Post on 26-Mar-2015
IS IT DIFFICULT FOR VIETNAM TO ATTRACT CAPITAL
FROM TNCS?
GROUP MEMBERS
1. NGUYEN THI THANH TRA BAIU080762. LUONG KHANH NHU BAIU081023. DOAN THI HUONG THAO BAIU08155
SOCIAL & POLITICAL STABILITY
Political and social stability is the first
most important requirement,
determined on the attracting TNCs.
Under the leadership of the Party, the
management of the state, Vietnam is
considered to be one of countries
with political stability and high
economic conditions, no potential
conflict of religion and ethnicity.
That is the basic condition to ensure
the development of economic
external and attract the attention of
foreign investors in general and TNCs
in particular.
EXPANSIVE AND POSITIVE FOREIGN POLICY
The expanded foreign policy of Vietnam:
promote the implementation of strategies toward
the opening of export
expand the cooperation of foreign investment.
With the motto "Vietnam would like to make
friends and reliable partner of all countries
in the international community", Vietnam was
a 7th member of ASEAN from July 28, 1995, joined
APEC in November 1998, the first member of
ASEM and member of the WTO from July 11, 2006.
Currently, we have established
diplomatic relations with more
than 170 countries, trade
relations with more than 100
countries and territories and
receive investments of nearly
80 countries. Major expansion
of economic relations of the
Party and State have created
necessary conditions to attract
and facilitate foreign
investment of TNCs.
COMPARATIVE ADVANTAGES
Vietnam has natural conditions and
geographical location particularly convenient.
Located at the center of Southeast Asia with long seashore.
Air routes and maritime world are very close to Vietnam.
Vietnam has extremely diverse resources and ranked seventh
among 15 countries richest of resources in the world.
Large labor resource
5
- 97% Vietnam's enterprises are small and medium
enterprises (SMEs), registered capital is no more than 10
billion and 300 employees scale
- The speed of technological innovation in most enterprises
is still too slow:
Ex: Thailand: 30%
Malaysia: 51%
Singapore: 73%
Vietnam: 2%
=> too low
- Investment activities for science and technology of
Vietnam’s enterprises are still low.
Capacity of Vietnam partners still be limited:
- STILL USE OUT OF DATE TECHNOLOGY. MOST COMPANIES
HAVE BEEN USING THE TECHNOLOGY IN THE 80S OF THE
LAST CENTURY AND THE RESEARCH AND TECHNOLOGY
INNOVATION CAPACITY ARE VERY LIMITED
- 80% - 90% OF THE TECHNOLOGY IS IMPORTED (LAG FROM
2-3 GENERATIONS)
- GENERALLY FOR THE BUSINESS, THE LEVEL OF EQUIPMENT:
10% MODERN
38% AVERAGE BACKWARD
52% VERY BACKWARD
=> IT IS DIFFICUT FOR VIET NAM TO ATTRACT
CAPITAL FROM TNCS.
THE MARKET ECONOMIC IS STILL
SIMPLE
- Market with goods and services have established but still
had so much negative phenomena (fake, smuggled goods,
counterfeit brand goods make market turmoil).
- Labor market has appeared. Some referral centers for
work and labor export appears leading to the arising
negative phenomena and many crises. A highlight of this
market is the supply of skilled labor is smaller than
demand.
- Monetary market and capital market have been set up
but still a lot monitoring.
- High inflation
INSTITUTIONS AND LAWS ALSO HAVE MANY DISADVANTAGES
Transparency, consistency and stability of law is the greatest
disadvantage, and also the requirement of foreign investors
The lack of transparency of law a gap for abuse of power in
society and causing trouble for investors
The lack of consistency and stability of law unpredictable
changes in business
INSTITUTIONS AND LAWS ALSO HAVE MANY DISADVANTAGES
The legal document lack of consistency in content and
implementation. Many of content also stop at the general and
have no specific instructions.
Some central agencies and local governments voluntarily
issued documents contrary to law or not law enforcement
TECHNICAL INFRASTRUCTURE IS NOT HIGH
Infrastructure in Vietnam is not suitable with developed
economic needs about expenditure and quality
It has been improved in recent years still level average in
the area
The transportation cost of Vietnam is still expensive in the area
Traffic density in Vietnam only equal 1% of average one of the
world
TECHNICAL INFRASTRUCTURE IS NOT HIGH
Material infrastructure use a lot of capital and national budget
is essential.
Material infrastructure is lack of competing.
The reasons:
Participation of private company limits.
Managing and trading in material infrastructure pay
attention some national companies.
SUMMARY When Vietnam promulgated law on foreign investment:
The investable way of TNCs is better.
Some results of Vietnam :
Attract FDI capital of total investable capital ,some projects ,investors
---- >increasing and developing economy
However ,there are many reasons why make investable
environment unattractive.
------ > to attractive FDI capital of TNCs-----> Vietnam
needs global and consistent solutions.
At now we are still difficult to attract foreign investment
But when we point out the advantages and disadvantages of Vietnam as above, it’s easier for us to adapt with the invested requirements
Vietnam should have flexible policies to attract TNCs in short-term (industrial zones, economic activities…) and in long-term (public infrastructure, government’s military…)