TÀI CHÍNH QUỐC TẾ 2

Bài thi tiểu luận học viện tài chính, tài chính quốc tế bằng tiếng anhWhat is Foreign Indirect Investment? What are specific features of FII? Analyse roles of inflow FII for an economy andFrom your perspective, what are strong and weak points of ODA management in Vietnam? By researching important information and comparing when neccessary, analyse some important characteristic of ODA by a specific donors in Vietnam. In your opinion, what can be done to improve the quality of ODA management in Vietnam

BÀI THI MÔN: TÀI CHÍNH QUỐC TÊ Hình thức thi: Tiểu luận Mã đề thi: Test Thời gian thi: ngày CHỦ ĐỀ: Question (4 points): What is Foreign Indirect Investment? What are specific features of FII? Analyse roles of inflow FII for an economy? Question (6 points): From your perspective, what are strong and weak points of ODA management in Vietnam? By researching important information and comparing when neccessary, analyse some important characteristic of ODA by a specific donors in Vietnam In your opinion, what can be done to improve the quality of ODA management in Vietnam? Question 1: What is Foreign Indirect Investment? What are specific features of FII? Analyse roles of inflow FII for an economy? - Foreign Indirect Investment (FII, also written as FPI – Foreign Portfolio Investment) is the purchase of stocks, bonds, and money market instruments by foreigners for the purpose of realizing a financial return, which does not - result in foreign management, ownership, or legal control Foreign indirect investment is characterized by basic features: + The investors not directly supervise the organization and executive management, as well as the use of capital However, in many cases, the distinction between direct investment and indirect investment is not clear +Foreign Indirect Investment is purely financial investment in international financial market Differing from the foreign direct investment, indirect investors inject capital into a host country without any commitments of transferring visible assets, technologies or education and management skills - Roles of inflow FII for an economy: + Increases the liquidity of domestic capital markets, and can help develop market efficiency as well: For the developing countries like Nepal, India and China, FII is an important source of capital and plays a significant role in boosting their economy and financial market It is one of the important mediums through which the companies in the developing country can get access to long-term capital for their growth Their presence improves the efficiency of the share market and increases the share price of the company The companies with FII improves in terms of financial and technological innovation, have good corporate governance and managed uncertainty, knowledge flows and are regarded as less risky investments by the general investors i.e they stimulate the growth of the company + Bring discipline and know-how into the domestic capital markets: The institutions with good governance and efficient functioning are vital for the economic prosperity of the whole country As the investment is done in foreign currency, it also helps to increase the foreign reserve of the country which in turn strengthens the domestic currency and makes export competitive, thus, supporting the domestic manufacturing industries Therefore, it has become a necessity for the government to devise strategic plans and policies to attract FIIs Some of those plans could include stable government policy, stable inflation and exchange rate, competitive rate of interest and sufficient money supply + Promote development of equity markets and the shareholders’ voice in corporate governance + Help the domestic capital markets introduce more sophisticated instruments and technology for managing portfolios Question 2: From your perspective, what are strong and weak points of ODA management in Vietnam? By researching important information and comparing when neccessary, analyse some important characteristic of ODA by a specific donors in Vietnam In your opinion, what can be done to improve the quality of ODA management in Vietnam? - Strong and weak points off ODA management in Vietnam: + Strong points: • The current mechanism of ODA management and use in our country is established on the basis of Decree No 17/CP dated May 4, 2001, of the Government The state management mechanism for ODA has been allocated to specific agencies and is quite clearly assigned to different departments Accordingly, the task of State management of ODA is assigned to agencies including the Ministry of Planning and Investment (MPI), Ministry of Finance, State Bank of Vietnam, Ministry of Foreign Affairs, Ministry of Justice, and the Government Office government • The management and use of ODA have contributed significantly to socioeconomic development, poverty alleviation, construction of infrastructure, distribution to change the face of the country in a positive direction: improve capacity , access and transfer the advanced science and technology, modern management methods, • The management of ODA for economic infrastructure such as transportation systems, electricity, water, irrigation, health stations, schools has had a spillover effect, leading to the development of the region and economic sectors, increase trade exchange between regions, so that the economic structure changes in a positive direction, increasing the proportion of industrial production and services; create many jobs, increase local revenue as well as improve people's income, contributing to sustainable poverty reduction + Weak points: • Mechanisms and policies on the management and use of ODA have not been implemented consistently and seriously, procedures are cumbersome, request-giving mechanism, unclear responsibilities, lack of coherence in internal coordination ministries and branches, between central and local governments and with donors o The management of ODA is still inadequate, there are also violations of the Government's and donors' ODA regulations, in particular, there are negative and corrupt incidents that affect the reputation of Vietnam Currently, the coordination between ministries, branches, and localities in the management of ODA projects is not synchronized and rhythmic The management stage is cut off, no agency is sure of the implementation of the project, unable to monitor the repayment of the project's debt o The organizational structure of the focal point on the management, coordination and use of ODA at all levels has not been uniformly built, scattered, and overlapped, causing difficulties for coordination and management