3.2.4.3. Take business performance as the basic objective for evaluating Vietnam's benefits in joint ventures with foreign countries in Telecommunications.
The benefits of VNPT are realized through the results of production and business activities of joint ventures with foreign countries in Telecommunications. Economic indicators can only be achieved if each achieves production and business efficiency. The results of production and business activities of joint ventures must be shown from angles such as: Suitable products, Fully satisfied markets, prices...
Product solutions
Current products of telecommunications joint ventures mainly include products with average technology content, simple assembly level and low competitiveness compared to similar products in the world. Production scale, although being joint ventures with famous telecommunications partners in the world such as SIEMENS, NEC, FUJISU... but production is still mainly assembly. Products with monotonous types. Current products of joint ventures include small capacity switchboard equipment or cables, transmission cards... are simple telecommunications products with great competition.
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The product strategy produced at telecommunications joint ventures in Vietnam in the future needs to have high localization and especially diversity. Current products are produced only focusing on the public telecommunications market segment, while leaving open the corporate telecommunications and home telecommunications markets.
Product solutions to be covered:
Increase the technology content of products by investing in research and development along with conducting full technology transfer.
Diversify and standardize products according to international quality regulations (ISO 9000).
Improve production efficiency, reduce product damage rate to improve production and business efficiency of the Telecommunications joint venture.
Expanding production scale goes hand in hand with expanding product orientation targeting the mass market: Business Telecommunications, Home Telecommunications...
Market solutions
With market problems, the main solutions are:
Strengthen the domestic market by increasing reasonable distribution channels for telecommunications products. Advertising and promotion forms to promote the product-market process.
Regularly organize customer conferences to increase sales and understand emerging needs of the domestic market. Expand product marketing to local post offices nationwide.
VNPT must gradually eliminate the mechanism of dividing the product consumption plan of joint ventures in the Vietnamese market. Move towards using the bidding method for all necessary products. This measure aims to increase the initiative of joint ventures in market issues.
It is mandatory to promote exports and marketing in regional and global telecommunications markets, and encourage foreign partners to market and consume products in international markets.
Maintain equipment operating capacity at the most efficient level while using indirect labor system at a reasonable level to create competitiveness for products in domestic and foreign markets.
Price solution
The issue of product prices in joint ventures with foreign countries in Telecommunications needs to be discussed by VNPT with its partners to have the most reasonable price policy. In the immediate future, VNPT needs to clarify the reasons why some domestically produced products in joint ventures have higher prices than those in the regional and international markets (copper cables, fiber optic cables, etc.)
The price issue must be considered from the perspective of the business's interests and the interests of VNPT. We should not only look at the business's profit aspect but ignore the unfavorable price conditions that the joint venture brings to the entire Vietnam Post and Telecommunications market system.
Pricing policy should be considered in the following directions:
First : Joint ventures must strengthen strict control over input materials to avoid being forced to increase prices by foreign parties.
products. Strengthen the localization of raw materials that can be supplied domestically and from countries in the region, moving towards not being dependent on partners.
Second: Competitive advantage of products due to having lower input factors compared to the region (labor, production costs, domestic market...)
Third: The price of the product is established at a moderate rate, competitive in terms of international prices.
Fourth: It is necessary to stick to a feasible plan when setting up a business regarding product pricing.
Technology solutions
The joint ventures need to focus on solving the technological issues and technology transfer activities. It is necessary to find out the causes and resolve the backlog related to the technological and technical systems of the production line. The problems that need to be solved in the immediate period are: Solutions to improve the efficiency of the production line; New applications of the technological line; The problem of transferring information systems,
management training for Vietnam side...
A synchronous solution for joint ventures is to consider establishing a research and development department in all joint ventures. The immediate scope of this department is to maximize the benefits of the existing production line, seek to improve and expand the benefits, and research and develop new scientific and technological applications in production.
With the above solutions, joint ventures can truly produce and do business effectively, and production lines and technologies can operate at maximum efficiency. Thus, the tangible and intangible benefits of the Vietnamese side can be preserved, avoiding waste due to lost opportunity costs due to inefficient production lines and technologies.
3.2.4.4. Selecting financial performance evaluation criteria for projects
BCC case
BCC projects with the role of attracting FDI from foreign investors often have very different capital contributions, the capital contribution of partners is often much higher than the capital contribution of the Vietnamese side. Foreign partners often use the index
internal rate of return IRR to compare their benefits and VNPT. Although the partner's IRR may be low, the total benefits received are high and vice versa, our IRR may be very high but the profits received from the project will also be low.
Currently, the internal BCCs are applying the framework IRR mechanism for the house.
foreign investment from 11% to 25%. The purpose of the framework IRR mechanism that Vietnam proposed is to limit the level of benefits that foreign investors enjoy, thereby increasing the benefits of VNPT. However, this has not been achieved, because as the university presented in Chapter II, the forecast demand for domestic BCC projects is too high compared to reality, which leads to the actual IRR of foreign investors being much lower than the IRR min = 11%.
