The project is still in effect with a total registered capital of 83.1 billion USD. The speed of attracting FDI capital is shown through the following stages [30]:
- In the years 1988-1990, due to the new implementation of the Foreign Investment Law, the results of attracting foreign investment were still low (214 projects with a total newly registered capital of 1.6 billion USD).
- The period 1991-1996 is considered a "boom" period (can be considered the first "wave of foreign investment" into Vietnam). Foreign investment in Vietnam with 1,781 licensed projects has a total registered capital (including registered and newly licensed capital) of 28.3 billion USD. In 1995, it attracted 6.6 billion USD of registered capital, 5.5 times higher than in 1991 (1.2 billion USD). In 1996, it attracted 8.8 billion USD of registered capital, an increase of 45% compared to the previous year. This result is partly due to the expectations of foreign investors for an open economy, with a fairly large population of over 70 million people and a potential consumer market.
- In the 3 years 1997-1999, there were 961 licensed projects with a total registered capital of more than 13 billion USD, but the total registered capital of the following year was lower than the previous year. In 1998, it was only 81.8% of 1997, in 1999, it was only 46.8% of 1998, mainly small and medium-sized projects. Also in these years, a number of FDI projects that had been licensed in previous years had to temporarily suspend project implementation due to financial difficulties of investors, mainly investors from Korea and Hong Kong. The reason for the sharp decline in FDI capital flows into Vietnam was mainly due to the impact of the Asian financial crisis and because the investment environment in Vietnam became less attractive compared to other countries in the region, especially China. One possible reason is that the 1996 amended Foreign Investment Law reduced some incentives for foreign investors.
- From 2000-2003, FDI capital into Vietnam began to show signs of recovery as countries investing in Vietnam recovered their economies after the crisis. However, this was also the period when countries in the region actively participated in signing FTAs and increased trade and investment exchanges in the regions.
member countries of FTAs. Along with those reasons, Vietnam's investment policies themselves have not been properly adjusted, so the FDI capital flow into Vietnam during this period recovered slowly and even declined in 2002. Newly registered capital in 2000 reached 2.7 million USD, an increase of 21% compared to 1999; in 2001, it increased by 18.2% compared to 2000; in 2002, registered capital decreased, only 91.6% of 2001, in 2003 it reached 3.1 billion USD, an increase of 6% compared to 2002.
- The trend of rapid increase in FDI capital flow is from 2004 (4.5 billion USD) increased by 45.1% compared to the previous year, in 2005 increased by 50.8%, in 2006 increased by 75.4% and in 2007 reached a record level in the past 20 years with 20.3 billion USD, increased by 69% compared to 2006. In 2006-2007, FDI capital flow into Vietnam increased significantly (32.3 billion USD) with the appearance of many large-scale projects investing mainly in the industrial sectors (steel production, electronics, high-tech products, ... ) and services (seaports, real estate, information technology, tourism - high-end services, ... ). This shows signs of the second "wave of FDI" into Vietnam. The rapid growth of FDI capital is partly due to the improvement of the investment environment by amending and supplementing a number of articles of the Foreign Investment Law and especially the promulgation of the Investment Law, Enterprise Law, and Competition Law in 2005. In addition, the Government allowed indirect investment in 35 sectors, while opening up a number of sectors previously monopolized by the State such as electricity, insurance, banking, and telecommunications to foreign investment and allowing the conversion of foreign-invested enterprises into joint stock companies. Since 2004, Vietnam has paid more attention to investment promotion at home and abroad.
In the first quarter of 2008, there were 49 projects increasing their investment capital with a total registered capital increase of 280.3 million USD, equal to 47% of the number of projects increasing their capital and 52% of the total capital increase compared to the same period last year. In total, including newly granted and increased capital in the first quarter of 2008, the country attracted an additional 5,436 million USD of registered investment capital, an increase of 31% compared to the same period in 2007. Next
growth momentum of 2007, in the first quarter of 2008, attracting foreign investment was still high, a number of foreign investment enterprises actively implemented in the first month of 2008. Many large-scale projects were licensed by localities in the first months of 2008, especially the trend of rapidly increasing real estate business projects (building office apartments for sale and lease, building high-class hotels, resorts) [31].
