Foreign direct investment in vietnam current situation and solutions,graduation thesis

STATE BANK OF VIETNAM BANKING ACADEMY OF VIETNAM FACULTY OF FOREIGN LANGUAGES GRADUATION THESIS FOREIGN DIRECT INVESTMENT IN VIETNAM: CURRENT SITUATION AND SOLUTIONS Student : Nguyen Thanh Tra Class : ATCD – K15 Student ID : 15A7510231 Supervisor : Ms Nguyen Thi Hong Mai (M.A) Hanoi, May 2016 STATE BANK OF VIETNAM BANKING ACADEMY OF VIETNAM FACULTY OF FOREIGN LANGUAGES GRADUATION THESIS FOREIGN DIRECT INVESTMENT IN VIETNAM: CURRENT SITUATION AND SOLUTIONS Student : Nguyen Thanh Tra Class : ATCD – K15 Student ID : 15A7510231 Supervisor : Ms Nguyen Thi Hong Mai (M.A) Hanoi, May 2016 GRADUATION THESIS i BANKING ACADEMY DECLARATION I hereby declare that the thesis is my original work and effort Where other sources of information have been used, they have been acknowledged Signature Nguyen Thanh Tra Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS ii BANKING ACADEMY ACKNOWLEDGEMENTS This graduation thesis would not have been possible without the guidance and the inspiration of several individuals who in one or another way contributed and extended their valuable assistance in the preparation and completion of this study First of all, I would like to convey my deepest gratitude to my beloved supervisor, Ms Nguyen Hong Mai (M.A) for her great inspiration and constant guidance In spite of her busy schedules, she always spared the time to guide me through this thesis Next, I would like to express my sincere thanks to all the teachers in Banking Academy of Vietnam, especially those of the Faculty of Foreign Languages who have provided me with a huge source of knowledge during my four years at university Last but not least, I also owe my heartfelt gratitude to my family and my friends, who have been a constant source of love, concern, support and strength, greatly assisting me in completing my work Because of time constrains and limited capacity of the writer, this thesis will certainly not be free from defect Therefore, it is my hope that lectures and readers of the thesis will sympathize and I am eager to receive further contribution to it Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS iii BANKING ACADEMY ABSTRACT For developing countries with internal capital accumulation in the economy remaining low like Vietnam, attracting foreign investment is an objective necessity, a critical need for development investment Foreign direct investment inflow has become an important driving force to promote the process of international integration and economic transition towards industrialization and modernization Foreign direct investment is increasingly important for the socio – economic development of Vietnam With the right policy framework, FDI can provide financial stability and enhance the well-being of societies In the period of 2011-2015, Vietnam has made certain achievements in attracting foreign direct investment, indicating in the registered FDI capital following the upward trend, FDI capital structure starting a more diverse shift by sectors, investment location, and investment main counterparts In addition, investment activities overseas of Vietnam has also developed more dynamically However, beside the achievements mentioned above, the mobilization and disbursement of FDI still remain some limitations that need to be solved These contents will be shown in the thesis with the theme: "FOREIGN DIRECT INVESTMENT IN VIETNAM: CURRENT SITUATION AND SOLUTIONS" Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS iv BANKING ACADEMY TABLE OF CONTENTS ACKNOWLEDGEMENTS ii ABSTRACT iii TABLE OF CONTENTS iv LIST OF ABBREVIATIONS vi LIST OF TABLES AND FIGURES vii CHAPTER I: INTRODUCTION 1.1 Rationale of the study 1.2 Research objectives 1.3 Scope of the study 1.4 Research methodology 1.5 Thesis structure CHAPTER II: THEORETICAL BACKGROUND OF FOREIGN DIRECT INVESTMENT (FDI) 2.1 Definition of Foreign Direct Investment (FDI) 2.2 Characteristics of Foreign Direct Investment 2.3 Motivation for Foreign Direct Investment 2.4 Forms of Investment 2.5 The impacts of Foreign Direct Investment to the economy 2.6 Indicators to measure the ability to attract and use FDI 2.7 Factors affecting Foreign Direct Investment 12 CHAPTER III CURRENT SITUATION OF FOREIGN DIRECT INVESTMENT IN VIETNAM 15 3.1 Current situation of Foreign Direct Investment flows in Vietnam 15 3.1.1 Current situation of Foreign Direct Investment inflows 15 Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS v BANKING ACADEMY 3.1.2 Current situation of Foreign Direct Investment outflows 35 3.1.3 Current situation of Foreign Direct Investment use 38 3.2 Assessment of current situation of Foreign Direct Investment flows in Vietnam 43 3.2.1 Achievements 43 3.2.2 Drawbacks 48 3.2.3 Reasons 51 CHAPTER IV SUGGESTED SOLUTIONS ON IMPROVING THE EFFICIENCY OF FDI FLOWS IN VIETNAM 54 4.1 The experience of some countries in attracting Foreign Direct Investment 54 4.2 Direction of increasing the efficiency of FDI attraction and management 57 4.3 Some solutions to improve the efficiency of FDI flows in Vietnam 58 CONCLUSIONS 68 LIST OF REFERENCES 70 Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS vi BANKING ACADEMY LIST OF