(TIỂU LUẬN) based on theoretical and practical framework, please analyze and assess the impacts of FDI on vietnam economic growth in 2010 2019

UNIVSERSITY OF ECONOMIC AND BUSINESS FACULTY OF INTERNATIONAL BUSINESS AND ECONOMICS ***** INTERNATIONAL INVESTMENT Topic: Based on theoretical and practical framework, please analyze and assess the impacts of FDI on Vietnam economic growth in 2010-2019 Lecturer: Assoc.Prof, Ph.D Nguyen Thi Kim Anh Name: Pham Quynh Anh Student code: 17050553 Class: QH-2017-E KTQT CLC Ha Noi, June 2020 TABLE OF CONTENTS LIST OF ABBREVIATIONS LIST OF FIGURES PART 1: INTRODUCTION PART 2: CONTENT Chapter 1: Theoretical and practical framework of FDI in Vietnam 1.1 The role of FDI in the country's socio-economic development 1.2 Recent situation of FDI registration in Vietnam 1.2.1 New registered capital 1.2.2 Adjusted capital 1.2.3 Contribute capital, buy shares 1.2.4 By investment field 1.2.5 According to investment partners 10 1.2.6 By investment area 10 1.2.7 Cumulative foreign investment situation till December 2019 11 Chapter 2: Impact of FDI on Vietnam's economic growth period 2010-2019 13 2.1 Situation of FDI attraction in Vietnam 2010-2019 13 2.1.1 Overview 13 2.1.2 Implemented FDI 13 2.1.3 Export and import situation 14 2.2 Impact of the FDI sector on Vietnam's socio-economic development .15 2.2.1 Providing and supplementing important capital sources for development investment 15 2.2.2 Contribute to GDP growth and state budget revenues 16 2.2.3 Increase export share 17 2.2.4 Contribute to labor productivity growth 18 2.2.5 Create technology spillover effects 20 Chapter 3: Solutions to increase FDI attraction into Vietnam 21 3.1 Promote stable and sustainable economic growth 21 3.2 Maintain a stable political environment 21 3.3 Strengthen inspection and supervision of the process of licensing and managing foreign investment projects 21 3.4 Improve infrastructure, increase planning towards modernization 21 3.5 Invest in education development, improve the qualifications of workers .21 3.6 Priority will be given to attracting some industries and hi-tech products, creating great added value 21 3.7 Proactively selecting green FDI projects 22 3.8 Attracting FDI must be appropriate 22 PART 3: CONCLUSION 23 REFERENCES 24 LIST OF ABBREVIATIONS ABBREVIATION FDI GDP CPTPP EVFTA FTA GSO LIST OF FIGURES Figure 1: FDI by cumulative sectors 2019 Figure 2: Total FDI realized in the period 2010-2019 (million USD) Figure 3: Proportion of capital investment in Vietnam by economic sector 2014-2018 (%) Figure 4: Growth rate of investment capital in Vietnam 2014-2018 (%) Figure 5: Contribution of FDI sector to Vietnam's GDP by economic sector 2010-2017 (%) Figure 6: Contribution of FDI sector to Vietnam's export turnover 2010-2018 (%) Figure 7: Labor productivity by economic sector (million VND) PART 1: INTRODUCTION In many developing countries, economic growth is still largely based on capital while the average income is low, so it is not possible to save much to accumulate capital and therefore the capital is very limited One of the capital solutions is to rely on foreign investment In addition to adding necessary capital, foreign direct investment also creates more jobs, skills training for workers, improving professional qualifications, management or technology transfer Foreign direct investment (FDI) has been identified as one of the important driving forces promoting economic growth and social development in our country After more than 30 years of implementing FDI attraction policies, Vietnam has achieved very important achievements For Vietnam, attracting FDI and developing FDI enterprises have been making an important contribution in receiving modern technology, advanced management experience and creating favorable conditions for businesses to participate in the global value chains and global distribution networks; at the same time, create a premise for businesses to expand the market to the world At the same time, attracting FDI contributes to increasing production and product consumption, making production more developed; That is, make the economy grow more in the short term, medium term and long term as well as can create breakthrough development for the economy The foreign direct investment (FDI) sector has increasingly affirmed its important role in Vietnam's socio-economic development According to statistics, FDI enterprises now contribute about 23.5% of total social investment (nearly 20% of GDP), accounting for over 70% of export turnover And to understand the impact of direct investment foreign direct investment (FDI) to Vietnam's economy in recent years, positive and negative impacts on the development of the country This article will analyze and assess the impact of FDI on Vietnam's economic growth in the period 