both at the central and local levels o The financial reporting, payment, and settlement regime have not been strictly implemented and there is a lack of necessary sanctions in inspection and monitoring of implementation The aforementioned inadequacies have created loopholes for negativity and corruption to affect the reputation of Vietnam • The capacity to absorb ODA of the country, branches, localities, and specific projects is still limited, the ratio of ODA disbursement compared to the signed ODA capital is still low • The design of a number of ODA’s programs and projects are not close to reality, the allocation of ODA is still spread out and the time is long The integration of ODA with a number of national target programs is still overlapping o ODA programs and projects still focus on quantity, so the scope of investment is spread out over large areas, so it is not suitable for management capacity o ODA’s programs and projects only focus on the state economic sector, not distributed to other economic sectors such as collective economy, private economy o The preparation of ODA and concessional loan projects usually take 2-3 years, even more than years, leading to many projects that are no longer suitable and have to be adjusted, affecting the implementation progress • Lack of reciprocal capital for ODA programs and projects that have been signed with donors affects the project progress, due to the precarious disbursement plan, the arrangement of counterpart funds often encounters obstacles The loan disbursement speed is low and slow, reducing the preferential o The slow disbursement leads to the fact that the project is not completed on schedule, the works are slow to be put into use, cannot promote the efficiency of the original calculation, cannot meet the demand at the right time, sometimes The project must have adjustments in terms of objectives as well as implementation scale due to changing socio-economic conditions, causing waste of resources o On the other hand, the grace period is not fully enjoyed, in most programs and projects this time is greatly shortened In addition, the time to pay the commitment fee is long, so the actual efficiency of the project is generally low • The incorrect conception of ODA capital of some ODA beneficiaries both at the central and local levels leads to trying to take advantage of ODA without calculating economic efficiency, efficiency in using public investment, not pay due attention to the sustainability after the project and the ability to repay the debt Monitoring and evaluating have not been paid attention to all levels, especially the post-project evaluation is still left open • When considering the provision of ODA, donors often provide conditions to use consultants, contractors, and equipment provided for programs and projects (limited bidding or appointment of contractors), making the ability to control It is very difficult for the project owner, the cost of consulting activities is large, the cost of procurement equipment is high, affecting investment efficiency • Slow ground clearance for investment projects Most of the ODA- funded investment projects have had problems with immigration and ground clearance, and there are projects whose capital withdrawal period is about to end before the completion of site clearance (Vietnamese television station project) Migration and resettlement plans of projects are sketchy, lack of methodical research, and are not strictly implemented • Capacity of staff involved in state management of ODA at all levels, especially at the local level, staff directly involved in project management at the grassroots level are still weak in professional qualifications and management skills, foreign languages, and international cooperation experience Therefore, our country's reputation for donors in terms of the capacity to receive and use ODA is reduced, directly affecting the mobilization of this capital in the future • In the process of receiving and using ODA, many donors have not created conditions for us to promote our ownership role, there are manifestations of - imposing content, management methods, and funding conditions Some important characteristics of ODA by specific donors in Vietnam: Japan has always been the largest ODA donor to the Government of Vietnam, making significant contributions to the country's socio-economic development + Relevance of Policy: verify consistency with Vietnam's development plan, with Japan's ODA policy, and with international priority issues o Consistent with Vietnam's Development Plan o Consistency with Japan's ODA Policy o Consistency with international priority issues + Process of formulating and implementing aid policies: o Proactive commitment to a programmatic approach For example: In the medical field, Japan has supported the construction of the healthcare and medical care network through the referral system, that is, the establishment of a framework for coordination among frontline institutions ( commune and district level), middle level (provincial level) and end line (central hospital managed by the central government) o Apply loan projects in the form of STEP o Commitment to new support frameworks through partnerships with the private sector and local government: Partnership with the private sector, Cooperation with local government + Establishment of ODA-related Anti-Corruption Measures: o Strengthening clues to collect information on fraud and corruption o Strengthening provisions on sanctions against companies involved in fraud o o o o cheat and negative Propose JICA fraud/corruption prevention guidelines Policies to increase the legal compliance of companies Strengthening requirements with partner country governments Support for management development and management capacity building to prevent behavior fraud and corruption for the government of the partner - country Improve the quality of ODA management in Vitenam: + Properly aware of the nature of ODA with two closely linked to political and economic aspects, on that basis, exploiting the positive political and economic impacts of ODA for the development of the country In the context of being a middle-income country, Vietnam needs to clearly define the overall orientation on attracting and using ODA capital to serve as a basis for concretizing the guidelines and policies of the Party and State in the future in this resource mobilization; identify priority areas that need to use ODA capital to avoid spreading allocation, creating dependence, and not making efforts to seek other sources of capital + Increase reciprocal capital, especially reciprocal capital for site