FOREIGN DIRECT INVESTMENT (FDI) WITH ECONOMIC DEVELOPMENT IN VIETNAM

Nguyễn Bảo Quốc Thắng – D04 TIỂU LUẬN MÔN KINH TẾ PHÁT TRIỂN FOREIGN DIRECT INVESTMENT (FDI) WITH ECONOMIC DEVELOPMENT IN VIETNAM GIẢNG VIÊN HƯỚNG DẪN Th s TRẦN MẠNH KIÊN SVTH Nguyễn Bảo Quốc Thắng 03.

Nguyễn Bảo Quốc Thắng – D04 TIỂU LUẬN MÔN KINH TẾ PHÁT TRIỂN FOREIGN DIRECT INVESTMENT (FDI) WITH ECONOMIC DEVELOPMENT IN VIETNAM GIẢNG VIÊN HƯỚNG DẪN: Th.s TRẦN MẠNH KIÊN SVTH :Nguyễn Bảo Quốc Thắng - 030632162096  Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 CONTENTS ABSTRACT The process of globalization and modernization are boosted the integration of these countries into the world economy Today, foreign direct investment has been recognized as one of the "pillars" of Vietnam's economic growth The role of FDI is clearly expressed through the contribution of important factors of growth as well as the addition of investment capital, export promotion, employment generation, and budget revenue Other that it has brought to Vietnam Thanks to the important contribution of FDI, Vietnam has achieved high economic growth in the past several years, thereby enhancing Vietnam's position in the international arena as well as contributing to Vietnam Many opportunities for new development FDI is a vital factor, it makes a big step in the procession of developing economy and society This is also the reason I choose the subject “Foreign direct investment (FDI) with development economic in Vietnam” Due to the limited knowledge and time allowed, it is important to make sure that my assignment is inevitable So, I look forward to receiving your repair contributions Thank you! CHAPTER 1: OVERVIEW OF FDI The concept of FDI Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, by the act of buying that company or by expanding some existing business in the country That individual or foreign company will take control of production facilities in this business This does not include foreign investments in stock markets.Instead, FDI refers more specifically to the investment of foreign assets into domestic goods and services FDIs are generally favored over equity investments which tend to flow out of an economy at the first sign of trouble which leaves countries more susceptible to shocks in their money markets 1.1 The Vietnam investment law in Paragraph 1, Article of the Law on Foreign Investment: “Foreign investment means the organization or individual foreign countries give capital into Vietnam by in cash foreign or by any government property Vietnam approved for business cooperation on the basis of a contract or established joint ventures or enterprises with 100% foreign capital under the provisions of this law.: 22 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 1.2 Characteristics and forms of FDI 1.2.1 Characteristics - - - Income earned by investors depends on the business results of the enterprises in which they have invested their capital, it's the nature of business income rather than income The foreign investors make their own decision on investment, production and bussiness operation and take responsible for profits and losses The have the right to select forms of invesment, scale of invesment, investment market, technology,…to the best for themself The foreign investor must contribute a minimum amount of capital to the legal capital, according to the foreign investment law (In Vietnam, the joint venture of foreign capital must be greater or equal to 30% of legal capital) Enterprise management rights depends on the level of capital contribution FDI not only associated with the movement of capital but also in association with transfer of technology, knowledge and management experience to create a new environment for both the investor and the investee 1.2.2 The form of FDI - Based on the nature of FDI investments can be divided into two types: investment - - concentrated in industrial zones, export processing zones and dispersed investment Based on the reproduction process can be divided into investment FDI in research and development, investments in supply of raw materials Beside, Investments in production and investment in product sales Based on the investment motive, FDI can invest according to search engine resources, markets and strategic assets With the law of foreign investment in Viet Nam, the Viet Nam form of FDI to include the following forms:  Business cooperation contracts (BCC): Business co-operation contract (BCC) means the investment form signed between investors in order to co-operate in business and to share profits or products without creating a legal entity  Establishment of joint-venture enterprises between domestic and foreign investors: This one is now in general use in the world However, disadvantage of this form is conflict in operation, management bussiness because of the different traditions and customs, culture,language, legal,political regime  Enterprises with 100% foreign capital : This is traditional and popular form of FDI.This form is not only common to small scale of invesment, investors also use it in large-scale project Nowadays, transnational corporations often invest in the form of enterprises with 100% foreign capital and they set up subsidiaries  BOT The role of FDI for economic development The key benefit of FDI is the foreign capital and funds that it brings to the country where the investment is made Besides, it enables the exchange of skill sets, information and expertise, job opportunities and also leads to an increase in the productivity levels Supplement for domestic capital: 1.3 In the theories of economic growth, factors which have always been mentioned is capital When an economy that wants to grow faster, it needs more capital If insufficient domestic capital, this economy will want to have both foreign capital, including FDI 23 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 FDI provides new technologies for development: FDI is considered an important source for the development of technological capabilities of the host country This role is reflected in two aspects of technology transfer is available from the outside in and the development of technological capabilities of research institutions, the application of the host country These are important goals are expected from the host country for foreign investors - Participate in global production networks: When attractive FDI from multinational companies, not only invested factories of multinational companies, which even other domestic enterprises have business contacts with enterprises will also participate in division of labor the regional Therefore, domestic investment will have the opportunity to participate in global production networks conducive to boosting exports - FDI accelerates the process of economic restructuring: FDI is an important part of economic activity for the throne, through which countries will participate in the process of increasing economic integration between the countries of the world, requiring each to change the structure domestic economy in line with the international division of labor The economic restructuring of each country in line with the general level of development in the world will create favorable conditions for FDI activity In contrast, FDI has contributed to accelerating the process of economic restructuring in the host country - CHAPTER 2: FDI ATTRACTION IN VIETNAM 2.1 Factors attracting FDI The socio-political environment The unstable political situation is especially political institutions which are associated with changes in law So that the benefits of foreign investors are reduced and gain their truth In the other hand, when the political situation is unstable, the Goverment can not control investors' activities Consequently, the investors will operate under the own purpose They will not follow the orientation of the investment recipient country For this reason,the capital will not be used efficiently Macroeconomic Stability It’s the pre-conditions for invesment intensions and behaviors To attract FDI, provincial economy have to be a creat a safe market for the investment capital and this must be more profitable than the others The degree of macroeconomic stability is judged by fighting inflation and currency stabilization These criteria have been made through monetary policy instruments such as reserve requirements, interest rates, exchange rates, open market operations,… The complete and consist regulatory system – Effective State management agencies The problems which foreign investors care about are : A fair competitive environment and ensured private ownership The legal of distribution of profit, The right to repatriate profits to foreign capital The provisions on price, taxes, the length of land leases,… Technical infrastructure systems This is the primary concern of investors before making decisions The nation has telecommunication systems, transport and power network, providing and drainage 24 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 water system, help for FDI projects During its implementation, transportation and information costs reducing will improve the impact of those investments In addition to the factors are mentioned, also respect for human rights is deemed to encourage incoming FDI and, obviously, the certainty of a solid government must be one of the primary targets of a country willing to attract FDI 2.2 FDI attraction in Vietnam As a later comer as compared with other countries in the region, foreign direct investment (FDI) in Vietnam has a relatively short history of development In 1987, Vietnam for the first time issued its ever first Law on Foreign Direct Investment Despite its relative short history, Vietnam has managed to attract a substantial amount of FDI In relative term, Vietnam has been quite successful as compared with other countries, ranking the third largest recipient in the ASEAN Figure 1: FDI Inflows into Vietnam during 1988-2005, source GSO From 1988 to 1996: FDI inflows to Vietnam increased continuously and rapidly in project number, and newly - registered capital which reached the peak of nearly 8.9 USD billion in 1996 The amount of registered capital peaked in the 1995 and 1996 and dropped sharply subsequently when the Asian economic crisis began to seriously impact on Vietnam1 From 1997 - 2005: this period was characterized by the sharp fall in FDI inflows to Vietnam, mainly as a result of the Asian financial crisis and the unattractiveness of Vietnam's investment environment2 relative to other countries in the region, especially to China Since 1999, implemented capital has always exceeded registered capital Total registered capital increased by 30% comparing to 2003 Total implement capital, Although Vietnam remained a relatively closed economy during the financial crisis, a large portion of FDI came from the region resulting in a drop of FDI from this region From 1997 - 2005: this period was characterized by the sharp fall in FDI inflows to Vietnam, mainly as a result of the Asian financial crisis and the unattractiveness of Vietnam's investment environment relative to other countries in the region, especially to China 25 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 however, increased by only 7,6% The high increase in FDI inflows in this resulted partly from improvement in investment environment provided by revising the Law on Foreign Investment Figure 2: FDI Inflows into Vietnam during 2007-2014, source GSO Together with the number of investment projects, the amount of registered capital for licensed projects increased rapidly in the first half of the 2000s, which is generally referred to as the investment period in Vietnam The amount of registered capital peaked in the 2008 and continue to increase In 2007, the registered FDI capital of service branch was 47.7% total FDI in some projects such as port construction Up to 2013, there are 807 projects in services branch with nearly USD 17 billion registered capital and USD 22.3 billion USD actual inflow In 2014, FDI registered capital was estimated at 20.23 billion USD, which was equal to 93.5% compared to 2013 and increased 19% in comparison to the 2014 plan 2.2.1 Local of FDI Up to now, FDI has been invested in 64 provinces in Vietnam, However, inflow FDI is concentrate in main local which have complete constructions such as Ho Chi Minh, Vung Tau, Ha Noi, Dong Nai and Binh Duong that contribute in the local economy‘s development and nearly provinces 26 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 Figure 3: Top 10 provinces attracted FDI up to 2013, source: The Planning and Investment portal dated December 26, 2013 In the end of 2013, the Northern region had 4.913 projects in force as more than registered about 63 billion USD and nearly 20 billion USD charter capital The highest in Northern is Hanoi with 2.677 projects, nearly USD 23 billion registered capital and USD billion charter capital as 54 percent of total projects, 40 percent of total registered capital and 40 percent of total charter capital in the Northern The following rank in turn is Hai Phong with 396 projects as nearly USD 10 billion registered capital, Hai Duong with 290 projects as more than USD billion registered capital, Bac Ninh 104 projects as USD 4.3 billion registered capital 2.2.2 Sectoral distribution of FDI Foreign investors began to choose Vietnam as key areas for investment strategy, the establishment of enterprises, promoting the brand extension Aware of that, the government of Vietnam has made great efforts to encourage foreign investment by establishing a foreign investment law in 1987 KPMG said since then, at the end of 2010, 12 236 expected foreign investment projects licensed with total registered capital of $ 193.4 billion On the other hand, foreign investors contribute to strengthen Vietnam's economy KPMG level information demonstrated in 2010, the foreigninvested sector accounted for 21.5% of total investment in Vietnam, contributing to 18.3% of GDP Figure 4: FDI inflow of Vietnam, 2000 – 2010, source MPI As can be seen from the chart by the Ministry of Planning and Investment (MPI) and produce processing industry accounted for half of the registered capital and the number of projects 27 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 However, the tourism industry should be considered a high level of investment As of this research, in recent years, Vietnam has witnessed the development of a large number of spas and luxury hotels including Six Senses Con Dao Ninh Van Bay and However, Haley has shown that in 1996, Vietnam had 51,000 hotels, half of which reach international standards Therefore, Vietnam has built too many 5-star hotels, are at risk of redundancy Wall, suggested instead to build 5-star hotel, large, Vietnam should develop small guesthouse need less capital and create jobs for laborers Figure 5: Proportion of FDI in sectors in November, 2014 Source: Foreign Investment Agency and Ministry of Planning and Investment In 11 months of 2014, the total amount of newly registered capital and the increasing capital of processing and manufacturing industry in Vietnam reached 13.15 billion dollars, which accounted for 76% of the whole country In which, the average capital of a processing and manufacturing industry's project is 14.7 billion USD, which is higher than the average size the country's FDI project It can be clearly seen that majority of licensed projects in 11 months of 2014 is in fields of processing and manufacturing industry 2.2.3 Country of origin Many sources show that FDI inflows in Vietnam increase significantly Asia news network (2013) reports that in the first five months of 2013, Vietnam witnessed a rise in FDI which was US$8.51 billion, increasing 8.9% at the same period of time last year 28 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 Figure 6: Major FDI sources flow in Viet Nam, 2012, source: General Statistics Office of Vietnam With high technology application, Japan is one of the global leading countries in IT industry In Vietnam, there are many Japan-owned companies in IT services such as website development, integration system, and hosting, also, Vietnam was chose to be business partner of Japan software outsourcing However, South Korea has overtaken Japan as the biggest foreign investor in Vietnam in the first eight months of 2015 In both 2012 and 2013, South Korea was the second largest foreign investor, behind Japan Figure 7: FDI in Vietnam 2015, source: FIA According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, businesses from South Korea, Malaysia and Japan poured the largest sums into their projects in Vietnam in 2015, with their commitments and disbursements totaling $11.04 billion, accounting for 48.5% of the total South Korean 29 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 authorities have repeatedly released positive assessments of Vietnam’s investment environment, and many major South Korean groups are also considering expanding operations in the nation Samsung has invested nearly $8 billion in its Vietnam operations thus far Retail giant Lotte Mart has also planned to hike its Vietnam store count to 120 from the current number of 60 by 2020 2.3 2.3.1 The role of FDI in Vietnam’s economic development FDI and economic growth The FDI sector is an economic component that contributes to the overall growth of the economy On the one hand, FDI complements capital for investment in economic development, promotes economic growth on the demand side (labor demand, inputs, etc.) On the other hand, through the form of investment, FDI has formed a system of FDI enterprises, increasing the production capacity of the economy, promoting economic growth on the supply side (products, services, etc ) From 1991-1995, GDP increased continuously over the years with an annual average growth rate of 8.2% and the share of realized FDI in average annual GDP was 4.7% In the five years from 1996 to 2000, the average annual GDP increased by 6.96% and the share of realized FDI in annual GDP was 10.4% In the period 20012005, GDP increased by 7.5% / year and the proportion of FDI / GDP was 14.6% / year In 2006 and 2007, GDP grew by 8.3% and the FDI / GDP ratio was 17.3% per year In 2008 and 2009, GDP increased 5.78% per year and the proportion of FDI / GDP was 18.14% per year FDI has contributed to impressive economic growth in a number of developing countries FDI not only provides a large amount of capital investment, create more jobs for the society but also to promote increased productivity and competitiveness of the domestic industry From 2% share of the contribution of FDI in GDP in 1992, by 2004, this number grew to 20% outstanding In recent years, FDI inflows have played an important role, not only in providing investment capital but also I stimulating export growth Figure 9: FDP structure by ownership, 2000 – 2010, source: GSO Production and business have improved in 2014 and the economy has been back on the growth path This year’s GDP is projected to grow 5.8% compared to the previous year, higher than the 5.25% in 2012 and 5.42% in 2013 FDI not only injected badly needed capital but also expanded the size of the private sector In overall terms, the expansion of FDI in Vietnam can be viewed as the 210 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 expansion of private sector in the country which greatly helped the economic reform process 2.3.2 FDI and export Export performance of the FDI sector is being considered as a highlight of Vietnam's economic picture As part of the trade liberalization process, FDI enterprises in Vietnam have been granted the trading rights to engage in export and import activities In the 2011-2015, exports from the FDI sector accounted for 65.2% of the total export turnover of the country Specifically, the share of exports in this sector in total exports has always tended to increase over the years (54.1% in 2010, 56.9% in 2011, 64% in 2013 Is 66.9%) And in 2014, exports of the FDI sector reached $ 101.59 billion (up 15.2% from 2013) and accounted for 68% of export turnover In 2015, FDI sector exports accounted for 70.5% of total exports in the country Foreign Direct Investment Department, FDI enterprises have actually changed the structure of export goods, in the direction of reducing the proportion of mining products, primary products, gradually increase the proportion of manufactured goods If before 2003, crude oil accounted for nearly half of the export of foreign investment, then in 2007, crude oil accounted for about 7% of total export turnover Explaining the fact that FDI enterprises make up a large part of Vietnam's export turnover, especially in the context of the domestic and world economy still face many difficulties, Mr, Pham Duy Toan, an import-export expert said that because this block has many advantages in corporate governance, long-term investment strategy; Ensure financial resources and especially have a great advantage in export markets In 2014, FDI enterprises are the far most exporters in electronic goods, footwear, machines, equipment and tools Especially with electronic goods and telephones, almost 100% of exported products are from FDI enterprises In 2014, the total export revenue of telephones nationwide reached over $23.6 billion, while FDI sector accounted for $23.5 billion 2.3.3 FDI and creating jobs FDI plays an important role in creating jobs, increasing labor productivity and improving human resources Up to now, the FDI sector has created jobs for over 1.5 million direct workers and millions of indirect employees According to the survey of the WB, every direct laborer will create jobs for 2-3 employees indirectly serving in the service and construction sectors, contributing to improving social welfare and improving living standards A part of the population, contributing to GDP per head per year Moreover, these laborers have access to modern technology, good labor discipline and learn advanced working methods In particular, Vietnamese experts working at FDI enterprises can gradually replace foreign experts in corporate management and control of modern technological processes In addition, the activities of FDI enterprises in Vietnam have also encouraged domestic enterprises to continuously innovate their technologies and management practices to improve the quality and competitiveness of products and services Service in domestic and international market 211 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 FDI and expanding the external economic relations FDI helps Vietnam to expand the international economic relations to diversification method that promote Vietnam integration in the neighbor countries and international‘s economy Vietnam is a official member of ASEAN, APEC, ASEM and WTO Besides, Vietnam signed 51 agreements which encourage and protect the investors such as trade agreement between Vietnam and United States or liberalization, encouragement and protection agreement between Vietnam and Japan By the supporting of the foreign investor, the Vietnam image and position is improved day by day 2.4 The shortcomings of FDI in Vietnam: 2.4.1 Affect the environment and depletion of natural resources One of the most common problems of FDI as multinational companies often try to transfer their plants to pollution where environmental legislation at the closest, most developing country 2.3.4 The relationship between FDI and balanced development was Joseph Stiglitz, the chief adviser to the World Bank said that: "It is not hard for a country rich in natural resources to find investors abroad willing to exploit those resources, especially if the price is right Far more difficult, however, is creating an industrial or service based economy In 1994, foreign investment in manufacturing was a mere percent, compared with 57 percent in natural resources By 1997, non-natural resource investment dropped to a mere percent.” 2.4.2 The investors transfer outdated technology to Vietnam Vietnam has never set out to be an industrial development strategy in which both dynamic FDI and domestic enterprises to join together to increase the competitiveness of the economy, restructuring of production and exports climb Since the 1990s, the mainstream of FDI in Asia is the machinery industry with high added value and demand on the world market to grow, such as household electrical appliances, automobiles, PCs personnel, etc Vietnam has repeatedly had the opportunity ahead of it but did not flow on the policy initiative and soon improve the investment environment should have missed the opportunity For 20 years local companies not have the ability to manufacture these items to replace these imports Recently with the prospect of Vietnam joined Agreement Trans-Pacific Partnership (TPP), the