ABBREVIATIONS AEC ASEAN Economic Community ASEAN Association of Southeast Asian Nations BOT Build – Operate – Transfer contract BT Build – Transfer contract BTO Build – Transfer – Operate contract FDI Foreign Direct Investment GDP Gross Domestic Product ICOR Incremental Capital Output Ratio IMF International Monetary Fund OECD Organization for Economic Co-operation and Development UNCTAD United Nations Conference on Trade and Development USD US Dollar VND Vietnam Dong WTO World Trade Organization Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS vii BANKING ACADEMY LIST OF TABLES AND FIGURES LIST OF FIGURES Figure 3.1: FDI inflows into Vietnam during period of 2011 – 2015 15 Figure 2.2: FDI by forms of investment from 2011 to 2015 20 Figure 3.3 FDI capital structure by sectors and industries as of 31/12/2015 22 Figure 3.4 FDI in Agriculture, Forestry and Aquaculture sector (2011 – 2015) 25 Figure 3.5 FDI capital and the proportion of FDI in Real-estate business in the period of 2011 – 2015 27 Figure 3.6 FDI capital by province as of December 31, 2015 28 Figure 3.7 FDI capital by economic regions as of December 31, 2015 29 Figure 3.8 FDI capital structure by major Asian counterparts from 2011 to 2015 32 Figure 3.9 FDI outflows from Vietnam during period of 2011 – 2014 35 Figure 3.10 Vietnam GDP Annual Growth Rate from 2011 to 2015 40 Figure 3.11 Export and import turnover and proportion in Vietnam’s total export – import turnover (2011 – 2015) 41 Figure 3.12 FDI capital & total realized social investment capital (2011 – 2015) 45 Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS viii BANKING ACADEMY LIST OF TABLES AND FIGURES LIST OF TABLES Table 3.1 10 industries with highest amount of FDI capital attracted 23 Table 3.2 The proportion of FDI capital in Manufacturing – Construction sector in total FDI attracted in Vietnam from 2011 to 2015 24 Table 3.3 The incremental capital output ratio of Vietnam from 2010 to 2014 38 Table 3.4 The proportion of GDP from FDI sector in GDP of Vietnam (2010 – 2014) 40 Table 3.5 Contribution of FDI sector to Vietnam government budget 43 Table 3.6 The proportion of GDP from FDI sector in GDP of Vietnam (2011 – 2014) 45 Table 3.7 Export surplus of FDI sector from 2011 to 2015 46 Table 3.8 Proportion of export turnover from FDI sector in Vietnam’s total export turnover (2011 – 2015) 46 Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 58 BANKING ACADEMY Finally, planning FDI attraction by sectors, fields, and counterparts conforming to the advantages of each region and each sector to promote investment efficiency of each locality and region, in line with the general planning; taking into account the development of domestic businesses and the relationship between domestic and export environment; ensuring national overall benefit and the economy restructure according to new growth model 4.3 Some solutions to improve the efficiency of FDI flows in Vietnam Basing on the drawbacks of the current situation of FDI flows in Vietnam, following the government’s orientation on improving the efficiency of FDI attraction and management in the future, along with the information on some ways to mobilize FDI in several ASEAN countries mentioned above, some solutions are recommended as followed: 4.3.1 The government should attract FDI capital under a radical structure Thailand has achieved success in mobilizing FDI to remote and rural areas to narrow the gap between provinces Therefore, it is necessary that Vietnam also encourage FDI inflow to small provinces with less FDI capital attracted using some measures like supporting investment promotion activities with renewed contents and methods, training human resources for skilled workers demand, building infrastructure especially facilities in power and water supply as well as network connection This helps to follow the orientation of Prime Minister to plan FDI attraction conforming to the advantages of each region Ministries and sectors need to research and propose policies to mobilize and attract investment from multinational corporations from both key counterparts and those with little FDI capital invested such as EU members, the United States, Japan… as well as directly invite several large corporations in certain industries or fields for their negotiation and participation in those projects Vietnam can take advantage of Thailand’s outward investment policy to attract potential investors from Thailand to develop domestic manufacturing industries that our country does not have relative advantage From the experience of the three countries, it can be seen that FDI capital structure by sectors are divided equally between manufacturing and processing, agriculture and services This is what Vietnam has yet to complete Therefore, the Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 59 BANKING ACADEMY Ministry of Planning and Investment needs to quickly planning of industries, economic regions and structure in consistent throughout the country; utilizing resources to mobilize more FDI to some services industries and light industries such as food processing, textiles and garments, in order to participate highly in the global value chain For the agriculture sector in which FDI has