Table 2: Foreign investment licensing situation in the period 1988-2007
Unit: million USD
Year
Project Number | Registered capital | Realized capital | |
1988 | 37 | 341.7 | |
1989 | 67 | 525.5 | |
1990 | 107 | 735.0 | |
1991 | 152 | 1,291.5 | 328.8 |
1992 | 196 | 2,208.5 | 574.9 |
1993 | 274 | 3,037.4 | 1,017.5 |
1994 | 372 | 4,188.4 | 2,040.6 |
1995 | 415 | 6,937.2 | 2,556.0 |
1996 | 372 | 10,164.1 | 2,714.0 |
1997 | 349 | 5,590.7 | 3,115.0 |
1998 | 285 | 5,099.9 | 2,367.4 |
1999 | 327 | 2,565.4 | 2,334.9 |
2000 | 391 | 2,838.9 | 2,413.5 |
2001 | 555 | 3,142.8 | 2,450.5 |
2002 | 808 | 2,998.8 | 2,591.0 |
2003 | 791 | 3,191.2 | 2,650.5 |
2004 | 811 | 4,547.6 | 2,852.5 |
2005 | 970 | 6,839.8 | 3,308.8 |
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2006
833 | 12,004.0 | 4,100.1 | |
2007 | 1,544 | 21,347.8 | 8,030.0 |
Source: Statistical Yearbook 2007
1.2. Fields of investment attraction
FDI projects mainly focus on the industrial sector, contributing significantly to the process of economic restructuring towards industrialization and modernization. The graph describing the FDI investment structure by sector as of the end of 2007 shows: Industry and Construction sector with 5,819 projects accounts for 67.01% of the total number of projects, 60.44% of total investment capital, 58.85% of total charter capital, 68.57% of total implemented capital. Agriculture and Forestry is the sector that attracts the least FDI projects including the number of projects, investment capital and implemented capital. If in the 90s, FDI was directed towards the mining and import substitution industries, from 2000 to now, FDI projects in the processing and export-oriented industries have increased rapidly, contributing to increasing the total export turnover in recent years.
After joining and implementing its commitments to the WTO (2006), Vietnam abolished preferential regulations for projects with high export rates, and did not require mandatory implementation of localization rates and use of domestic materials. Over time, the orientation of attracting foreign investment in the industrial and construction sector has changed in terms of specific fields and products, but it is still basically oriented towards encouraging the production of new materials, high-tech products, information technology, mechanical engineering, precision mechanical equipment, production of electronic products and components, etc. These are also projects with the potential to create high added value and Vietnam has a comparative advantage in attracting foreign investment. Therefore, up to now, FDI projects in the above-mentioned fields (oil and gas exploration and exploitation, production of high-tech products, electrical and electronic products, iron and steel production, textile production, etc. ) still play an important role in contributing to economic growth, export and creating many jobs and stable income sources.
for millions of direct workers. The investment structure has changed positively towards increasing the proportion of investment in the high-tech, oil refining and information technology (IT) sectors with the presence of world-famous multinational corporations: Intel, Panasonic, Cannon, Robotech ... Most of these FDI projects use nearly 100% modern equipment and 100% automation for high output, productivity and quality, thus having a great impact on the value indicators of the entire industry.
Table 3: Foreign direct investment by sector in the period 1988-2007 (as of December 31, 2007 - only valid projects are counted)
Unit: USD
STT
Specialized | Reserve number sentence | Investment capital | Charter capital | Real investment presently | |
I | Industry and construction build | 5,819 | 51,405,264,671 | 21.118.126.226 | 20,045,968,689 |
Oil and gas industry | 40 | 3,902,961,815 | 2,345,961,815 | 5,148,473,303 | |
Light CN | 2572 | 13,553,033,810 | 5,943,809,944 | 3,639,419,314 | |
Heavy industry | 2434 | 24,437,228,586 | 9,293,803,365 | 7,049,865,865 | |
Food industry | 312 | 3,643,885,550 | 1,617,923,717 | 2,058,406,260 | |
Build | 461 | 5,868,154,910 | 1,916,627,385 | 2,149,803,947 | |
II | Agriculture and forestry | 929 | 4,458,158,278 | 2,115,319,681 | 2,021,028,587 |
Agriculture and Forestry | 800 | 4,008,270,499 | 1,867,539,550 | 1,852,506,455 | |
Seafood | 129 | 449,887,779 | 247.780.131 | 168,522,132 | |
III | Service | 1,936 | 29,193,410,221 | 12,653,163,964 | 7,167,440,030 |
Service | 966 | 2.155.006.145 | 947,877,283 | 383,082,159 | |
Transport-Post Office | 211 | 4,323,882,565 | 2,781,446,590 | 721,767,814 | |
Hotel-Tourism | 227 | 6,135,310,332 | 2,569,935,362 | 2,401,036,832 | |
