national. This economic sector has made important contributions to economic and social growth and development, creating a significant increase in economic value.
For developing countries like Vietnam, international capital is even more important; requiring the Vietnamese government to constantly improve policies to increase the effectiveness of attracting and using FDI to implement the country's development goals and strategies.
Implementing the renovation process, in the condition of low economic development level. Vietnam is a backward agricultural country, heavily devastated by war; the economy is underdeveloped, small production and isolated from most of the world, heavily self-sufficient, inflation rate reached over 700% in 1986, production stagnated, technical infrastructure was backward, falling into a serious crisis. After nearly 25 years, Vietnam has been highly appreciated by the world for the results of the transition to a socialist-oriented market economy, opening up and integrating with the world economy.
The Ministry of Planning and Investment has summarized 20 years of foreign investment in Vietnam (1988 - 2008) with quite impressive figures. In the past 20 years, Vietnam has attracted 9,500 foreign investment projects with a total registered capital of about 98 billion USD. In particular, in 2007, foreign investment exceeded the threshold of 20 billion USD, an increase of 70% compared to 2006, almost equal to the total foreign investment of the 5 years 2001 - 2005 and accounting for over 20% of the total foreign investment in the past 20 years. Currently, the economy with foreign direct investment capital accounts for about 16% of GDP, contributing to the State budget more than 1.5 billion USD in 2007; at the same time attracting 1.2 million direct workers and millions of indirect workers. Foreign investment has actively contributed to promoting the transformation of economic structure and labor structure towards industrialization and modernization. In terms of structure, the economy with foreign direct investment accounts for about 37% of the country's industrial production value. At the same time, it is an important bridge between the Vietnamese economy and the world economy, promoting the development of trade, tourism, services and creating conditions for Vietnam to proactively integrate more and more deeply into the world economic life.[7].
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Vietnam's success in developing its FDI-funded economy is undeniable, but it is also facing challenges and difficulties, including policy improvement, as the reason for Vietnam's less attractive investment environment to attract FDI depends largely on the state's policies on foreign investment activities. Firstly, there are currently two viewpoints on developing its FDI-funded economy in Vietnam. The first viewpoint is to increase foreign investment attraction in terms of quantity, regardless of the field, scale, as long as it is investment. The second viewpoint is that it is time to increase FDI attraction in terms of quality, with incentives for high-tech fields and fields of production materials. The first viewpoint is currently popular, almost all provinces and cities focus all their efforts on attracting FDI to their area regardless of industry or product, so FDI is too concentrated in food processing industries (wine, beer, soft drinks, consumer goods manufacturing industries), there is no appropriate investment in the production of production materials, only investing in electronic mechanical assembly. The most important lesson of NICs in recent years is to build a reasonable product structure, a product structure that must self-produce production materials to supply the entire economy, focusing on attracting FDI in products with high technical and capital content because light industrial products that use a lot of labor lose their international competitiveness, labor is no longer an advantage. From this lesson, a question for Vietnamese policy makers is which perspective should be followed to attract and develop the economy with FDI capital?
Second, the localization policy is not satisfactory. For example, Vietnam's localization policy for the automobile and motorbike industry is less ambitious than other countries in ASEAN such as Thailand, Malaysia, etc. For complete assembly, Vietnam requires 5% in the 5th year, and 30% in the 10th year, Thailand requires 60% in the 5th year. Thus, the trend of attracting FDI needs to increase localization, but Vietnam's policy has not paid much attention, which is why FDI products in Vietnam are more expensive than in Thailand and other countries.
Third, Vietnam does not have a technology transfer policy like China, Korea, etc. Therefore, after 10 years, our country has many world-famous automobile companies investing, but experts say that Vietnam will probably never have an automobile industry. There must be a technology transfer policy for foreign investment projects, or we will accept being just a giant consumer market with a population of more than 80 million people.