regulation regarding the origin of products exported to the United States will have to use force Vietnam intermediate products produced domestically In general, the official Vietnam so far almost only see the number (such as registered capital, which is done) is the result of FDI policy, and less attention to the quality, less dynamic enlist FDI projects effective strategy for industrialization 2.4.3 Foreign capital and joint ventures between foreign and domestic companies increasingly less In the early days after the Foreign Investment Law was born, Vietnam only allows FDI should form joint ventures of foreign enterprises there is no other choice Outcomes of projects in that period mostly joint ventures, the Vietnam really just contribute cash capital lease When foreign investors are allowed to choose the form of investments, foreign companies choose the form of investment with 100% foreign capital 212 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 As the statistics show, the ratio of FDI projects with 100% foreign capital only 38% in the period 1993-96, but increased sharply afterwards Included all pre-existing projects and also active shows that nearly 80% of the project is 100% foreign capital (if only projects from 2000 that number was even greater) Figure 11: Forms of FDI in Vietnam, source: Ministry of Planning and Investment The typical FDI projects and the recent popularity also in form 100% foreign capital Samsung invested such a large scale in Bac Ninh and Thai Nguyen, but both projects are 100% Korean capital Cause phenomenon is in Vietnam on private enterprise is weak, the majority can not afford to contribute capital and other resources is also essential State enterprises are relatively more capital and other resources, but also have fewer cases to choose a foreign partner for joint venture The limitations of Vietnam in attracting investment After 25 years of implementation of open-door policy to attract foreign investment with the promulgation of the Foreign Investment Law of 1987, sector foreign investment is increasingly important to promote the role and the play significant contribution in the economic development - society of Vietnam But besides these restrictions also in attracting FDI efficiency 2.5 Production costs increased due to the price of some commodities, especially raw material prices (gas, electricity, coal, oil, gas ) significantly increase will affect costs and the competitiveness of some products Vietnam has not overcome the inherent limitations of institutional, legal, predictability of rules - Absorption capacity of Vietnam's capital is still low Business planning there are unreasonable, especially industry planning is heavy on protection of domestic production - FDI disbursement process slow Investment promotion content to stop at just promoting and introducing the potential that has not come up with a strategic long-term investment promotion and depth, yet professional human resources, to limited degree so effect the faculty of be exposed, funding shortage, promote monotony information and update, daisies advanced proactive investment in weak, passive, still heavy psychological instead of waiting investors owners prospecting, contact, offering 213 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 CHAPTER 3: SOLUTION TO ATTRACT CAPITAL FOREIGN DIRECT INVESTMENT IN VIETNAM First, formulating strategies, planning to attract and use scientific and reasonable FDI o Attracting small and medium investors suited to each field and each locality; At the same time, pay attention to attract and care for large investors, using high technology, modern, friendly with the environment o There are plans to create favorable conditions for investors in the implementation of the project after being licensed, bring good effect for both parties o Orientations for the development of specialized industrial parks, limiting the development of multi-branch industrial parks o Reducing the unnecessary planning, creating a unified planning, easy to implement, high efficiency At the same time, there must be a plan to attract investment in the service sector or the technology sector to gradually shift to higher value added industries such as supporting industries; Industrial production, infrastructure development and financial markets Secondly, creating a favorable business and investment environment for FDI o Ensuring economic and political stability for business activities of foreign investors o Minimizing the administrative procedures, remove unnecessary procedures, shorten the licensing time, help businesses deploy projects quickly o Concentrating human resources to develop the system of structural, physical infrastructure and social infrastructure in a uniform way At the same time, there must be a program of development plan to train high-level laborers to meet the demand in time Third, promoting appropriate, scientific and rational investment promotion Do