Domestic Economic Environment and Competitive Position of VNPT

In addition to the internal relationship backlog, currently, joint ventures with foreign countries at VNPT also have the following problems:

In the labor structure of joint ventures, the labor force has qualifications.

The number of universities or higher education institutions is relatively large. However, the organization of Research and Development (R&D) departments is still weak, and functions are not clearly defined, so the strength of highly qualified staff cannot be promoted.

There are no regulations defining the rights and obligations of the management staff that VNPT sends to work in the joint venture as well as the staff participating in the Board of Directors.

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Although VNPT has issued regulations on the consumption of industrial products within VNPT, the problem of consuming products of joint ventures still faces many difficulties. The bidding and approval process of projects is prolonged, so the companies are not proactive.

actively build their long-term business production plan.

With the current level of investment, after the joint venture expires (except for cable manufacturing companies) and especially when our economy integrates with the regional economy in 2006, the switchboard manufacturing joint ventures will not yet be in control.

Fully engineered product manufacturing both hardware and software.

The cost of joint venture products is still high, even higher than some similar products on the world market. This causes significant damage to Vietnam.

With the current level of product consumption, joint ventures only exploit 50-60% of equipment capacity, domestic market share is not enough to convince partners to invest in equipment and in-depth technology. In addition, the problem of creating regular jobs for workers is facing many difficulties.

The current import tax on telecommunications equipment by the State does not protect domestic manufacturers and does not encourage investors to increase the proportion of products and production in Vietnam. Some university joint ventures are recognized by the Ministry of Science, Technology and Environment as High-Tech Enterprises, but still do not enjoy the 0% import tax regime on input materials because the concept of input materials by the State has not been clarified...

Export activities of joint ventures are still very weak. In recent times, except for Vinadaesung joint venture, other joint ventures have not yet fully exploited the designed capacity of the production line while the joint ventures

The joint ventures have not paid due attention to product export activities, the total export value by the end of 1999 was only about 10 million USD, not commensurate with the potential and scale of the joint ventures. Promoting export activities is one of the important directions that joint ventures focus on if they want to further improve the efficiency of their operations.

The profits of joint ventures are generally unstable over the years and between joint ventures. In 1996, the total profits of the joint ventures reached their highest level (4.6 million USD), but in 1997, with the establishment of two new joint ventures, at the same time the Vietnamese and regional economies entered a period of crisis, so the total profits of the joint ventures were negative. Among the joint ventures, excluding the newly put into operation, only the Vinadaesung joint venture operated stably and most effectively. The other joint ventures operated unstablely, with losses in some years and losses in other years, and financial efficiency did not meet requirements.

The disbursement and investment speed of some BCCs, especially intra-provincial BCC projects, is still slow.

The actual amount of capital invested in the network depends on the speed of disbursement of investment capital sources committed in the contracts. In general, BCC projects are disbursed slowly, especially intra-provincial BCC projects, which only disburse 40%.

- 50% of investment capital is committed according to progress. Slow investment progress will limit VNPT's actual investment capital attraction results and affect the overall efficiency of operations.

FDI activities.

The financial efficiency of FDI projects (except for two projects BCC - VTI and BCC - VMS) has not met requirements.

The BCC projects are in the early stages of development, but there are signs that they are unlikely to deliver the performance forecasted in the contract.

The agreement was signed. This situation has reduced the confidence and enthusiasm of the

partners, affecting the investment process and project implementation.

2.3.3. Causes limiting the benefits of FDI projects

2.3.3.1. Subjective causes from VNPT side

Finding out the causes leading to limitations in the benefits of the activity

FDI activities to provide remedial directions are very important. This will

closely linked to the performance of projects and affecting the investment calling environment in the entire Vietnam Post and Telecommunications industry.