humble result, Vietnam can apply the policy on prioritizing processing and distributing agricultural products from Thailand and Malaysia as well as taking notice to develop machinery for agriculture In addition, there must be incentive policies for businesses interested in this sector such as import tax exemption for technology, value-added tax exemption, preferential state credits, land use tax and other investment support 4.3.2 Technology transfer situation should be improved to live up to expectations Thailand, Singaporean, and Malaysian governments have paid special attention to the development of high-tech and environmentally friendly industries by launching programs to stimulate investment into these fields Vietnam’s Prime Minister Nguyen Tan Dung also stress the importance on this issue Therefore, the existing legal documents on science and technology and technology transfer are obliged to be amended and supplemented to point out a long-term roadmap with various measures and instruments for foreign technology attraction in conformity with Vietnam’s conditions, as well as creating favorable conditions and policies for technology transfer Provisions on importing machinery, equipment (including used machinery and equipment) are needed to be amended and supplemented as well in direction of increasing application of evaluation and re-evaluation instruments; issuing strict regulations on import standards and periodically assessing technology level of economic sectors and fields to eliminate the machinery and equipment that are oldfashion, using too much energy, having environment pollution potential, affecting people’s health, as well as define prioritized areas in FDI attraction It is necessary to form the high-tech zone, clean technology in the appropriate regions in the country with a clear regulatory framework to create attractive factors for foreign investors Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 60 BANKING ACADEMY 4.3.3 The workforce quality needs to be improved corresponding with the FDI attracted It is compulsory to design programs of action specifying on human resource training and associating with enterprises using labors for career training in conformity with their employment requirements Vietnamese enterprises need to prepare themselves a labor force knowledgeable about international business cooperation activities and express high confidence along with competence in cooperating with foreign partners Some regulations can be regulated in direction of facilitating the licensing of foreign labors working in Vietnam in fields requiring high professional skills, qualifications and technology which the domestic labors have not yet satisfied; concurrently, providing mechanism to encourage enterprises to train domestic workforce to replace these positions Moreover, the education and training system must be gradually reformed to develop and increase highly qualified human resources that meet the requirements of integration and national development Long-term and basic training plans should be proposed to guarantee sufficient quantity and reasonable structure to achieve high quality and serve the long-term development of the economy In addition to upgrading and investing in vocational system to reach the region and the world level, the government should develop more vocational schools and training centers from different sources; mobilize and coordinate with international organizations to open training courses on management and promotion of foreign investment as well as training centers of high-tech workers 4.3.4 The National Assembly needs to improve the legal system and policies to be synchronized and consistent 4.3.4.1 Legal documents involving investment activities and business of FDI enterprises to be amended and reformed Singapore has done very well in creating an attractive business environment for foreign firms by building a complete and effective legal system This is a disadvantage of Vietnam compared to Singapore, though law on investment and law on enterprises were amended by Congress in 2014 in the direction of continuing to create a favorable, transparent legal framework for the establishment and operation of enterprises in all economic sectors Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 61 BANKING ACADEMY Therefore, policy-makers must continue to review and reform legal documents towards guaranteeing the consistency and harmony with the provisions of the Law on investment, and issue decrees if necessary to fix the shortcomings and overlaps The current legislation for mergers and acquisitions activity with foreign elements should also be reviewed to be more synchronized and explicit Officials need to carry out the monitoring and supervision of the implementation of the law on investment and enterprises for timely detection and treatment of problems arising 4.3.4.2 Administrative procedures to be simplified The administrative process and procedures for foreign investment are required to be simplified and publicized, along with the implementation of one-stop-shop mechanism in investment procedures settlement The consistency of processes and procedures at localities to be ensured in line with specific conditions