In fact, the proposed framework IRR is disadvantageous to Vietnam in all aspects.
case even when the project's IRR is high. Many views hold that when the IRR
If the IRR is high, foreign investors will receive a large share of revenue and VNPT will suffer a loss. But in reality, highly effective investment will benefit both sides because the total profit is large and the revenue sharing ratio remains unchanged. Limiting the IRR Max level will not encourage partners to try hard in business because when IRR TT > IRR Max, they will not receive anything and that profit will only belong to VNPT.
If the IRR is low, it will be a disadvantage for Vietnam because in this case VNPT must compensate the shortfall for the partner guaranteeing the IRR TT cda.
partners not less than 11%.
In fact, the domestic BCCs all have low IRR TT . According to the calculation
Adjusted at the end of 2003, the BCC-KT project had an IRR TT = 4.42%, the BCC-NTT project had an IRR TT = 7.4%, and only the BCC-FCR project had an IRR TT = 17%. Currently, measures to cut investment and re-determine revenue sharing ratio are being taken to protect
Guarantee partners with IRR TT = 11% as committed in the contract.
Thus, to evaluate the investment efficiency of a project accurately and comprehensively, it is necessary to consider all three criteria: NPV, IRR and T.
Above are all the solutions, considering the scale of production and business operations of all FDI projects of VNPT. These solutions are proposed on the basis of minimizing the risks and threats of factors to VNPT as the representative of Vietnam in FDI projects. In addition, the solutions
The above solutions are built on the basis of enhancing and expanding the strengths and opportunities of the Vietnamese side in foreign investment cooperation. From there, the solutions will be tools for the Vietnamese side to ensure its interests in the projects.
FDI project at VNPT.
In summary, based on the research requirements of chapter 3, the author presents two major issues: Orientation views on FDI attraction activities of VNPT in the coming period and Solution groups to ensure Vietnam's interests in FDI activities.
The author carefully analyzes the position of VNPT in the coming period when Vietnam joins the WTO and how the WTO accession commitments will affect VNPT's operations. The author also clearly states the basic viewpoint of receiving FDI capital sources into the telecommunications industry in general and VNPT in particular is to protect
ensure socio-economic benefits for Vietnam, especially economic benefits;
At the same time, it must also ensure legitimate benefits for investors, but nothing binds them if they do not gain economic benefits for the capital they have invested.
To ensure the benefits of VNPT, the author proposes a system of solution groups including: solutions combining orientation; human resource work; strengthening relationships with partners; technology transfer solutions; solutions to ensure and preserve counterpart capital from Vietnam to continue to innovate and perfect VNPT's organizational structure in the coming period up to 2010.
Conclude
Ensuring the interests of the Vietnamese side in attracting and managing FDI capital in our country in general and in VNPT in particular is an extremely urgent issue.
For our country in the process of building the country in the direction of socialism to industrialize and modernize the country in the trend of international and regional economic integration; this is a diverse, complex and sensitive issue in both theory and solution direction in applying theory to practice.
The thesis focuses on solving the following problems:
1. Systematize and develop theories on benefits in FDI attraction activities, on that basis draw ideas in attracting and effectively managing FDI capital sources in the BCVT industry in the coming period. Through analysis, the thesis also provides a system of conditions to ensure the benefits of the investment recipient in this activity.
2. Introduce the experiences of some foreign countries (China, Indonesia, Thailand) in attracting and managing FDI capital sources to draw some useful lessons for our country.
3. Describe the overall picture of VNPT's FDI attraction and management activities since entering the renovation period. Clearly state the achievements and shortcomings of FDI activities and find out the causes of the shortcomings to have a solution for the next period (2006 - 2010).
4. The study proposes 4 groups of solutions in sync with VNPT in attracting and effectively managing FDI capital sources in the coming period .market orientation and investment policy ,internal mechanisms and partnerships ,technology transfer policy ,financial solutions
The thesis has new contributions:
1. Systematize and develop theoretical issues on foreign direct investment (Clarify concepts, classification, roles and implementation conditions).
2. Summarize some experiences of some countries with good achievements in attracting FDI capital, from which draw some lessons for reference in Vietnam.
3. Clarifying the concept of host country benefits in attracting and managing
FDI capital sources.
4. Clearly state the current status of FDI attraction and management activities at VNPT (achievements, problems, causes).
5. Propose some scientifically based and feasible solutions to VNPT (4 groups of solutions).
List of author's works
1. Ngo Huy Nam (2000), Ensuring economic benefits in joint ventures with foreign countries at Vietnam Posts and Telecommunications Corporation . Master's thesis - National Economics University
2. Ngo Huy Nam (2001), “Conditions to ensure the interests of the host country in joint ventures with foreign countries”. Scientific Activities Magazine - Ministry of Science and Technology, March 2001
3. Ngo Huy Nam (2001), “Joint ventures in the telecommunications sector, achievements and problems that need to be solved”. Industry Magazine - Ministry of Industry, July 2001
4. Ngo Huy Nam (2005), “Evaluation of foreign direct investment activities in Vietnam”. Journal of Scientific Activities - Ministry of Science and Technology 1/2005