On VNPT side, there are some problems that directly affect the operation of the projects. Some of those problems are mentioned as follows:

First : Joint venture and BCC contracts are not signed tightly:

+ The form and content of the agreement in current BCCs do not specify the partners' ability to participate in business activities. BCC is a form of cooperation that does not establish a common legal entity, and the partners do not participate in project management. Specifically, the parties do not bind each other in terms of responsibilities such as investment disbursement, implementation of commitments and project business efficiency. The contract also does not foresee all possible scenarios, so both parties are often very passive when major problems arise.

+ Some joint venture contracts signed in previous years have not specified the technology transfer as well as the rights and obligations of the parties involved in the technology transfer activities, leading to foreign parties finding ways to delay the obligation to transfer technology to Vietnam.

+ Previous FDI projects often forecast lower demand than actual demand while recent FDI projects, especially local BCC projects, forecast demand too high compared to market developments. This situation often causes projects to have to be negotiated and readjusted during implementation, affecting VNPT's overall development plan.

Second : VNPT has a policy of purchasing too many products from joint ventures, which leads to the phenomenon of these joint ventures relying on the Vietnamese market. Some joint ventures intentionally push the selling price of products higher than the allowed level. As a result, there are products with prices higher than the selling price in foreign countries, causing the situation of still having to import the same type of domestically produced products.

Third : The issue of staff management, the qualifications of the staff assigned to participate in the management of university joint ventures are underestimated, the staff do not have enough capacity, appropriate knowledge... leading to the foreign side completely manipulating the production and business system in the joint ventures. Training activities of the projects have not really been focused on:

+ The quality of the course content is not yet commensurate with the university experience accumulated by the partner. The support of the partner in improving project management and business, increasing competitiveness has not been utilized.

+ VNPT units have not focused on and proactively learned and grasped technical and management technology in cooperation, and have not had a specific plan to take advantage of the support from partners. The units have not yet expressed their need for support and are not ready to accept changes in organization and management processes proposed by partners. The role of partners is limited (mainly arranging investment capital), so the influence of partners in investment, business and project management activities is not much.

Fourth: The organizational model for managing intra-regional BCC projects is not appropriate. The organizational model for managing intra-regional BCC projects has not yet specified the authority and responsibility of VNPT and its member units when implementing the project, so it has not stimulated the units to increase their initiative and responsibility in the process of cooperation and work implementation. This model also delays the investment process for project implementation and the implementation of business activities and service expansion of the project.

Fifth: Currently, the regulations on investment and bidding are still very complicated. In particular, the time for preparing and submitting projects for approval often takes a lot of time. The average time for preparing and submitting a project for approval is too long, in which many steps and procedures are applied mechanically, most of the time spent is mechanical time: waiting for competent authorities to complete approval procedures. In addition, applying for a license to construct a peripheral network is very difficult and time-consuming. The State and VNPT do not have a specific mechanism for implementing FDI projects. The implementation procedures and methods for implementing investment projects using BCC capital are implemented similarly to investment projects using capital from VNPT. Furthermore, when implementing investment in these projects, there must be agreement from the partner. This mechanism does not create conditions to speed up the investment progress of capital from BCC, especially in cases where the partner delays disbursement.

Some other reasons that must be mentioned are: There are still many shortcomings in the preparation stage for projects, product market orientation is not done well, the problem of resolving relationships between VNPT and FDI projects and other external relationships is not planned and has a long-term strategy...

2.3.3.2. Influence from State policy

The impact of State policies on issues such as procedures for establishing FDI projects, procedures for capital guarantees... always slow down the progress of project implementation.

FDI projects are delayed. Foreign partners always find it difficult to understand the market, encounter many problems with administrative procedures... The ever-changing policies of Vietnamese authorities also cause many difficulties for projects.

The problem of limiting investment types and the Post and Telecommunications market in the recent period has also significantly affected VNPT's ability to attract FDI.

The mechanism of two sets of laws distinguishing foreign investment and domestic investment has caused negative psychology among foreign investors.

The operations of the banking system, product brand protection agencies, patents, information and propaganda systems... are additional barriers to the difficulties in the production and business activities of FDI projects in the Post and Telecommunications sector in Vietnam.

In summary , in recent years, VNPT and 16 FDI projects have been operating stably and achieved certain results.