Agencies in charge of investment need to cooperate and create advantageous conditions for foreign business registration, as well as timely handle issues and problems in the licensing process and investment certificate adjustment, and overcoming the stagnation of the state management agencies The provisions of customs procedures are immediately amended and publicized towards simplicity, enabling enterprises to overcome the troublesome and negative incidents, receiving and handling comments or complaints from businesses Coordination between the ministries and departments involving such as trade, customs, and environmental technology to be facilitated General Department of Land Administration and the relevant authorities immediately to draft regulations on ground clearance and compensation for projects with foreign capital, as well as provisions on transfer of land use rights 4.3.4.3 Appropriate, flexible and attractive incentive policies to be established Investment incentives are considered an important tool to attract FDI, so Malaysia and Singapore have taken full advantage of this instrument to promote FDI attraction For Vietnam, it is crucial to amend investment incentive policies relating to tax preference, financial and non-financial preferences Tax policy and investment policy should be unified Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 62 BANKING ACADEMY to contribute to promote the competitiveness of Vietnam with these countries regarding FDI attraction; adjusting subjects receiving tax preferences to attach the prioritized sector and field preferences with regions One thing to pay attention is that tax policy and financial incentives associated with operations in FDI are key elements constituting the attractiveness of FDI environment Therefore, value added tax and corporate income tax should be efficiently implemented Besides, promoting effectiveness and efficiency of financial incentives such as resolve quickly tax for foreign investors, conveniently transfer profits to home countries, contribute capital easily… Issuing investment incentives in fields such as urban development, technical infrastructure development (water supply, urban environment ), social housing and housing for people with low income development, welfare facilities projects development (apartments, hospitals, schools, cultural and sports) for laborers working in industrial parks, export processing zones, high-tech zones and economic zones, the investment projects in the field of agriculture and rural development is also needed 4.3.4.4 Legal documents system on environmental protection to be synchronized and completed National technical regulations system on energy consumption, environment, environmental impact assessment for investment sectors and fields causing greenhouse effect and environment pollution must be reviewed, amended and improved Ministries should promulgate regulations on preventing, minimizing pollution and controlling environment, as well as supplementing sanctions basing on the actual emission levels to replace current sanctions basing on the maximum and minimum framework; environment information and solutions to handle emission volume publicized by enterprises Mechanism and policies to attract FDI in the field of treating emission gas, sewage, solid waste and urban environment sanitation to be operated Guiding, monitoring, and examining enterprises in compliance with Law on environmental protection to be intensified Improving regulations on law violations sanctions in environment field to be deterrent enough Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 63 BANKING ACADEMY 4.3.5 State management of FDI must be renovated to be harmonious and efficient 4.3.5.1 The effectiveness of investment promotion activities to be enhanced The national image in the international community can be improved better with marketing techniques and the cooperation among governmental authorities, organizations, media agencies, and individuals There are some methods to innovate and improve investment promotion activities such as updating and supplementing new information and content on the environment and investment policies; releasing important documents in a number of foreign languages to meet the requirement of big and potential investors (English, Korean, Japanese, and Chinese) Staff training in investment promotion activity in particular and investment management in general should be increased by collaborating with international organizations to open training courses on promotion and foreign investment management The government should consider funding allocation to be able to actively implement investment promotion activities abroad in an effective way, especially paying attention to the strategic partners Approaching independent organizations specialized in organizing overseas investment promotion activities can be another choice Businesses need to prepare and thoroughly research cooperation options gain trust from counterparts, as well as speed up the cooperation and contribution of capital by foreign investors, particularly in the context of competition in attracting FDI, gaining advantage in the production distribution across the ASEAN region Besides, seeking