Attracting and Implementing FDI Capital in the Period 2001

[ 10] , then almost continuously decreased sharply, but the trade deficit ratio of the whole year was still at a record high in more than a decade.

In short, it can be affirmed that the high trade deficit rate is determined by many factors, but among them, the special fluctuations in world prices leading to reversals in import and export are particularly important causes.

Protectionist actions in major markets

When the economy was under pressure from the consequences of the US financial crisis, it also meant that governments of countries had to quickly implement tighter policies and laws to protect the domestic market. However, this reduced trade relations between countries in the world. For Vietnam, 2009 was an extremely difficult year for import and export activities when new policies and regulations from the US and EU appeared on a number of imported goods to these two markets. Protection measures such as anti-dumping and self-defense subsidies were also established and Vietnam's three main export items to the US - including textiles, wooden furniture and seafood - were the first cases to be applied.

 Farm Bill 2008: "Food, Conservation and Energy Act of 2008" - of the United States was passed by the US Congress on June 18, 2008. The content of the law stipulates the continuation of agricultural programs and other programs of the US Department of Agriculture (USDA) until 2012. The scope of this law is very broad, including provisions to restrict the import of Vietnamese pangasius and put pangasius on the list managed by the USDA. The production process and quality standards are also more stringent. Accordingly, all types of catfish imported from abroad must have a certificate of processing techniques. The production process and quality control regime must be equivalent to the current US standards that the Department of Agriculture is applying. Currently, the demand for seafood imports into the US is about 12 billion USD/year and Vietnam's exports to this market only account for 5-6%. However, this is still a large seafood export market for our country, so any move on US technical barriers will have a significant impact on the industry. Regarding wood and wood products, the 2008 Farm Bill has provisions to prevent illegal logging activities. Specifically, section 8204 stipulates:

“ In interstate and foreign commerce, it is prohibited to import, export, transport, sell, or purchase any plant that has been cut, harvested, possessed, transported, or sold in violation of any law or regulation of any state or foreign law governing the protection or management of plants or the taxes and fees associated with the exploitation of plants .” This provision also requires businesses exporting products to the US market to prepare complete records and documents related to the origin of exported raw materials, as well as export value, and other documents related to the products of businesses providing to importers. In addition, the 2008 Farm Bill also regulates the use of labor in the production of agricultural products exported to the US. Therefore, if businesses do not ensure labor and use labor in violation of international regulations on the use of child labor or forced labor, those goods will not be imported into this country.

 The Lacey Act in the US was enacted in 1900, supplemented on May 22, 2008, regulating tighter control of the origin of wood products and the agreement "Strengthening Forest Law Enforcement, Governance and Timber Trade" - FLEGT in the EU stipulates that all shipments exported to this market must be licensed by the competent authority after checking the legality of the shipments through original evidence. Thus, if the crisis in the US starts from the real estate market, causing a serious decline in demand for wooden furniture in these markets (Vietnam's wooden furniture export turnover to the US decreased by 300 million USD/month); then in the coming time, this tighter quality barrier will cause many difficulties for Vietnamese wood enterprises.

 Trade barriers in the US textile market: in 2009, the US textile industry proposed that the Government expand the textile monitoring program to China. This could lead to an anti-dumping investigation on US textiles in the near future. Specifically, the US textile monitoring mechanism applied in Vietnam is likely to be extended after 2 years of implementation (from December 31, 2006 to December 31, 2008). Although the monitoring results in the past two years have not shown evidence that Vietnamese textiles are being dumped into the US market, causing damage to the domestic manufacturing industry,

However, domestic manufacturers believe that this result is due to the effective operation of the Monitoring Mechanism and should continue to be maintained. On the other hand, if the United States sues against the price-gouging of Chinese textiles, Vietnamese textiles will likely be implicated, that is, included in the defendant list along with other countries. In addition, China - the largest textile export market to the United States has had its quotas removed according to WTO commitments on January 1, 2009. Accordingly, Chinese textiles will have the opportunity to penetrate deeper and dominate this market in the near future.

Since the global recession broke out, there have been about 47 countries in the world supporting the implementation of trade protectionism to protect the domestic economy and fight against imports. Besides the US and EU, typical cases include: India increased the import tax rate on soybean oil to 20% to protect domestic farmers when the world price of cooking oil is falling sharply. Indonesia restricted the import of at least 500 items, requiring importing businesses to have a special license and pay a new fee. Russia increased the import tax rate on cars, pork, poultry and is planning to increase the import tax on agricultural equipment. In South America, the import tax rate on wine, textiles, footwear, fruits, etc. has also been adjusted up in Argentina and Brazil.