The basic achievements of FDI projects must be taken into account based on the following criteria: Contribution to the State Budget, Profits transferred to the Vietnamese side represented by VNPT, number of employees recruited as well as transfer of product manufacturing technologies, modern industrial management methods,

staff training...

In addition, the activities of these foreign joint ventures also give rise to a number of problems that are disadvantageous to Vietnam, such as: Slow technology transfer process, conflicts arising between the management team of Vietnamese and foreigners, products with low technology content, high prices compared to the international market, etc.

BCC contracts also have certain results such as contributions to the network, there are contracts that bring socio-economic benefits, high economic efficiency such as BCC-VTI, BCC-VMS, there are contracts that have not brought the desired results such as local BCCs, there are loss-making contracts such as card phones, texting....

All of the above problems stem from certain causes (subjective from the business side, objective from the State's policies). These causes require early and effective synchronous measures to further improve the quality of FDI projects' operations to meet the requirements and

demands of VNPT in particular and society in general.

Based on the research requirements of chapter 2, the author divides the content of chapter 2 into two major issues: VNPT and the actual situation in its operations.

FDI attraction and management; Assess the protection of Vietnam's interests in this activity and thereby find out the causes.

The author successfully described a panoramic picture of FDI activities at VNPT in the recent period.

Chapter III

Main viewpoints and solutions to ensure the benefits of attracting and managing foreign direct investment at VNPT in the period up to 2010

3.1. Viewpoints on FDI activities orientation at VNPT

3.1.1. Socio-economic environment, comparative advantages, opportunities and challenges

for VNPT's FDI

3.1.1.1. International and regional environment

The globalization trend is becoming the driving force to connect the world and regional economies, influencing each other as an integrated economy, affecting the increase in FDI investment, especially in the telecommunications industry.

Globalization and FDI have a significant impact on each other. The role of FDI is to promote globalization and vice versa, globalization is an important condition to increase the amount of FDI capital in the world. FDI is tending to increase rapidly along with the economic recovery of the Asia region . These are signals showing that FDI investment in Asia in general and Vietnam in particular will increase in the coming years.

The rapid change in telecommunications technology requires investment in new technology, which is the driving force for FDI development. The trend of reform and liberalization is taking place in many countries, in order to adapt to the rapid development of technology and services. Telecommunication technology is the convergence of telecommunications, information technology and broadcasting, which will change the structure of the telecommunications service market and network equipment. The rapid explosion of university Internet services has changed the concept of networks as well as traditional telecommunications services. Rapidly changing telecommunications technology requires VNPT to have

large investment to update and catch up with the development level of world telecommunications. The level of production and business management in the telecommunications industry is not yet commensurate with

High and modern technology requires accelerating the speed of technology transfer in the region through investment cooperation with foreign partners.

3.1.1.2. Domestic socio-economic environment and VNPT's competitive position

Although VNPT has achieved important achievements in network development, VNPT still needs to continue to invest heavily to avoid falling behind in the future. Telephone density per 100 people in Vietnam is still low compared to the world average and even lower in rural and remote areas. Therefore, it is necessary to promote investment, especially foreign investment, to help Vietnam catch up with the world's development.

The Party and State's policies and guidelines are very supportive of investment in developing national information infrastructure, creating favorable conditions for attracting FDI into the telecommunications industry.

The process of integration and opening up of Vietnam's telecommunications market also positively affects FDI attraction of the telecommunications industry in general and VNPT in particular.

2001-2003: The State plans to grant more licenses to domestic operators and promote the equitization of state-owned enterprises. Competition will become more intense in the telecommunications sector among service providers and operators such as mobile phones, Internet, VOIP and other value-added services. This also means that there will be competition in attracting FDI among service providers in Vietnam.

In 2003, domestic economic sectors were allowed to hold up to 40% of shares in enterprises providing domestic and international telephone services. Foreign investors were allowed to participate in joint ventures for basic services except for local, long-distance and international fixed-line telephones with a capital contribution of up to 30%.

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