alternatives to investigate and cooperate in order to attract more investment from the ASEAN businesses into Vietnam to take advantage of favorable conditions in macro level created from the regional integration process 4.3.5.2 The planning process to be implemented radically There must be effective construction and management planning, especially the overall social-economic development, territorial planning, land use planning, especially for coastal regions to ensure economic and environmental sustainable development; sector and major products planning; specific plans to implement the approved planning to be proposed in order to create favorable conditions for investors in identifying and building projects Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 64 BANKING ACADEMY The identification and uniform implementation of new provisions of the Law on investment in planning should be proposed, and assuring the development of sector, field, and project planning in conformity with international commitments The Ministry of Planning and Investment should review a number of lowquality planning which contains restrictions inconsistent with the law and international commitments by not being updated regularly, or to restrict and prevent competition from new businesses, in addition to some sectors that have not had planning (electronic supporting industry, higher education, vocational training), causing obstacle to licensing 4.3.5.3 Investment decentralization to be further improved with the aim to promote the dynamic, creativeness and responsibility of localities The government needs to decentralize to the Ministry of Planning and Investment, the provincial People's Committee, and the management board of industrial zones in granting certificate of investment licenses without depending on the size of the business operations, unless the projects are sensitive, affecting national security, culture, ethics, and customs Moreover, they should spare time to conclude and assess the implementation of decentralization in managing FDI activities over the last few years to detect inadequacies and timely adjust and supplement policies Measures to accelerate the disbursement, licensing framework for outdated technology projects, or projects with adverse environmental impact should be adopted Furthermore, it is critical to examine carefully projects using large areas of land, allocate land enclose with projects’ schedule condition, avoid setting up large projects to keep the land without deploying, take the investment ratio / land areas into account, including land in industrial zones Raising the level of staff and officials to guarantee implementation of the tasks stipulated in the Law on Investment and new regulations on decentralization of foreign investment Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 65 BANKING ACADEMY 4.3.6 The economy should be well prepared to attract FDI 4.3.6.1 Infrastructure to be improved The Government needs to review, amend and supplement decrees on investment in the form of BOT, BTO, or BT contracts with clear content that is in conformity with international common practices in order to encourage the application of investment in these forms to construct technical infrastructure Taking maximize advantage of the resources to reasonably and effectively develop and upgrade infrastructure, especially ports, power plants, highway systems, rail services quality, medical facilities, school along with water supply and sanitation Policy-makers and scientists should research and develop policies and measures to encourage the production and use of electricity from renewable energy such as wind, tidal waves, and solar energy Vietnam can open early some service industries in need like posts and telecommunications, marine, aerospace, and information technology so that investors can use better and synchronized infrastructure to serve their production and business effectively; as well as developing new services and network infrastructure Formulating and promulgating mechanism to stimulate non-state economic sectors to participate in development of infrastructure projects The planning of infrastructure to lay the foundation for attracting FDI in infrastructure development should be comprehensively reviewed, adjusted, approved and publicized The planning process and planning execution as well as FDI attraction in transport and energy projects to develop highways and railways system that connects Vietnam with other countries in the world, connect port clusters and large mineral tissues need to be promoted Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 4.3.6.2 66 BANKING ACADEMY Mechanism for development of supporting industries to be renovated The criteria to define sectors and products receiving preferential policies under supporting industries need to be specified in a clear, understandable and transparent way Another method is to research and raise the incentives to be attractive enough for investment projects in the fields of supporting industries according to the list of sectors and products of supporting industries issued by the government; at the same time researching and enforcing Law on encouraging and developing supporting industries