2010-2019 The paper consists of chapters: chapter is about the theoretical framework and practice of FDI in Vietnam, chapter is about the situation and impact of FDI on Vietnam's economic growth in the period 2010-2019 and chapter gives suggestions on solutions to enhance FDI attraction into Vietnam PART 2: CONTENT Chapter 1: Theoretical and practical framework of FDI in Vietnam 1.1 The role of FDI in the country's socio-economic development Along with the renovation process and opening the economy, the Law on Foreign Investment was passed and enacted by the National Assembly on December 29, 1987, marking a turning point for the formalization of foreign capital inflows Vietnam From that right policy, over the past 30 years, the FDI sector has increasingly shown its important role and significantly contributed to the economic development economic social of the country The attraction and use of foreign investment contribute to the impact of promoting the restructuring and restructuring the economy, renewing the growth model, improving the national competitiveness, industries, products and services; promoting institutional reforms, economic policies, business and investment environment, developing a fully modernized and integrated market economy, strengthening external relations, cooperation and international integration Vietnam is internationally evaluated as one of the most successful FDI attracting countries in the region and in the world, becoming a reliable and effective investment location in the eyes of foreign investors The 2017 report of the United Nations Trade and Development Organization assessed that Vietnam was among the Top 12 most successful countries in attracting FDI According to official statistics of the Ministry of Planning and Investment, as of August 2018, Vietnam has had more than 26,500 FDI projects, with a total registered capital of more than 334 billion USD, with implemented capital of 184 billion USD Foreign investment has contributed nearly 20% of GDP and is an important additional source of capital for development investment with a proportion of about 23.7% of the total social investment capital 58% of total foreign investment is focused on processing and manufacturing, creating over 50% of the country's industrial production value Export turnover of foreigninvested sector, accounting for an increasing share in exports, reached 72.6% in 2017 and 71.4% in the first months of 2018 Revenue to the region's budget Foreign investment has steadily increased over the years and reached more than billion USD in 2017, accounting for 17.1% of the total state budget revenue Foreign investment is an important driving force for Vietnam's economic growth because the region's contribution has increased from 9.3% in 1995 to 19.6% in 2017 (accounting for 23.7% of the total social investment capital, accounting for 72% of the country's total export turnover, over 50% of industrial production value, over 17% of total state budget revenue) Over the past decade, many foreign investment projects have transferred advanced technologies and management experience in a number of branches and fields; certain spillover effects on the domestic enterprise sector, thereby contributing to improving the technological level and governance of the economy Many big projects have brought about a breakthrough, contributing to the budget revenue for many localities For example, according to the report of the City People's Committee In Ho Chi Minh City, in 1992, FDI enterprises only contributed more than VND 15 billion to the state budget (accounting for 0.6% of total budget revenue), in 2016, the revenue from FDI enterprises reached VND 48,700 billion, accounting for 16.3% of the City's total budget The foreign investment sector has also made significant contributions to the development of high-quality services in Vietnam such as finance - banking, insurance, auditing, shipping, logistics, education and training, health, tourism At the same time, this is also a factor contributing to transforming development space, forming new urban areas, industrial parks, export processing zones, economic zones Foreign investment also facilitates Vietnam to expand international markets, increase exports, gradually participate in production networks and global value chains Thanks to this orientation, exports of foreign investment sector have increased rapidly, contributing to balancing the trade balance, reducing exchange rate pressure and improving the international payment balance The foreign investment sector also has many contributions in creating jobs, contributing to labor restructuring and improving the quality of human resources Foreign direct employment in the foreign-invested sector increased from 330,000 in 1995 to about 3.6 million in 2017, and indirect jobs