quang Chau Industrial Park (Bac Giang), and at the same time to expand it the production of many modern electronic equipment and components of this company in our country Not only Foxconn, but Luxshare, after investing in building a factory in Van Trung Industrial Park, is also continuing to invest in another project in this industrial park, with an investment capital of 190 million USD In addition, Pegatron is investing 500 million USD in Hai Phong, Wistron has also invested in a 273 million USD project in Ha Nam Assessing the impact of FDI inflows on Vietnam after WTO accession WTO 3.1 Positive impact on the economy After more than 30 years of implementing the Law on Foreign Investment promulgated in 1987, especially after joining the WTO, the FDI sector has increasingly played an important role and contributed significantly to economic development society of the country a The driving force behind economic growth FDI capital plays an important role in promoting Vietnam's economic growth According to statistics from the Foreign Investment Department (Ministry of Planning and Investment), the contribution of the FDI sector to GDP of the whole country increased from 9.3% in 1995 to 16.9% in 2008 and 19, respectively 6% in 2017 Research on the efficiency of the FDI sector in the period 2011-2019 found that the FDI sector contributed about 25.7% to Vietnam's economic growth, accounting for about 13% of GDP in 2010 and 19, 6% of GDP in 2019 In addition, the proportion of state budget revenue from the FDI sector also increased significantly, from 1.8 billion USD in the period 1994-2000 to 23.7 billion USD in the period 2011- 2015, accounting for nearly 14% of total state budget revenue In 2017 alone, the FDI sector contributed more than billion USD, accounting for 17.1% of the total state budget revenue 18 Figure 2.7: Vietnam's GDP growth over the years (Source: Vietnam News Agency) b Promote structural transformation towards modernity FDI is an important factor promoting the development of many new industries and products, creating over 50% of industrial production value, contributing to the formation of a number of key industries of the economy, such as: oil gas, electronics, information technology, steel, cement , increasing the production capacity of the national economy thanks to a more advanced economic structure FDI also makes a certain contribution to agricultural restructuring, diversifying products, increasing the value of exported agricultural products and absorbing a number of advanced technologies, high yielding plant varieties and high animals FDI enterprises have focused on investing in a number of important industries in agriculture and rural areas, such as post-harvest processing of agricultural products, animal feed processing, etc to create new products and increase their competition capacity of agricultural products In the service sector, FDI has given rise to many new high-quality services, such as banking, insurance, auditing, shipping, logistics, hotels, offices, apartments for rent, etc Some industries meet international standards, step by step create conditions for the service market to develop and increase the possibility of international economic integration c Raise the level of technology 19 FDI is considered an important channel to develop the technological capacity of the host country Through FDI, Vietnam has access to advanced technology of the world to develop economic sectors using modern technology, such as precision mechanics, electronics, software industry, and postal services - telecommunications, biotechnology FDI also contributes to the rapid development of export processing zones and industrial parks with advanced technology Many new and modern technologies have been transferred through FDI activities, creating an important turning point in the development of a number of key economic sectors of the country In addition, FDI enterprises often import many modern machinery, equipment and technological lines for production, technical processes and management experience are also transferred to engineers and Vietnamese technicians and managers As a result, many Vietnamese technical workers, technicians, and managers can well take on the positions of foreign workers d Create job opportunities and improve human resources Foreign investment has made an important contribution to creating jobs as well as improving the quality of human resources, a fundamental factor for Vietnam's economic integration and development The FDI sector has created a large number of large jobs with about 3.5 million direct jobs and 4-5 million indirect jobs If in 1990 the proportion of laborers in this sector accounted for only 0.04% of the national labor force, in 2007 this proportion was 1.6% In 2010, the FDI sector attracted over 1.7 million direct workers, of which the direct laborers working in the industrial sector accounted for nearly 80%, in 2015 it was 2.2 million employees, accounting for 2% compared to the whole country In addition, foreign direct investment also contributes to gradually raising the position of Vietnamese workers Working in FDI