Although the scope of these protectionist moves is relatively small, and most of the domestic protectionist measures that countries have introduced remain within the limits of international trade rules, the general trend towards protectionism can erode the gains of free trade in globalization and cause many difficulties for export-based economies like Vietnam.

Some other difficulties in import-export businesses

- Due to the effects of the global financial crisis, Vietnam's export market is shrinking sharply. Export orders (textiles, cashew nuts, wooden furniture, etc.) to the US and EU have decreased by 20-30%; some signed contracts have been postponed or stopped altogether.

- The State Bank's decision to tighten credit in 2008 caused difficulties for importers. In 2008, the Vietnamese banking system implemented a tight monetary policy to control inflation, stabilize the macro economy and ensure social security.

association. By the end of the year, the State Bank increased the basic interest rate 3 times and decreased it 5 times. The refinancing interest rate and rediscount interest rate also had similar adjustment frequencies. The exchange rate management mechanism recorded unprecedented adjustments in history. The band was widened 3 times, from +/- 0.75% to +/- 3% [23] . It can be affirmed that this is a necessary step for Vietnam's long-term economic growth. However, in the short term, increasing bank interest rates will increase production and business costs. When businesses cannot transfer this cost into selling prices, they will face many difficulties, leading to losses, having to reduce business scale, or gradually losing liquidity.

- The issue of VND loans for production and business still has many shortcomings, especially for agricultural and aquatic products. In 2008, although loan interest rates have decreased, they are still high at 17-18%/year. This increases costs, affecting the competitiveness of export goods. In the general difficult situation of the world, with high interest rates like today, businesses will be uncertain about their profitability. In fact, some small and medium enterprises have had to reduce production scale, even stop production. Many businesses have borrowed money at high interest rates to purchase agricultural products for processing and export, but are not able to cope with market difficulties, so they have to sell off export goods at cheap prices to collect money to pay off bank loans.

However, besides the difficulties due to objective conditions, Vietnam's import and export still has the following advantages:

 In 2008, Vietnam ranked fifth among 20 emerging markets in terms of attractiveness in attracting foreign direct investment. In 2008, the amount of FDI capital poured into our country was 64 billion USD, 3 times higher than in 2007; of which the amount of capital realized was 11.5 billion USD, an increase of 43.2% compared to 2007 [12b]

Table 2.7: FDI attraction and implementation in the period 2001 - 2008

Unit: Billion USD

2001	2002	2003	2004	2005	2006	2007	2008
FDI attraction	3.14	3	3.2	4.5	6.8	12	21.3	64
Perform	1.98	2.27	2.47	2.64	3.2	4.1	8.0	11.5

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Source: Vietnam Trade Information [12b]

This will be an advantage and opportunity for Vietnam's exports to escape from immediate difficulties . Directly, FDI contributes to increasing total investment capital, increasing export turnover, creating jobs for workers, contributing to budget revenue and stabilizing the national economy. Indirectly, FDI will impact Vietnamese enterprises through four main channels; creating competitive pressure in the market, thereby forcing domestic enterprises to innovate in technology investment; transferring labor from FDI enterprises to domestic enterprises; transferring technology to domestic enterprises; linking FDI enterprises and domestic enterprises to produce products.

 Vietnam's exports are mainly raw materials, agricultural and forestry products and low-value essential goods. These groups of goods are not affected as much when demand decreases as other groups of goods. The negative impact of the financial crisis reduces consumer demand, which means that people will save on spending on luxury goods and the demand for average goods increases. Therefore, our country's exports are not completely difficult because large US distributors have begun to have large orders or import needs to supply average stores. For example, with seafood products, previously Vietnam's exports to the US were usually tiger shrimp, but now people have changed their habits from tiger shrimp to white-leg shrimp because of the cheaper price. With such developments, depending on each industry, businesses can still promote their strengths in combination with changing direction to suit consumer tastes.

In addition, the advantages of political and social stability, the economic growth rate remains optimistic , and the Government's proactive support measures for businesses are also important advantages that help exports gradually escape the global crisis.

CHAPTER III. SOME SOLUTIONS TO PROMOTE IMPORT AND EXPORT ACTIVITIES IN VIETNAM IN THE CONTEXT OF THE US

I. FORECAST OF VIETNAM'S ECONOMY AND GOALS AND DEVELOPMENT ORIENTATION OF VIETNAM'S IMPORT-EXPORT ACTIVITIES FROM NOW TO 2010

To propose solutions to promote Vietnam's import and export activities during the US financial crisis, the thesis is based on the current situation of import and export activities mentioned in Chapter II, forecasts about the economic situation of our country and orientations for import and export from now to 2010.