were created for around to million workers FDI enterprises are also the pioneering units in training, improving the qualifications and industrial manners of workers, technicians and managers Many of the jobs previously held by foreign experts have now been replaced by Vietnamese workers Many foreigninvested enterprises have paid attention to social responsibility to the community, participating in hunger eradication, poverty reduction and other volunteer activities 1.2 Recent situation of FDI registration in Vietnam According to data from the Foreign Investment Agency (Ministry of Planning and Investment), as of December 20, 2019, foreign direct investment (FDI) into Vietnam included newly and additionally registered capital and foreign investors' share purchase capital reached US $ 38 billion, up 7.2% compared to the same period in 2018 This is also the highest figure in the last 10 years 1.2.1 New registered capital As of December 20, 2019, the whole country had 3,883 new projects granted the IRC, an increase of 27.5% of the projects compared to the same period in 2018 The total newly registered capital of US $ 16.75 billion, equaling 93.2 % compared to the same period in 2018 The average registered capital of the new project decreased from US $ 5.9 million in 2018 to US $ 4.3 million in 2019 Although the newly registered investment capital in 2019 decreased But the pace of decline has been smaller than in previous months If excluding large projects of over US $ billion newly licensed in the same period in 2018, the total newly registered investment capital in 2019 will increase by 32.5% over the same period (in 2019, the investment project with the scale of The largest investment capital is USD 420 million.In 2018, there was a Smart City project in Hai Boi commune, Dong Anh, Hanoi with a total registered capital of 4.14 billion USD and a factory project Polypropylene, an underground storage of liquefied petroleum with a total registered capital of 1.2 billion USD) 1.2.2 Adjusted capital There were 1,381 projects registered to adjust investment capital, up 18.1% over the same period in 2018 Total adjusted registered capital was 5.8 billion USD, equaling 76.4% compared to the same period in 2018 In in 2019, the scale of adjustment to expand capital of small projects (an average of USD 4.2 million / adjustment, smaller than the average of 2018 is USD 6.5 million / adjustment) and there is no large capital increase projects like in the same period of 2018 (Laguna - Singapore Co., Ltd has adjusted the project to increase its capital by 1.12 billion USD) 1.2.3 Contribute capital, buy shares Also in 2019, the whole country had 9,842 times of capital contribution and share purchase of foreign investors with a total value of contributed capital of US $ 15.47 billion, up 56.4% over the same period in 2018 and accounting for 40.7% of the total registered capital sign Investment in the form of capital contribution to share purchase has tended to increase sharply in recent years and accounts for an increasingly large proportion of the total foreign investment Specifically, 2017 investment in the form of capital contribution, share purchase accounted for 17.2% of the total registered capital, in 2018 accounted for 27.9%, in 2019 accounted for 40.7% of the total registered capital Foreign investors contribute capital to domestic enterprises mainly in the field of processing and manufacturing industries with 45.8% of the total value and real estate business with 17.8% of the total price treatment 1.2.4 By investment field In 2019, foreign investors invested in 19 sectors, of which investment focused on manufacturing and processing industry with a total capital of 24.56 billion USD, accounting for 64 , 6% of the total registered investment capital This is also a field that accounts for a large proportion of the registered capital in terms of registration of new investment projects, expansion investment projects, capital contribution and share purchase Real estate business ranked second with total investment capital of 3.88 billion USD, accounting for 10.2% of total registered investment capital Next is the field of wholesale and retail, professional activities of science and technology, Increasing FDI tends to focus on a few key sectors, associated with the roadmap of tariff reduction and opening of attractive investment sectors under FTA commitments Statistics show that FDI in Services, especially real estate business, tends to increase rapidly and is the second largest sector in terms of FDI attraction, only after processing and manufacturing industries Generally, over the past 30 years, investment in the real estate business only accounted for 2.8% of the total number of projects, but accounted for 16.8% of the total registered capital; the average