Raw materials, semi-processed materials should not be export, and refined materials for production should not be imported, as our country has large reserves of many minerals - the valuable resources to produce important components for many industries like mechanical engineering, automobile production, namely iron, bauxite, titanium, copper, white sand for glass, oil to make the plastic, natural rubber Enterprises involving in manufacturing spare parts and components should be financially supported with long-term loans, tax exemption for reinvested profits (especially foreign enterprises) in order to form quickly a high quality network of domestic suppliers, contributing to shape the value chain in the domestic market, and increasing the value of commodities produced in Vietnam 4.3.7 Other solutions Though investment support that Vietnam provides for investors is as attractive as those of Thailand and Malaysia, the difference is that Malaysia has a specialized agency to directly negotiate the investment incentives package with investors and propose best supportive and flexible policies for foreign firms As Vietnam has not developed this kind of agency, it is necessary to maintain regular dialogue mechanism between the leaders of the government, ministries and sectors with foreign investors, especially the annual business forum for timely handling difficulties and problems of the project in existing policies and legal systems implementation process, and ensuring projects to perform effectively and go according to their schedule Though might not be as effective compared to the mechanism of Malaysia, this measure can further maintain the trust of investors for business environment in Vietnam Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 67 BANKING ACADEMY FDI enterprises must be fully supported by actively introducing and guiding policies so that they would not encounter difficulties in understanding and following the constant adjustment and changes in Vietnamese laws and policies relating to their operations in Vietnam; researching to reduce operating costs for FDI businesses through synchronized price system; renewing regulations to prepare tax reports and financial statements in a transparent, simple, time and cost-saving way; seriously and efficiently implementing regulations to address the requirements and administrative formalities for tax-payers Singapore is an exemplary in severely judging corruption, a long-term issue that the government need to but yet to complete Therefore, the government and ministries should consult Singapore’s way to deal with corruption in order to improve the efficiency of corruption prevention in Vietnam, eliminating negative and pestering situation for investors Personal responsibility in handling work, executing saving practice and waste combat in the state management agencies to be promoted Establishing and developing derivatives market is a necessary measure to help foreign investors avoid investment risks, facilitating Vietnam's economy deeper integration according to the international standards, in proportional with the FDI capital attracted Finally, it is important to establish socio-economic information center to provide data on the economic, political, social and technical situation inside the country and all over the world, help businesses to take the initiative in production and technology improvement in line with market requirements Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 68 BANKING ACADEMY CONCLUSIONS Conclusions Vietnam is in the period of new strategies with the target that by 2020 the country shall basically become an industrialized country Though facing difficult periods, external economic activities in general and foreign investment sector in particular have displayed a positive role in the achievement of Vietnam’s growth and development throughout the years, especially during the period of 2011 – 2015 In the period 2011-2015, Vietnam has achieved remarkable success in attracting FDI, showing in criteria such as total registered FDI capital, total implemented FDI capital, scale and size of FDI projects in Vietnam The number of counterparts increased, and the capital structure has shifted towards more reasonable and balanced by economic sectors, regions and partners This shows that Vietnam is still an attractive market for investors Besides, investment activities overseas of Vietnamese enterprises has expanded in both projects scale and location of investment, along with the diversity in investment fields, showing the potential and growth of Vietnam enterprises In addition to the achievements above, attracting and using FDI has still remained some drawbacks such as the actual implementation of FDI was still limited; the capital structure was not diverse enough in terms of investment industries, locations, forms and partners; technology transfer fell short of expectations; some projects were still polluting the environment; workforce quality was not in line with investment potential These are core issues that the government, ministries, sectors and localities should focus on tackling in the coming years to promote the efficiency of FDI attraction and disbursement In the context