Finance-Banking | 67 | 915.827.080 | 850.404.447 | 714.870.077 | |
Culture-Health-Education sex | 272 | 1,249,195,062 | 573,586,594 | 367,037,058 | |
New Urban Area Construction | 9 | 3,477,764,672 | 944,920,500 | 111,294,598 |
Office-Apartment Construction household | 154 | 9,418,878,164 | 3,468,469,591 | 1,892,234,162 | |
Industrial Park Infrastructure Construction Industrial Zone | 30 | 1,517,546,201 | 516,523,597 | 576,117,330 | |
Total | 8,684 | 85.056.833.170 | 35,886,609,871 | 29,234,437,306 | |
Source: Foreign Investment Agency - Department of Planning and Investment
22%
11%
67%
Table 1: Structure of foreign direct investment projects by industry in Vietnam 1988-2007
Industry and construction Agriculture, manufacturing Services
Source: Foreign Investment Agency - Ministry of Planning and Investment
1.3. Investment form
Due to many reasons, including the restriction on the establishment of FDI enterprises with 100% foreign capital, FDI projects registered in Vietnam until the mid-1990s were mainly in the form of joint ventures between state-owned enterprises and foreign investors. By the end of 1998, the number of joint venture projects accounted for 59% of the total number of projects and 69% of the total registered capital. Since 1997, this restriction has been removed and has had a strong impact on the restructuring of FDI projects by ownership form. Currently, FDI in the form of 100% foreign capital accounts for the majority. By the end of 2007, mainly enterprises with foreign capital invested in the form of 100% foreign capital with 6,743 projects with a total registered capital of 52.4 billion USD, accounting for 77.2%.
in terms of number of projects and 61.6% of total registered capital. In the form of joint ventures, there are 1,640 projects with a total registered capital of 24.5 billion USD, accounting for 18.8% in terms of number of projects and 28.7% of total registered capital. In the form of business cooperation contracts, there are 226 projects with a total registered capital of 4.5 billion USD, accounting for 2.5% in terms of number of projects and 5.5% of total registered capital. The rest are in other forms such as BOT, BTO, BT.
Table 4: Foreign direct investment by investment form 1988-2007 (as of December 31, 2007 - only valid projects are counted)
Unit: USD
STT
Investment form | Reserve number sentence | Investment capital | Charter capital | Real investment presently | |
1 | 100% foreign capital outside | 6,743 | 52,437,099,250 | 21,476,300,760 | 11,324,296,112 |
2 | Joint venture | 1,640 | 24,574,544,436 | 9,292,461,262 | 11,144,796,904 |
3 | Cooperation contract business | 226 | 4,578,597,287 | 4,127,650,407 | 5,661,119,003 |
4 | BOT, BT contracts, BTO | 8 | 1,710,925,000 | 456,185,000 | 727,030,774 |
5 | Joint Stock Company | 66 | 1,657,659,197 | 451,054,442 | 362,746,513 |
6 | Parent-Child Company | 1 | 98,008,000 | 82,958,000 | 14,448,000 |
Total | 8,684 | 85.056.833.170 | 35,886,609,871 | 29,234,437,306 | |
Source: Foreign Investment Agency - Department of Planning and Investment
Table 2: Structure of foreign direct investment projects in the form of
Investment in Vietnam 1988-2007
100% foreign capital Joint venture
Business cooperation contract BOT, BT, BTO contract M&Con Joint Stock Company
19%
3% 0%
78%
Source: Foreign Investment Agency - Ministry of Planning and Investment
1.4. Investment attraction situation of localities
Over the past 20 years, FDI in Vietnam has spread throughout the country. Up to now, FDI has been present in 65 provinces and cities. However, in the recent period, the investment structure by locality has changed very slowly. Although the State has had special preferential policies for areas with difficult geographical and economic conditions, the attraction of FDI to serve economic development in these areas is still very low. Most FDI projects are concentrated mainly in large cities and concentrated industrial zones, where there are favorable infrastructure conditions, abundant and skilled labor resources. In 2007, the four provinces of Ho Chi Minh City, Hanoi, Dong Nai, and Binh Duong alone attracted about 12 billion USD, accounting for 58.6% of the total registered capital nationwide, 67.9% of the number of projects. The remaining provinces and cities attracted only 41.4% of the total registered FDI capital. In recent years, many provinces have actively improved their investment environment and some have been quite successful, such as the neighboring provinces of Hanoi and Ho Chi Minh City.
Table 5: Top 15 localities in attracting foreign investment capital