investment capital is up to 74.4 million USD / project, more than times the average capital scale of each project in the processing and manufacturing industry Although the Vietnamese population is mainly concentrated in rural areas (about 67%), the labor force working in this region accounts for about 46% of the total social and agricultural labor contributing about 17% of Vietnam's GDP (GSO, 2016) but FDI inflows into this sector only account for 1.7% of total projects and 1% of total FDI into Vietnam It can be affirmed that with low investment, FDI does not play a role in Vietnam's agricultural and rural development 1.2.5 According to investment partners In 2019, there were 125 countries and territories investing in Vietnam South Korea leads with a total investment of 7.92 billion USD, accounting for 20.8% of total investment capital into Vietnam; Hong Kong ranked second with total investment capital of US $ 7.87 billion (of which US $ 3.85 billion of shares bought in Vietnam Beverage Co., Ltd in Hanoi, accounting for 48.9% of Hong Kong's total investment capital) ); Singapore ranked third with a total registered investment capital of 4.5 billion USD, accounting for 11.8% of total investment capital Next is Japan, China, In particular, investment from China, Hong Kong tends to increase over the same period due to the impact of the USChina trade war Specifically: investment from China increased by nearly 1.65 times, from Hong Kong increased by 2.4 times over the same period in 2018 Foreign investors investing in Vietnam for over 30 years mainly concentrated in 15 countries and territories These major investors account for 89.4% of the registered capital and 86.2% of the total number of projects The scale of investment for the projects is largely above average In this group, the projects of Chinese investors have the smallest scale, about 6.2 million USD / project, equal to 44% of the average project size Although Korea ranks first in terms of total registered capital, the average project size is 9.1 million USD / project It is worth noting that among the 15 countries and territories considered as the "main", there are three locations considered tax havens: British Virgin Islands, Cayman Islands and the Netherlands, with many projects large scale Registered capital from this "triad" group, although only accounts for 4.4% of the total number of projects, the total registered capital accounts for 10.3% The project size in this group is 32.4 million USD / project, more than double the average project size 1.2.6 By investment area Foreign investors have invested in 62 provinces and cities, of which Hanoi is the locality attracting the most foreign investment capital with a total registered capital of US $ 8.45 billion, accounting for 22.2% of total capital invest Investment capital in Hanoi is mainly based on the method of capital contribution, share purchase with 6.47 billion USD, accounting for 76.6% of total registered investment capital of Hanoi TP Ho Chi Minh City ranked second with a total registered capital of nearly 8.3 billion USD, accounting for 21.8% of total investment capital Like Hanoi, Ho Chi Minh City's investment in the form of capital contribution, share purchase accounted for a large proportion, accounting for 67.5% of the total registered investment capital of the City and 10 accounting for 58.1% of the total number of turns contribute capital, buy shares of the whole country Next are Binh Duong, Dong Nai, Bac Ninh, In 2019, the number of delegations working for investment opportunities increased sharply, increasing by about 30% compared to the same period last year The partners are mainly from Japan, Korea, China, Hong Kong, Singapore MPI has held many policy dialogues, talks with businesses of Japan, Korea, Singapore, China, Hong Kong, Thailand, Taiwan, Germany, Netherlands, India, in 2019 1.2.7 Cumulative foreign investment situation till December 2019 Accumulated to December 20, 2019, the whole country has 30,827 valid projects with a total registered capital of 362.58 billion USD The accumulated realized capital of foreign direct investment projects was estimated at 211.78 billion USD, equaling 58.4% of the total valid registered capital - By field: Foreign investors have invested in 19/21 branches in the national economic sub-system, of which the processing and manufacturing industries account for the highest proportion of 214.2 billion USD, accounting for 59.1% of total investment capital, followed by real estate business with 58.4 billion USD (accounting for 16.1% of total investment capital); electricity production and distribution with 23.65 billion USD (accounting for 6.5% of total investment capital) Figure 1: FDI by cumulative sectors 2019 (%) Source: Ministry of Planning and Investment 11 - - By investment partners: In December 2019, Honduras, Iceland and Lithuania were partners who had new investment projects in Vietnam, bringing the total number of countries and territories having valid investment projects in Vietnam up to 135 Among them is Korea with a total registered capital of 67.71 billion USD (accounting for 18.7% of total investment capital) Japan ranked second with 59.3 billion USD (capturing 16.4% of total investment capital), followed by Singapore and Taiwan, Hong Kong By location: foreign investment has been present in all 63 provinces and cities nationwide, of which Ho Chi Minh City is still the leading province in attracting foreign investment with US $ 47.34 billion (accounting for 13.1% of total investment capital); followed by Binh Duong with 34.4 billion USD (accounting for 9.5% of total investment capital); Hanoi with 34.1 billion USD (accounting for 9.4% of total investment capital) Conclude: The number of registered projects and the value of FDI capital into Vietnam over the past time has grown very well, however, the current FDI attraction is still not methodical Vietnam has not been really proactive, selectively attracting FDI projects with high technology content and strictly controlled pollution levels Many FDI projects are crude manufacturing, high processing capacity, large emission levels, low added value, and lack of basic industries such as supporting industries and high technologies The capacity of preventing, controlling and protecting the environment of some FDI enterprises is still inadequate The spread of FDI inflows to economic sectors is not commensurate with expectations The level of localization in Vietnam is still low when the ratio of imported inputs to product value is largely above the threshold of 50% 12 Chapter 2: Impact of FDI on Vietnam's economic growth period 2010-2019 2.1 Situation of FDI attraction in Vietnam 2010-2019 2.1.1 Overview Since Vietnam joined the World Trade Organization (WTO), foreign direct investment (FDI) in Vietnam has increased sharply Especially after Vietnam has signed a series of free trade agreements (FTAs), becoming an economy with large openness (more than 200% of GDP in 2018) After more than 30 years of opening, integrating and reforming the business environment, Vietnam has become an attractive destination for foreign investors FDI inflows into Vietnam increased sharply, registered capital and implemented capital have improved over the years The total number of newly registered FDI projects, adding capital and capital contributions increased rapidly in both quantity and value This result is due to the fact that Vietnam has aggressively implemented open-door mechanisms and policies to attract FDI over the past 30 years The economic environment is outstanding with an average annual growth rate of 6% -7% A stable political environment is also a favorable condition to attract FDI enterprises to invest in Vietnam The field of investment participation of FDI enterprises is quite diverse, up to 19/21 Vietnam's economic sectors have the participation of foreign investors This also shows the interest to promote, attract capital to develop the multi-sector economy of the State According to a report on FDI attraction by the Foreign Investment Agency (Ministry of Planning and Investment), in the first months of 2019, Vietnam continued to record a new record of registered capital value 2.1.2 Implemented FDI Data from the General Statistics Office shows that from 2010 to 2012, the total amount of FDI realized through each year did not have much strong growth, even in 2012, it decreased slightly compared to the previous two years From 2013 onwards, the total implemented FDI capital tends to increase over the years In the first half of 2019, FDI projects disbursed about 7.3 billion USD, up 7.8% over the same period in 2018 Generally for 10 years (from 2009 to May 2019), FDI disbursement through In the following years, the average growth rate is 9% -10% / year In 2018 alone, the disbursed capital nearly doubled compared to 2009, reaching 19.1 billion USD (Figure 2) 13 Figure 2: Total FDI realized in the period 2010-2019 (million USD) Source: General Statistics Office (GSO) 2.1.3 Export and import situation In 2015, export turnover is estimated at 162.4 billion USD, up 8.1% compared to 2014, the lowest increase since 2010 Merchandize export price index decreased by 3.8%, so excluding weak price factor, export turnover increased by 12.4% (In 2014, the export price index increased by 0.79%, excluding the factor of export price increase by 12.9%) Export turnover of the foreign-invested sector was estimated at 115.1 billion USD, up 13.8% over the previous year, accounting for 70.9% of the total export turnovers, contributing 9, percentage points on overall export growth Excluding crude oil, the