of international and domestic’s fast and complicated movements, which create many opportunities as well as challenges for attracting and using FDI, proposing breakthrough, efficient and feasible measures is very important and critical First of all, the legal system involving investment to create synchronized, transparent, clear environment should be improved; amending incentive policies in line with the orientation to attract FDI, while ensuring the attractiveness and competitiveness compared to other countries in the region Basically improving methods of investment Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 69 BANKING ACADEMY promotion towards focusing on key points for each sector, region and counterpart Moreover, the Government should concentrate on improving the steering, operating effect and creating favorable social and economic environment to compete more strongly for FDI; requiring innovative, effective and highly-executed solutions to improve the investment environment, continue to attract and maximize the effectiveness of foreign investment capital Limitations of Research Within a limited amount of time, the study cannot provide an in-depth analysis of FDI impacts on every aspect of the Vietnamese economy Due to the same reason, the paper cannot adequately compare the impacts FDI have on various aspects of the economy of Vietnam Last but not least, the work did not involve a wide range of methods such as conducting surveys, questionnaire, etc Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 70 BANKING ACADEMY LIST OF REFERENCES OECD (2008) OECD Benchmark Definition of Foreign Direct Investment, fourth edition International Monetary Fund (1993), Balance of Payments Manual, fifth edition Law on Foreign Investment in Vietnam (2000), National Assembly UNCTAD (2007) World Investment Report 2007: Transnational Corporations, Extractive Industries and Development Resolution No 103/NQ-CP (August 29, 2013) on orientation to increase efficiency of attracting, using and managing foreign direct investments in the future The Government Decree No.83/2015/NĐ-CP (September 25, 2015), Regulations on Outward Investment The Government Hoang, V.C; Pham, P.M (2015), Tang cuong thu hut va nang cao hieu qua su dung FDI tu cac nuoc ASEAN Central Institute for Economic Management (CIEM) – The Ministry of Planning and Investment Phan, V.C (2015) Kinh Nghiem thu hut FDI tu mot so nuoc ASEAN Kinh tế châu Á – Thái Bình Dương Vietnam’s Association of Foreign Invested Enterprises (2012) 25 nam dau tu nuoc ngoai: Thanh tuu – Van de – Trien vong 10 Ministry of Planning & Investment (2014) Experts discuss orientations to attract FDI 11 Kenichi, O; Le, H.T (2014) Key Issues for FDI Policy Re-formulation in Vietnam Journal of Economics and Development, Vol.16, No.3 12 A, P (2016) Using Foreign Capital in an Effective Way Vietnam Chamber of Commerce and Industry 13 Q M (2014).Dinh huong cho hoat dong dau tu nuoc ngoai den nam 2020 Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS Retrieved from: 71 BANKING ACADEMY http://baodauthau.vn/dau-tu/dinh-huong-cho-hoat-dong-dau-tu- nuoc-ngoai-den-nam-2020-13475.html 14 EU-Vietnam Business Network (2016) Creating a competitive advantage to attract FDI Retrieved from: http://evbn.org/creating-a-competitive-advantage-toattract-fdi/ 15 V.H; B.L (2016) Renewing policies to attract FDI Retrieved from: http://vovworld.vn/en-us/Current-Affairs/Renewing-policies-to-attractFDI/230277.vov 16 Vietnamnews.vn (2016) Vietnam welcomes record high FDI Retrieved from: http://vietnamnews.vn/economy/280703/viet-nam-welcomes-record-high-fdi.html 17 Ho, B.M (2015) UPDATE 1-Vietnam's FDI inflow hits record high so far in 2015 Retrieved from: http://www.reuters.com/article/vietnam-economy-fdi- idUSL4N11V1QH20150925 18 T.A (2012) De an FDI den nam 2020: Co gi moi? Retrieved from: http://cafef.vn/vi-mo-dau-tu/de-an-fdi-den-2020-co-gi-moi20121010102623453.chn 19 Nguyen, H (2013) FDI’s contributions and future orientation Retrieved from: http://www.talkvietnam.com/2013/03/fdis-contributions-and-future-orientation/ 20 T.H (2015) Hap thu co chon loc de tranh “tac dong nguoc” cua nguon von FDI Retrieved from: http://tapchitaichinh.vn/kinh-te-vi-mo/kinh-te-dau-tu/hap-thu-cochon-loc-de-tranh-tac-dong-nguoc-cua-nguon-von-fdi-61157.html 21 PhD Nguyen, M.P (2015) Ba diem sang kinh te Viet Nam 2015 Retrieved from: http://www.nhandan.org.vn/kinhte/nhan-dinh/item/28333002-ba-diem-sang-kinhte-viet-nam-2015.html 22 AmCham Vietnam (2015), Vietnamese companies have limited success in joining global supply chains FDI Foreign Direct Investment, News Retrieved from: http://www.amchamvietnam.com/30450448/vietnamese-companies-have-limitedsuccess-in-joining-global-supply-chains/ Nguyen Thanh Tra ATCD – K15 GRADUATION THESIS 72 BANKING ACADEMY 23 Statistics are collected from: - Foreign Investment Agency – The Ministry of Planning and Investment: http:// http://fia.mpi.gov.vn/ - General Statistics Office of Vietnam: http://www.gso.gov.vn/ - Hanoi Portal: http://english.hanoi.gov.vn - Vietnam Institute for Economic and Policy research: http://vepr.org.vn -National Center for Socio-Economic Information and Forecast: http://www.ncseif.gov.vn Nguyen Thanh Tra ATCD – K15