not form the movement type, must really promote the focus, focus and real effectiveness In the promotion must avoid unfair competition between the local o It is necessary to carry out investment promotion in a diversified and rich way such as: Through the visits of heads of state, organizing investment promotion conference in the country and internationally o Fourth, there are preferential policies, supporting investors depending on each field in each period It is necessary to have preferential policies on income tax, land use tax, tax and customs for foreign investors in a number of fields such as the development of supporting industries, Infrastructure development, financial markets o Governments at all levels should work side by side with foreign investors to solve difficulties in administrative procedures and other difficulties arising in the course of their business operations o 214 Nguyễn Đặng Thanh Tú – D04 Nguyễn Bảo Quốc Thắng – D04 Fifth, strengthen inspection and control of the operation of FDI enterprises It is necessary to focus on inspecting, controlling and seriously handling FDI enterprises causing environmental pollution, deliberately using outdated technologies, shaking hands together to price, transfer prices, tax evasion, treatment Harshly with the workers of the host country, fleeing, debt forgiveness To so, need to train, build a team of inspection, control qualified, qualified and qualified; To equip advanced and modern technical means to detect violations and create a basis for strictly handling FDI enterprises that violate Vietnamese law CONCLUSION Capital is essential and important in the process of economic development of each country, especially Viet Nam, it becomes extremely essential to accelerate the process of industrialization We affirm the great role of FDI in the process of innovation and economic development In order for FDI to contribute more to economic growth as well as to maximize the benefits that FDI can bring, it requires a broader and more ambitious approach to developing foreign direct investment policies Besides, FDI will not only help to increase domestic capital investment, but also brings improvements, technological development, technical sciences for the economy Therefore, FDI plays an important role in the process of developing the economy is small and backward as our country today Measures should be taken to attract foreign investment, in addition to the necessary measures to promote investment and accelerate the disbursement of capital, and in particular to pay more attention to the efficiency of capital use, closely monitor capital activities of FDI enterprises to avoid possible consequences Vietnam is not only a country attracting foreign investment, but also actively investing abroad to seek and exploit the market, earning greater profits for the country, contributing to reducing the trade deficit The attraction of FDI to the country has made positive changes, its role has been increasingly enhanced anonymous transformation for our country's economy, however there are still limitations Hence we need to coordinate the policy to a uniform to further promote the role of capital in the economy and limit its negative impacts 215 Nguyễn Bảo Quốc Thắng – D04 REFERENCES Nguyen, Ha Thanh, Nguyen, Hung Vo and Meyer, Klaus E, 2003, “Foreign Direct Investment in Vietnam”, London Business School Borensztein, E., Gregorio, J De and Lee, J.-W, 1998, “How does foreign direct investment affect economic growth?”, Journal of International Economics Nguyễn Mại, 2004, "Chính sách thu hút đầu tư nước FDI Việt Nam: Thành việc hồn thiện sách" Tài liệu Hội thảo quốc tế về: "Việt Nam gia nhập WTO: Cơ hội thách thức" tháng 3/2004, Hà Nội Hồng Anh, 2013 Điểm mặt hạn chế sau 25 năm thu hút đầu tư nước Cafef Le Dang Doanh, "Foreign Direct Investment in Vietnam: Results, Achievements, Challenges and Prospect Hanoi, Vietnam, 2010 WEB SOURCES Imports and Exports of Vietnam in 2014 - Part 1, http://www.vietrade.gov.vn/ Vietnam’s Association of Foreign Invested Enterprises, http://www.vafie.org.vn/ Vietnam Economic Times, http://www.vneconomy.com.vn Ministry of Planning and Investment- Foreign Investment Agency http://fia.mpi.gov.vn Overview of Vietnam’s economy 2010, http://www.vnep.org.vn/ The Saigon Times http://english.thesaigontimes.vn http://www.vafie.org.vn/ 216 ... into investment FDI in research and development, investments in supply of raw materials Beside, Investments in production and investment in product sales Based on the investment motive, FDI can invest... the Law on Foreign Investment: ? ?Foreign investment means the organization or individual foreign countries give capital into Vietnam by in cash foreign or by any government property Vietnam approved... company or individual in one country in business interests in another country, by the act of buying that company or by expanding some existing business in the country That individual or foreign