FDI sector reached 111.3 billion USD, up 18.5% The domestic sector is estimated at US $ 47.3 billion, down 3.5% compared to 2014 (after years of continuous growth), which reduces 1.2 percentage points of export growth in 2015 ( Source: Financial Magazine, 2015) By 2019, exports of foreign invested sector (including crude oil) reached US $ 181.35 billion, up 4.2% over the same period in 2018 and accounting for 68.8% of export turnover Export excluding crude oil was 179.33 billion USD, up 4.4% as compared to the same period in 2018 and accounting for 68.1% of export turnover Imports of foreign invested sector reached nearly 145.5 billion USD, up 2.5% over the same period in 2018 and accounting for 57.4% of import turnover Generally in 2019, the foreign invested sector had a trade surplus of nearly 35.86 billion USD including crude oil and a trade surplus of 33.8 billion USD excluding crude oil Thus, the trade surplus from the foreign invested sector was a source of offsetting 14 of the US $ 25.9 billion trade deficit of the domestic enterprise sector, resulting in a trade surplus of US $ 9.9 billion in 2019 2.2 Impact of the FDI sector on Vietnam's socio-economic development The contribution of FDI enterprises over the past three decades has greatly contributed to promoting Vietnam's economy The direct and strong impacts on the economy of FDI include: 2.2.1 Providing and supplementing important capital sources for development investment The structure of investment capital in recent years has continued to shift towards increasing the proportion of the domestic private-resident sector and reducing the proportion of investment from the public sector (Figure 3) Figure 3: Proportion of capital investment in Vietnam by economic sector 2014-2018 (%) Source: GSO It can be seen that the state sector sharply reduced the proportion of investment to percentage points, from 40% in 2014 to 33% in 2018 However, the proportion of the FDI sector in total basic investment remained stable at an average of 23.5% over the period 2015 - 2018 and affirming an important role for Vietnam's socio-economic development investment 15 Figure 4: Growth rate of investment capital in Vietnam 2014-2018 (%) Source: GSO From 2014-2018, the growth rate of investment capital from the state sector decreased sharply over the years, especially in 2018 to only 1% Meanwhile, the growth rate of the FDI sector increased sharply in 2015 and the non-state sector sharply increased in 2018 This shows that the structure of investment capital shifted to the domestic privatepopulation sector and reduce the proportion in the state sector 2.2.2 Contribute to GDP growth and state budget revenues FDI has played an important role in boosting Vietnam's economic growth in recent years The contribution of the FDI sector to the country's GDP for the period from 2010-2017 increased from 17.7% to 19.6% (Figure 5) Always playing a certain important role in the economy 16 Figure 5: Contribution of FDI sector to Vietnam's GDP by economic sector 2010-2017 (%) Source: GSO 2.2.3 Increase export share Impressive export performance of Vietnam for many years has marked with bold impressions of FDI enterprises The share of exports in this sector has increased sharply from 54% of total turnover in 2010 to 72% in 2018 (Figure 6) Occupy a very important position 17 Figure 6: Contribution of FDI sector to Vietnam's export turnover 2010-2018 (%) Source: GSO The spillover effect of exports from FDI enterprises to the domestic sector is analyzed indepth by Nguyen Bich Ngoc (2017) in the processing and manufacturing industry Research shows that large-scale FDI projects have created a strong impact on the export results of these industries in Vietnam The presence of FDI enterprises in the manufacturing and processing industry has put pressure on domestic enterprises to innovate technology, improve production, increase the understanding of export markets, and strengthen joint ventures commercial association The overwhelming advantage of capital and technology of multinational corporations has created significant pressure on export market share as well as the competitiveness of domestic enterprises Moreover, from a macro perspective, the position of FDI enterprises is overwhelming in Vietnam's exports However, this situation also creates instability for export, because the production and export of FDI sector depends heavily on regional and global supply chains 2.2.4 Contribute to labor productivity growth Theoretically, FDI inflows are related to the productivity of receiving countries, but it should be noted that it will have a positive impact when the domestic business sector is capable of learning new technology, or capable of providing input for FDI enterprises In 18 the opposite direction, labor productivity is also