1. Forecast of Vietnam's economic situation from now to 2010

Since 2008, there have been many forecasts made about the situation and recovery of the world economy in the period of 2009 - 2010. Although there are differences in numbers, the reports have one thing in common when predicting a sharp decline of the global economy in this period.

According to the International Monetary Fund (IMF), the entire world economy will decline. Accordingly, the output of developed economies will decrease by 3-3.5% in 2009 and will only be able to grow by 0-0.5% in 2010. The Japanese economy is forecast to decline the most (down 5.8%), followed by the Eurozone (down 3.2%) and the US (down 2.6%). Developing and emerging countries are forecast to grow by only 1.5-2.5% in 2009.

For Vietnam, according to the Asian Development Outlook 2009 Report of the Asian Development Bank (ADB), Vietnam's growth rate could reach 4.5% in 2009 and 6.5% in 2010. This is ADB's second forecast for Vietnam and a decrease from the previous forecast of 6.5% in 2009. However, compared to the general forecast for the Southeast Asian region of 0.7% - the lowest level compared to other regions; 4.5% in 2009 is still a positive forecast. Forecasts for other countries in the region such as Singapore, Thailand, Brunei, Malaysia are -5%, -2%, -0.4%, -0.2% respectively. The forecast of 6.5% in 2010 is the highest growth rate in the ASEAN region.

Table 3.1: Forecast of Vietnam's economic growth rate in 2009

ADB	IMF	WB
Forecast 1	6.5%	5%	6.5%
Forecast 2	4.5%	4.75%	5.5%

Source: Vietnam Chamber of Commerce and Industry

Table 3.1 shows that the latter forecasts are lower than the previous forecasts because the consequences of the financial crisis are still not fully understood at this point. The extent and duration of the recession are unclear, making it difficult to determine its impact on economies. In addition, depending on each country, when governments decide to introduce additional stimulus packages, as well as other measures to promote growth, these figures may still be higher or lower depending on the effectiveness of these measures.

According to ADB, Vietnam's average inflation in 2009 will decrease to 4% because world commodity prices are expected to be much lower than in 2008. This figure will increase to 5% in 2010 due to loose monetary policy, slight increase in world commodity prices and growth recovery. The fiscal deficit will increase to 9.8% of GDP due to the decline in oil revenue, reduction in corporate income tax, slower growth and especially increased budget expenditures from financial stimulus measures. The current account deficit will increase to 11.5% of GDP in 2009. However, in the medium term, Vietnam will have a good recovery with growth at 7 - 7.5% due to strong FDI inflows. The report also affirmed that the short-term challenge for Vietnam is to limit slow growth while still controlling the budget and current account deficits. The Vietnamese government needs to accelerate economic reforms and further open up the economy in line with its WTO commitments to ensure investor and public confidence. These policies will ensure continued foreign direct investment flows into Vietnam.

In short, with active measures to save countries from the crisis, 2010 is predicted to be the year the economy will enter the orbit of recovery. The speed of recovery depends entirely on each country as well as the level of impact of the crisis on that country. As for Vietnam, the country ranked by the IMF among the emerging economies in the ASEAN-5 group (Indonesia, Thailand, Malaysia, Philippines, Vietnam), it is less affected by the financial crisis. Economic growth reached 6.23%, although it is the lowest compared to the growth rate of over 8% in the past decade, but it is still considered high and not pessimistic in the general trend of the world. Although in 2009 the difficulties are predicted such as a large decline in exports, inflation of 5-6%, and risks of macroeconomic instability in the context of the global recession; However, since 2008, the Vietnamese Government has taken many active measures to prevent economic recession in order to promote the re-growth of agriculture, handicrafts, processing industry, etc. - such as a 6 billion USD stimulus package, interest rate support, tax exemptions, bond issuance, foreign loans with government guarantees, etc. With these advantages, our country's economy is fully capable of recovering by the end of 2009 and early 2010. This is the forecast with the earliest recovery time in the East Asia region.

2. Goals and orientations of Vietnam's import-export activities from now to 2010

2009 is predicted to be a very difficult year for Vietnam's import and export activities, especially export activities. Commodity prices will decrease, while raw material prices will not decrease; fierce competition for global market share and the risk of becoming a place to consume goods that cannot be exported to other markets produced by China and ASEAN countries will become factors that not only pose great challenges to exports but also increase the trade deficit sharply. Therefore, the intervention of the Government to regulate the market is an important task to help the Vietnamese economy in general and import and export activities in particular stand firm in the context of global recession.

The report of the Ministry of Industry and Trade on the general direction and objectives of import-export activities in 2009 - 2010 clearly stated: