Current situation and solutions to attract foreign direct investment in Vietnam's tourism industry

directly participate in the operation and management of the objects in which they invest. For example, in Vietnam, Article 8 of the Law on Foreign Investment stipulates: "The minimum capital contribution of the foreign side must be equal to 30% of the legal capital of the project" (Except for cases prescribed by the Government).

 The right to manage and operate an enterprise with FDI capital depends on the capital contribution. The higher the foreign capital contribution ratio, the greater the right to manage and make decisions.

 The income of investors is not a fixed annual income but depends on the use of investment capital.

 Through FDI, the host country can receive advanced technology and techniques, and learn management experience - goals that other forms of investment cannot solve.

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 FDI capital is used according to the purpose of the foreign investor within the framework of the Foreign Investment Law of the host country. The investment receiving country can only indirectly direct the use of that capital for certain purposes.

3. Forms of FDI.

Currently there are 3 main forms of FDI in Vietnam.

100% foreign-owned enterprise: is an enterprise owned by foreign investors established in Vietnam by foreign investors who are responsible for management and business operations.

Joint venture : This is a form of international business organization of participants of different nationalities, on the basis of joint ownership of capital contribution, joint management, joint distribution of profits, joint risk sharing to conduct production and business activities, service activities or research activities including basic research and development research according to the terms of commitment in the joint venture contract signed between the participating parties in accordance with the legal regulations of the host country.

Business cooperation contract : is a document signed between two or more parties to conduct business investment in Vietnam, which stipulates responsibilities and division of business results for each party without establishing a new legal entity.

In addition, there are some special forms of 100% foreign investment applied to technical infrastructure construction projects, such as Build-Operate-Transfer (BOT) contracts; Build-Transfer-Operate (BTO) contracts; Build-Transfer (BT) contracts. These forms operate according to the Law on Foreign Investment in Vietnam 1996, amended in 2000, stipulated in Article 19.

4. The role of FDI.

4.1. For the investor country:

 Improve the efficiency of capital use: Most of these countries are developed industrial countries and now some are newly industrialized countries (NICs). In these countries, the level of development has reached a fairly high level, causing the extensive production factors to lose their original meaning, accompanied by the phenomenon of relative surplus of domestic capital. By investing abroad, they have used the advantages of the host country to reduce production costs, lower product prices, and improve the efficiency of capital use to overcome the situation of the profit rate that is tending to decrease.

 Extending product life cycle: According to the product life cycle theory, through FDI, the host countries have moved a part of industrial production, mostly machinery in the aging stage or at risk of rapid invisible depreciation (in the trend of technological development and innovation, products are increasingly shortened) to less developed countries to continue using, extending the product life cycle, or to quickly depreciate, as well as to increase production and consumption, helping to recover capital and increase profits.

 Exploiting raw materials in the investment receiving country: FDI will create opportunities for these countries to expand and stabilize the market for supplying raw materials at controlled prices through investment in industries and exploiting natural resources of investment receiving countries, which are slow and developing countries.

 Creating position and power in the international arena: FDI helps host countries increase their economic strength and enhance their political prestige in the international arena. Through building production plants and consumer markets abroad (especially in areas with "bridgehead" value to penetrate and expand potential markets), host countries can expand their consumer markets, avoid trade protection barriers in other countries, and can also influence the political life of the host country through economic influence, which is beneficial to the host country.

4.2.For the investment receiving country:

First of all , FDI adds capital for development.

In the early stages of economic development, developing countries are short of investment capital due to low or no internal accumulation, so they need external capital to supplement their development investment capital. The type of FDI does not stipulate a maximum level of capital investment but only a minimum level, thus allowing host countries to exploit external capital sources, increasing resources for economic growth and development.

Second , FDI promotes technology transfer and learning of management experience.

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For developed countries, FDI contributes to supplementing and perfecting technology. For developing countries with low and backward technology levels, FDI is considered an effective means to import higher-level technology from outside through different channels:

 Importing higher level technology through purchasing patents

Innovate and improve imported technology to become suitable technology for oneself.

(like Japan and South Korea). This path helps countries create a foundation

own technology platform and reduce dependence on foreign technology.

 When implementing an investment project in a country, foreign investors not only transfer capital in cash but also transfer physical capital such as machinery, equipment, raw materials and intangible capital such as technology, scientific knowledge, management know-how, market access skills... as well as bring in foreign experts or train local experts in those fields. This allows the recipient countries to not only simply import technology, but also master the skills of operating principles, repairing, simulating and developing it, quickly accessing modern technology even when the national technology foundation has not been fully established.

Third , FDI contributes to the development of domestic and international division of labor.

improve economic efficiency and expand the market for the investment-receiving country. Attracting FDI allows the investment-receiving country to participate more widely and deeply in the international division of labor (especially when the foreign-invested enterprise is a branch of a large multinational corporation in the world) and domestically (through the development of satellite enterprises of foreign-invested enterprises). Moreover, with experience, technology, and capital from FDI, FDI-receiving countries will be able to take advantage of and promote their advantages in terms of resources, geographical location, and labor resources... Especially thanks to the available consumption channels of foreign-invested enterprises, thanks to the improvement in the quality and list of domestically produced export goods with the help and promotion of FDI... FDI-receiving countries have the conditions to access and expand the international market, as well as immediately expand the domestic market.

Fourth , FDI promotes economic restructuring towards industrialization and modernization.

By transferring technologies and production sectors that have lost their competitiveness.

war in the mother country, but still new and quite modern for the host country

investment, FDI contributes to improving the economic structure of the country receiving investment in the direction of

Industrialization, modernization and internationalization.

Fifth , FDI has a positive impact on the international balance of payments.

If we consider FDI in relation to other foreign capital sources such as international credit, international securities, official development assistance (ODA)... then FDI allows developing countries to avoid debt burden, is less risky, and therefore has a positive impact on the balance of payments in the short term.

Sixth , FDI partly solves unemployment and helps increase workers' income.

Through FDI, the investment goal of transnational companies is to earn high profits and seek new markets, consolidate their position and maintain their competitiveness in the international arena. These companies pay special attention to taking advantage of cheap labor resources in the countries receiving investment. Through the creation of new enterprises or increasing the scale of existing enterprises, FDI has created jobs for a large number of workers, especially for many developing countries where there is an abundant labor force, but lacks capital to exploit and use. Experience in other countries shows that FDI in export manufacturing industries will create more jobs for workers. In parallel with creating more jobs, FDI also increases workers' income because wages paid by foreign-invested enterprises are often higher than those of domestic enterprises, contributing to raising the domestic wage level.

II. VIETNAM'S VIEWPOINTS AND POLICIES ON FDI ATTRACTION.

1. Vietnam's perspective on attracting FDI.

1.1. Correctly assess the position of FDI in the national economy.

FDI is a component of the entire investment activities of the country in which domestic capital, considered as a whole, has a decisive significance. FDI cannot replace

can replace other investment sources but has its own strengths. In the coming years, when the accumulated capital from within the economy is still limited and ODA sources are insignificant, FDI holds an important position in the national economy.

In the process of attracting FDI, we should avoid underestimating or even condemning FDI as a harmful factor to an independent and autonomous economy. FDI in Vietnam is a country with independence and sovereignty, with laws that must be governed by Vietnamese law and the inspection and supervision regulations of state management agencies. FDI cannot be a factor that causes deviation if we have the right strategy and good management measures.

Although many countries in the world consider FDI as a golden key to economic growth, we should not have any illusions about the “magic” of FDI, assigning it a natural positive role regardless of the country’s internal conditions. We should not rely on FDI but should pay attention to exploiting internal advantages to the fullest. FDI holds an important position in the national economy but is not a decisive source of capital for socio-economic development.

1.2. The “open” and “protective” perspectives

Opening up is necessary to attract foreign direct investment, which is consistent with the trend of economic internationalization. The "opening up" viewpoint is a consistent long-term viewpoint, however, "opening up" must have a certain extent, "opening up" but not forgetting the necessary "protection" measures for political, economic and social security. The protection is implemented through a system of laws, legal corridors, mechanisms, and policies that specifically regulate the fields of investment, investment forms, and regulations on business operations. However, the "protection" is only temporary and will change over time. Along with the trend of internationalization of the world economy, the protection measures will be gradually reduced.

1.3. Reasonable settlement of relationships between parties in the investment cooperation process.

Considering the needs, capabilities and advantages of each party, investment cooperation between our country and foreign countries is essentially finding a "meeting point" of interests to jointly produce and do business on the principles of agreement, voluntariness, equality and mutual benefit. Equality here does not mean equal, but equality on the basis of properly determining the interests of each party in accordance with comparative advantages, in accordance with the correlation of needs and capabilities of this party and the other party in cooperation, with the option to compare the price to be paid to other partners with the same goal and at the same time, taking into account the conditions of the investment environment.

1.4. Put socio-economic benefits first in the investment process.

From the investor's perspective, the highest efficiency is the profit. Therefore, foreign investors and sometimes Vietnamese investors are only interested in the profit. Meanwhile, the State encourages more or less an FDI project to bring about socio-economic efficiency (creating jobs, contributing to creating a reasonable industry structure...). Therefore, when evaluating an FDI project, it is necessary to put socio-economic efficiency first and consider it as the basic direction of investment incentive measures.

1.5. Diversify investment forms and methods.

Since the Law on Foreign Investment was issued in 1987, FDI into Vietnam has been implemented in three main forms: joint ventures, business cooperation contracts and 100% foreign-owned enterprises. In the early years, the discrimination between these three forms of investment was quite clear: joint ventures were given more incentives than the other two forms, while business cooperation contracts were only allowed in certain fields. Up to now, this discrimination has been gradually eliminated. The Law on Foreign Investment 1996, amended in 2000, gives equal incentives to both forms of investment: joint ventures and business cooperation contracts.

Regarding investment methods, the establishment of the export processing zone investment method in 1991, the legalization of export processing zones in 1992, the establishment of the industrial park investment method in 1994, the legalization of export processing zones, industrial parks and high-tech parks in 1996 demonstrated Vietnam's view of diversifying investment methods. In the field of infrastructure investment, the establishment of the BOT (Build-Operate-Transfer) investment method in 1992 and two investment methods BTO (Build-Transfer-Operate), BT (Build-Transfer) in 1996 also created many advantages for foreign investors.

2. Vietnam's FDI attraction policy.

2.1. On investment fields and forms.

According to current regulations, foreign investors are allowed to invest in Vietnam in most sectors of the economy (except for projects related to security and defense) and in the following forms: Business cooperation contracts, joint ventures or 100% foreign-owned enterprises. The Government has also issued separate regulations to attract foreign investment in industrial parks, export processing zones, high-tech zones, investment under BOT, BTO, BT contracts with specific incentives. In addition, foreign-invested enterprises in Vietnam are also entitled to take the initiative in reorganizing their enterprises in the forms of separation, merger, consolidation of enterprises, and conversion of investment forms to create more flexible mechanisms to suit business conditions.

2.2. On investment incentives and guarantees.

These are issues that foreign investors are often concerned about and also reflect Vietnam's viewpoint in attracting foreign investment, including:

 Financial incentives:

 The common tax rate for corporate income tax is 25%, preferential tax rates are 20%, 15%, 10% and can be exempted for up to 8 years for