a factor affecting FDI attraction According to a report by the Ministry of Planning and Investment, the FDI sector is creating jobs for more than 3.6 million direct workers and about 5-6 million indirect workers Analysis from a report of the General Statistics Office (2016) shows that, over time, the labor productivity gap between economic sectors, though gradually narrowed, is generally higher in FDI labor productivity about 1.4 times that of the state sector and to times higher than that of the private sector (Figure 7) Figure 7: Labor productivity by economic sector (million VND) Source: GSO Research by Le Van Hung (2017) measures and analyzes the contribution of this sector to labor productivity growth in the period of 2006 - 2016 shows that FDI sector plays an important role in promoting energy growth Vietnam's labor productivity However, the contribution of the FDI sector to labor productivity growth is created by the impact of labor mobility from the low labor productivity sector (mainly from the agricultural sector) to the FDI sector with labor productivity higher motions (64%) Accordingly, real labor productivity growth from the FDI sector accounts for a much smaller proportion (36%) In addition, the level of linkage between the FDI sector and the domestic sector is mostly low 19 in all sectors, especially in the technology and high-skill sectors This situation implies a low potential for indirect impact on labor productivity of FDI sector through technology and labor skills 2.2.5 Create technology spillover effects FDI has created a spillover effect on technology, contributing to raising technology level through technology transfer and management skills transfer to Vietnamese people, creating competitive pressures, technological innovation for The presence of FDI enterprises has a positive spillover effect to promote innovation and technology transfer which has helped improve the productivity of domestic enterprises In general, Vietnam has received a positive impact from FDI, but the level of positive impacts is still low, mainly due to competitiveness, learning, especially production linkage, participating in the supply chain of Domestic enterprises are still weak This is also the basic reason for limiting the spillover effects from FDI In fact, FDI projects mainly focus on assembling, processing, low localization rate, and the value created in Vietnam is not high FDI has not created a close link with Vietnamese enterprises to join the value chain, has not promoted Vietnam's supporting industry development, technology transfer and management experience have not met as expected 20 Chapter 3: Solutions to increase FDI attraction into Vietnam In order to bring into play favorable factors and overcome difficulties, increase FDI attraction in the context of integration, Vietnam needs to proactively attract FDI in the direction of focusing on quality and enhancing the role of Enterprises in the global value chain: 3.1 Promote stable and sustainable economic growth A stable economic growth will create favorable conditions for businesses to develop, creating a premise to attract more FDI capital in the future and create a favorable and open business environment 3.2 Maintain a stable political environment Study to complete mechanisms and policies to attract strategic investors and multinational corporations to invest in administrative - economic units, develop industrial parks, export processing zones, and technological parks Foreign investment promotion agencies need to build a forecasting capacity and meet the sourcing needs of foreign investors Building a national database of supportive providers and business connections; help businesses overcome information obstacles in the era of Industrial Revolution 4.0 3.3 Strengthen inspection and supervision of the process of licensing and managing foreign investment projects Promoting disbursement, not licensing backward technology projects, having bad impacts on the environment; thoroughly examine projects that use a lot of land and allocate conditional land according to the project progress; Considering the rate of investment / land area, including industrial park land 3.4 Improve infrastructure, increase planning towards modernization The planning and improvement of infrastructure needs to be carried out synchronously among localities and key economic regions throughout the country 3.5 Invest in education development, improve the qualifications of workers Build a team of high-quality human resources, enhance the knowledge content in products, improve labor productivity 3.6 Priority will be given to attracting some industries and hi-tech products, creating great added value The Industrial Revolution 4.0 has been and will affect all sectors of the economy, so it is necessary to prioritize the attraction of FDI in some high-tech industries and products, 21 creating great added value such as information technology, electronics, internet of things, artificial intelligence, virtual reality, cloud computing, big data analytics, manufacturing engineering, automation, biotechnology, new materials, Education and training of high quality human resources, research and development, community health care 3.7 Proactively selecting green FDI projects Solving problems related to environmental pollution and selecting projects with great spillover Vietnam also needs to give priority to attracting FDI into hi-tech and advanced industries and fields, environmentally friendly technologies, clean and renewable energies; developing modern technical infrastructure, especially new industries based on industry 4.0 3.8 Attracting FDI must be appropriate Attracting FDI must be consistent with the advantages, conditions, development level and planning of each locality in the regional linkage, ensuring the overall socio-economicenvironmental efficiency For developed cities like Hanoi and Ho Chi Minh City Ho Chi Minh City, Da Nang, Hai Phong need to focus on developing high-quality industries and services, creating great added value; resolutely not to choose FDI projects that employ a lot of labor, causing environmental pollution and greenhouse gas emissions For localities and underdeveloped economic regions, the project may use labor-intensive projects (such as weaving, dyeing, sewing, thick leather) but must commit to invest in ensuring environmental protection 22 PART 3: CONCLUSION Vietnam's FDI attraction will be maintained in the coming time thanks to Vietnam's persistent efforts to expand international integration, strong commitment to opening markets, and eliminating investment and trade barriers through the new generation FTAs in effect such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Free Trade Agreement - EU (EVFTA) Trade tensions between the United States and China with the current Covid-19 pandemic affect investor sentiment and may accelerate the trend of shifting investment to other potential markets, Vietnam is a point come fascinating in this context In addition, the renovation process of Vietnam continues to be maintained, aiming at reducing many business conditions, transparency of administrative procedures, the confidence of businessmen and investors thanks to government-created start-up efforts and private economic development The role and contribution of FDI to the economy is undeniable Many studies also show that the most influential impact of FDI is transmitted through indirect channels rather than directly Among many influencing factors, the key to attract and retain investors is a stable and transparent business investment environment; Abundant labor force and development support industry, ensuring effective linkage between FDI sector and domestic sector Accordingly, in attracting FDI, it is necessary to ensure the selection of FDI projects towards high and medium technology industries; promoting FDI enterprises to strengthen their connection with domestic enterprises, especially auxiliary enterprises, through developing and implementing appropriate priority policies; development orientation of supporting industries closely to global and regional production networks and value chains; developing and implementing policies to support expert advice, technology solutions, support for human resource training, including business management team In terms of macro management, Vietnam must consistently promote reform, reduce barriers, eliminate unreasonable business conditions, and create an environment that promotes innovation In addition to focusing on investment in infrastructure development, in order to maintain attractiveness to investors, it is necessary to increase investment in scientific and technological research in order to "catch up" with technology trends; at the same time, creating a platform to attract and retain talents, create dynamic and attractive competitive forces with hi-tech FDI industries 23 REFERENCES Tạp chí Tài (2015), “Xuất, nhập hàng hố, dịch vụ năm 2015” Lê Văn Hùng 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theoretical framework and practice of FDI in Vietnam, chapter is about the situation and impact of FDI on Vietnam'' s economic growth in the period 2010- 2019 and chapter gives suggestions on. .. and negative impacts on the development of the country This article will analyze and assess the impact of FDI on Vietnam'' s economic growth in the period 2010- 2019 The paper consists of chapters:... solutions to enhance FDI attraction into Vietnam PART 2: CONTENT Chapter 1: Theoretical and practical framework of FDI in Vietnam 1.1 The role of FDI in the country''s socio -economic development Along