clearance and resettlement for construction investment projects To this, need to the following steps: o Determining the order of priority for investment in ODA projects associated with ensuring reciprocal capital sources for these projects; o Develop a systematic and methodical process and mechanism for synthesizing, allocating, and monitoring counterpart funds, especially capital allocated from the state budget to central agencies and supporting localities o Develop a medium-term plan on reciprocal capital on the basis of the medium-term investment plan for ODA capital o Strictly implement capital appraisal when appraising and approving program and project documents in the spirit of Directive No 1792/CT-TTg of the Prime Minister, ensuring that the project scale must be suitable with the capacity of the project arrange reciprocal capital of the governing body and the investor o Having effective solutions in mobilizing and using ODA capital as counterpart capital, restructuring the project portfolio to improve the efficiency of using ODA and reciprocal capital + Enhance the role of ownership and sense of responsibility of many governing agencies and project owners and promote transparency in the management and use of ODA, specifically: o Promote the role of mastery of development goals will avoid falling into dependence on aid, promote the spirit of autonomy, dynamism, and creativity to use ODA in a smart and effective way o Enhance the active role and responsibility of the state management agencies in charge of development aid, the governing agencies, as well as the beneficiaries in attracting, managing, and using ODA capital of donors is one of the requirements set out to ensure effective use of aid in the new context of cooperation o Encourage and advocate for the full active participation of social organizations, professionals, beneficiaries, or affected people from the project in the process of selecting, developing, and implementing the project The project aims to promote publicity, transparency, and accountability in the management and use of ODA funds of donors + Public-private partnership (PPP): A new way to attract investment and use ODA capital effectively Accordingly, the State should encourage the private sector to jointly invest in the State's public works or service projects using ODA as the core of implementation With the PPP model, the State will set standards for service delivery and the private sector is encouraged to provide by a payment- for-service mechanism The participation of all economic sectors and private enterprises in projects using ODA capital will further promote the effective use of this capital + Building a legal corridor and legal framework on the management of ODA in an asynchronous and transparent manner In the immediate future, in order to meet the requirements set out in the context when Vietnam has become a middle-income country, and at the same time, to manage and use ODA effectively, ensure the harmonization management processes and procedures with donors, maintaining the unified management and coordination of development funding sources, towards optimizing the use of these funds, should replace Decree No 132/2018/ ND-CP amends Decree 16/2016/ND-CP on management and use of official development assistance (ODA) and concessional loans with a new Decree in line with the current situation + Strengthen monitoring and evaluation of ODA capital to ensure debt safety Although the Government has made important efforts to improve the monitoring and evaluation system, the monitoring and evaluation of programs and projects at all levels has not been paid due attention, the reporting system has not been paid enough attention Financial reporting and settlement have not been seriously implemented and necessary sanctions are lacking In order to ensure sustainable debt safety before making decisions, it is necessary to further strengthen the supervision of the National Assembly, to point out the shortcomings in the use of aid by both domestic and foreign interest groups, donors support; analyze the advantages and disadvantages of ODA capital, thereby proposing recommendations to ensure its selective and effective use + Prioritize funding sources to support poor areas In relations with international Non-governmental organizations(NGOs), there should be close coordination between the Vietnamese government and NGOs, directing their aid to the poorest regions of Vietnam Governments need to take measures to improve this situation, such as making regulations for their activities by geographical area, making lists for programs and countries in the social sector such as a national program on employment, population and family planning, national program on rural clean water, and sanitation, national program on HIV/AIDS prevention and control, list of communes in poverty of the country to call the attention of donors + Improve project information and tracking Information is an important factor contributing to improving the efficiency of ODA management Complete and accurate information will be the basis for the management agency to make decisions Recently in Vietnam, information on ODA is often lacking and incomplete, causing many difficulties for government agencies in ODA management It is urgent to establish an effective information system on ODA, which should clearly reflect the following issues: o Action strategy, cooperation basis, ODA procedures and procedures of each donor State the characteristics, principles and laws of each aid partner o International treaties on development cooperation, regulations that our government has signed with donors to ensure consistent implementation of these documents o Information on ODA commitments of donors, the government's strategic priority orientation for using ODA, ODA disbursement by specific sectors, regions and fields o Informationonthesystemoflegaldocuments,regulationsandregulations in the management and use of ODA, instructions on procedures for a specific ODA project ... funding sources, towards optimizing the use of these funds, should replace Decree No 1 32/ 2018/ ND-CP amends Decree 16 /20 16/ND-CP on management and use of official development assistance (ODA) and concessional... ODA management and use in our country is established on the basis of Decree No 17/CP dated May 4, 20 01, of the Government The state management mechanism for ODA has been allocated to specific agencies... collective economy, private economy o The preparation of ODA and concessional loan projects usually take 2- 3 years, even more than years, leading to many projects that are no longer suitable and have to