enterprises, employees have matured in many aspects: industrial style, corporate culture, professional and management qualifications, foreign language skills, etc After working in FDI enterprises, after working in FDI enterprises, they have become good technicians and managers, core in enterprises, or have accumulated experience and established own business themselves and become a major partner of FDI enterprises 20 3.2 Difficulties due to the double impact of FDI Besides the positive results, it is also necessary to recognize the challenges and difficulties to clearly see the two-sided effects that FDI brings to the Vietnamese economy Firstly, the link between the FDI sector and the domestic sector has not been as expected, the "localization" rate in some industries is low, and the added value per unit of product is not high Besides, the spillover effect on the economy is still very weak The contribution of FDI enterprises to the improvement of industrial capacity in Vietnam is still very low The linkages between FDI and domestic enterprises are low partly because both supporting industries and domestic enterprises are still weak, failing to meet the needs and service provision standards of FDI enterprises especially transnational corporations The survey results of 13,580 Asian enterprises by JETRO (2020) show that the proportion of components and materials that Japanese enterprises buy in Vietnam only accounts for 36.3%, of which only from Vietnamese enterprises accounting for 13.6% of total purchasing value Second, many FDI projects focus on a few stages in industries that use a lot of labor for outsourcing, assembly and processing Investment of the FDI sector in the field of using high technology, source technology is still very limited Besides, the problem of technology transfer, especially high technology from FDI enterprises, is still limited and has not met expectations The limited transfer of high technology by FDI enterprises is relatively "reasonable" from the point of view of their economic interests and business strategies However, this is not commensurate with the long-term incentives that Vietnam gives the FDI sector, especially giant corporations such as Formosa, Samsung Electronics Vietnam Third, the FDI sector still has many negative behaviors, evading financial obligations, some FDI enterprises have shown signs of abusing preferential policies and "transfer pricing" mechanisms to evade taxes, causing loss of revenue for the State books and business situation lack transparency, unfair competition Fourth, in the process of doing business in Vietnam, many FDI enterprises only focus on exploiting natural resources, causing destruction to the natural environment, air pollution, noise pollution, dust pollution, etc According to statistics of the Ministry of Natural Resources and Environment, in 2019 there are 283 industrial parks nationwide with more than 550,000m3 of wastewater/day and night; 615 industrial clusters, but only about 5% of them have centralized wastewater treatment systems 21 More than 500,000 production facilities in which there are many types of production with environmental pollution and outdated production technology These are statistics showing that the risk and phenomenon of pollution to the soil, water and air environment is at an alarming level Thus, it is necessary to recognize that FDI is an important external force for investment in economic development, but if it is not managed and used inefficiently, it will have to face negative impacts affecting planning, causing imbalance for investment structure, regional structure, causing environmental pollution and absorbing outdated science and technology II SOLUTIONS TO ATTRACT FDI INFLOWS INTO VIETNAM In order to continue to promote the role and reduce the negative effects of FDI, the State and enterprises should actively implement a number of oriented solutions as follows: Firstly, FDI attraction balances quality and quantity, aiming to gradually shift to quality attraction when the economy has gradually met the demand for capital for development Priority should be given to attracting FDI in industries and fields of high technology, new and advanced technology, environmentally friendly technology, information technology and telecommunications, and electronics at the world's advanced level, automobile technology, agricultural machinery, construction equipment, industrial equipment, electrical equipment, supporting industries, research and development, financial services, logistics and other modern services Secondly, in order to increase the added value per unit of product, increasing the rate of "localization" needs to attract foreign investors to invest in capital, hi-tech, advanced, modern, and participate deeper into global production networks and value chains In addition, it is necessary to strengthen linkages between the FDI sector and the domestic sector to increase the rate of "localization", the value of products created Thereby, expanding exports, promoting economic restructuring, associated with innovating the growth model on the basis of Industrial Revolution 4.0 Third, develop and perfect investment and tax policies to protect the country's economy At the same time, blame the abuse in the incentives to encourage investment attraction, the phenomenon of transfer pricing of foreign investors Fourth, it is necessary to have a strategy to train managers and technical workers working in FDI enterprises in terms of professional expertise, working style and attitude 22 Cultivate managers operating in the field of foreign economic relations with market exploitation skills, business skills and international law Paying attention to salary policy, building trade union organizations in FDI enterprises to protect the legal rights of Vietnamese workers Fifth, further strengthen the inspection and examination of environmental protection in industrial parks, strictly handle violating enterprises, and suspend operations in accordance with the law In addition, it is also necessary to actively improve the quality and efficiency of environmental assessment activities, only allowing the construction of factories and projects in industrial parks after completing the technical infrastructure and construction works environmental protection CONCLUSION Thus, it can be affirmed that foreign direct investment (FDI) is an important and key factor in the process of industrialization - modernization and socio-economic development of Vietnam Becoming an official member of the World Trade Organization (WTO) has opened up great opportunities for Vietnam in its integration journey into the world economy Regarding the issue of FDI attraction, the WTO accession has created the impetus for Vietnam to attract more FDI, creating record numbers At the same time, through each period, the quality of FDI inflows into Vietnam has also improved, improved, and become more quality It can be said that the opportunities brought by WTO and FDI have had a profound and comprehensive impact on the entire economy - culture - society, making Vietnam more and more developed, and have a place on the world map However, besides the great opportunities opened up, after joining the WTO, Vietnam also faced many difficulties and challenges FDI inflows into Vietnam are revealing many limitations in transfer pricing, technology transfer, environmental pollution, etc., causing many difficulties in the management and implementation of regulations and policies This issue requires the Government to pay attention to improving the attraction, management and use of FDI capital, more closely in the implementation of regulations, policies and in monitoring the implementation of FDI capital and FDI projects Only when the above problems are solved, will Vietnam take firm steps on the path of integration into the world economy 23 REFERENCES A References in English UNCTAD (2007), World Investment Report 2007: Transnational Corporations, Extractive Industries and Development UNCTAD, World Investment Report 2004 World Trade Organization (1996), “Trade and foreign direct investment” B References in Vietnam Ban Quan he quoc te VCCI (2016), “Ho so thi truong: To chuc Thuong mai The gioi (WTO)” Bo Ke hoach va Dau tu, “To chuc Thuong mai The gioi (WTO)” Bo Ke hoach va Dau tu, Tinh hinh th hut dau tu nuoc ngoai nam 2019 Bo Ke hoach va Dau tu, Tinh hinh th hut dau tu nuoc ngoai nam 2020 Cuc Dau tu nuoc ngoai, Bo Ke hoach va Dau tu Lam Duong (2021), “Phat huy vai tro cua FDI phat trien kinh te dat nuoc” Le Xuan Sang (2021), “Thu hut dau tư truc tiep nuoc ngoai vao Viet Nam boi canh moi” Luong Van Tu (2006), “Tien trinh gia nhap WTO, co hoi va thach thuc doi voi nuoc ta” Luong Xuan Duong (2019), “Dau tu truc tiep nuoc ngoai vao Viet Nam giai doan 1988-2018 va mot so giai phap” 10 Nguyen Duc (2017), “Thu hut FDI hau WTO: Tang cao ca luong chat” 11 Nguyen Tan Vinh (2017), “Nhin lai gia tri cua FDI o Viet Nam sau gan 30 nam” 12 Nguyen Thi Thanh Thuy (2020), “FDI – nguon von quan thuc day nen kinh te Viet Nam thoi ky hoi nhap” 13 Nguyen Thi Thu Hang (2019), “Mat trai cua thu hut đau tu truc tiep nuoc ngoai (FDI) den Viet Nam hien nay” 24 14 Nguyen Thi Tue Anh, Vu Xuan Nguyet Hong, Tran Toan Thang, Nguyen Manh Hai (2004), “Tac dong cua dau tu truc tiep nuoc ngoai toi tang truong kinh te o Viet Nam” 15 Pham Thien Hoang (2019), “Tam quan cua khu vuc FDI doi voi phat trien kinh te - xa hoi Viet Nam” 16 Thong tan xa Viet Nam 17 Thu vien phap luat, Luat dau tu 2005 so 59/2005/QH11 18 Tong cuc Thong ke 19 Trung tam Thong tin Du bao kinh te - xa hoi quoc gia (2020), “Tinh hinh thu hut dau tu truc tiep nuoc ngoai cua Viet Nam thoi gian qua” 20 Wikipedia, Dau tu truc tiep nuoc ngoai 25 26 ... especially the issue of attracting foreign direct investment, I chose the topic "Assessment of foreign direct (FDI) flows into Vietnam after Vietnam' s accession to WTO? ?? The topic aims to analyze and... VIETNAM AFTER WTO ACCESSION The situation of Vietnam' s FDI attraction before WTO accession (period 1987 - 2006) The situation of attracting FDI into Vietnam after WTO accession. .. (WTO) 2.1 Definition 2.2 The function of WTO 2.3 Opportunities and challenges of Vietnam after joining WTO I SITUATION OF ATTRACTING FOREIGN DIRECT INVESTMENT OF VIETNAM