Fourth, the price policy is not reasonable, the investment cost in Vietnam is still too high compared to other countries in the region, reducing the competitiveness of Vietnamese products, discouraging investors. To reduce input costs, which are currently mainly controlled by state-owned enterprises, it is necessary to prevent the transformation of state monopoly into business monopoly for state-owned enterprises. It is necessary to quickly develop and promulgate a competition law.
Fifth, entering the 21st century, the world has entered the era of “knowledge economies”. Consultants all share the same view that the competition to attract foreign investment is an increasingly fierce and never-ending battle. Even if a country chooses to “stand still”, it means that the country is falling behind, because competitors will take that opportunity to break away and move forward. The choices and needs of foreign investors are always changing and this forces the countries receiving foreign investment to adjust their policies to suit those changes.
The above challenges and difficulties need to be summarized in practice, thoroughly researched, "to ensure consistency, stability, transparency and increasing attractiveness in foreign investment policies. Innovate state management methods and strongly improve investment procedures in accordance with the provisions of the Investment Law and in accordance with the level of implementation of our international commitments" [20, p.238]. A policy system based on science and in accordance with practice will mobilize domestic and foreign resources, promote potential and advantages to quickly become a country with a developed economy, enhance the role and position of the country.
position, integrating more strongly into the world economy. The question is: what is the policy for the economy with FDI capital? How will the policy impact so that the FDI sector becomes a dynamic and effective economic sector of the national economy?
In practice, there are countries whose governments have appropriate economic development policies with FDI capital, and those countries become developed countries (Korea, Singapore, Malaysia, etc.). On the contrary, many countries also develop this economic sector but fall into a "vicious circle", one of the reasons is due to the government's policy restrictions on the economy with FDI capital.
Up to now, the issue of policies for the FDI economy has not been scientifically analyzed to help our Party and State build and perfect policies for this economic sector, to attract and effectively use FDI capital for the purpose of sustainable growth and development. This is a big problem that needs to be scientifically researched and analyzed when Vietnam has become a member of the World Trade Organization (WTO), the Vietnamese economy operates and develops in a new capacity and position, with a global nature. Contributing to solving that requirement, the author chose the issue of "Scientific basis for perfecting state policies for the foreign invested economy (FIE) in Vietnam" as the topic of his PhD thesis in Economics, majoring in Political Economy.
2. Research status related to the topic
Along with the strong development of international trade, the flow of FDI capital has also increased continuously, contributing significantly to the growth and development of the global economy. For different purposes, many organizations and individuals, both domestic and foreign, have researched the economy with FDI capital.
In Vietnam, since the implementation of the Foreign Investment Law in 1987, there have been many works addressing issues related to economic policy in general, and to the FDI economy in particular. Up to now, general issues regarding FDI have been addressed by many research works.
However, there are only a few studies that delve into the impact of FDI, mainly on the economy, and have not comprehensively considered policies for this economic entity with the regulatory role of the "state hand" in the market economy.
In the country, some typical authors can be mentioned:
- One of the earliest research works on FDI-funded economy is “Improving policies and organization to attract foreign direct investment in Vietnam” by a group of authors edited by Associate Professor, Dr. Mai Ngoc Cuong (1999). This is a reference book on attracting foreign direct investment in the last years of the 20th century.
XX. From the economic approach with foreign direct investment from the perspective of organization and management, the author has studied the general FDI activities in Vietnam from the time the Law on Foreign Investment in Vietnam took effect in 1987 to 1999, on that basis, made recommendations to improve policies and organizations to attract foreign direct investment in Vietnam in the following years. However, the research and analysis only focused on the role and impact of FDI on the Vietnamese economy, in the condition of a "closed" economy; the recommendations made stopped at increasing FDI attraction when the Vietnamese economy needs FDI at all costs, to attract capital mainly to achieve the goal of economic development.[16]
- Next is the topic (2004) "Foreign-invested economic sector: Its position and role in the socialist-oriented market economy in Vietnam" chaired by Prof. Dr. Nguyen Bich Dat. This is a research topic under the State-level Science and Technology Program KX 01. In addition to the main summary report, there are also many topics and sub-topics; with the approach that foreign direct investment (FDI) is an economic component in the socialist-oriented market economy in Vietnam. From the summary and assessment of Vietnam's practices to further clarify the nature, position and role of the foreign-invested economic sector and its relationship with other economic components in the socialist-oriented market economy; propose policies and solutions to promote the position and role of the foreign-invested economic sector.
FDI serves the cause of industrialization and modernization in accordance with the requirements of developing a socialist-oriented market economy in Vietnam. In research and analysis, the policy of attracting FDI has been approached as an economic component in a multi-component economic structure; but the policy for an economic sector has not been considered systematically and on a comprehensive scientific basis.[21]
- Tran Xuan Tung (2005) with the work "Foreign direct investment in Vietnam: Current situation and solutions". This is a reference book on foreign direct investment activities in Vietnam in the early years of the 21st century. The author approaches the issue from the economic perspective with foreign direct investment as a component in the multi-sector economic structure of Vietnam. From the study of the nature and movement trends of FDI, the current situation of attracting and using foreign direct investment capital in Vietnam from the implementation of the Foreign Investment Law in 1987 to 2005 has been assessed. When studying the relationship between FDI and economic development, it has not been considered as a complete economic entity in the movement process. When proposing some basic solutions to strongly attract and effectively use foreign direct investment in the following years, although the impact policy has been considered, it has not yet clearly specified what the policy system is and what scientific basis it is based on. Although the research time was in the early 21st century, policy solutions were still biased towards attraction, not focusing on management.[52].
- Nguyen Van Tuan (2005) researched on "Foreign direct investment and economic development in Vietnam". The research approached the economy with foreign direct investment as investment projects and the movement of capital flows accompanied by trade activities, technology transfer and international labor migration. The research presented the viewpoint that if only emphasizing FDI attraction in economic growth as a resource (attraction), without paying attention to solving other economic and social issues, it will lead to the negative side of growth. Research on policy solutions to increase capital attraction and improve efficiency
Using FDI capital, also only stops at policies to increase the impact of foreign direct investment on economic development in Vietnam. Policy issues related to the economy with foreign direct investment capital that the study raises are not approached and resolved comprehensively, systematically, and synchronously.[51]
- Tran Quang Lam and An Nhu Hai (2006): "Foreign-invested economy in Vietnam today". This is a monograph on foreign-invested economy in Vietnam in the first decade of the 21st century. The study approaches the foreign-invested economy as an economic sector. The authors have identified the foreign-invested economy (FIE) as an economic sector, but in the research process, they have surveyed and analyzed the current status of formation, development and role of foreign-invested enterprises; theoretically generalized the "foreign-invested economic sector" in the socialist-oriented market economy in Vietnam; pointed out its movement, development and transformation trends. Thus, the study again examines the foreign-invested economic sector and the movement of foreign-invested enterprises (microeconomics). In the viewpoints, solutions to develop, expand and effectively use the foreign-invested economic sector in Vietnam are only technical solutions although they are related to policies. Moreover, solutions related to policies have not been analyzed on a scientific basis from the study of the objective movement of an economic sector (macro policy).[28]
- By using a narrow approach, based on the analytical framework that has been applied in the world, Nguyen Xuan Ba (2006) analyzed the impact of the economy with foreign direct investment on economic growth. The results obtained from combining both qualitative and quantitative analysis methods confirmed that FDI positively contributed to economic growth in Vietnam.
- Research by Do Duc Binh and Nguyen Thuong Lang (2006) on "Socio-economic issues arising in foreign direct investment: China's experience and Vietnam's practice". From the economic approach with foreign direct investment as a form of international investment, this is one of the few monographs to date that has analyzed a number of socio-economic issues arising in attracting FDI in Vietnam, on the basis of summarizing experiences from China, thereby proposing a number of appropriate solutions to increase the attractiveness of the investment environment in Vietnam. However, this study only mentioned solutions to handle a number of socio-economic issues arising in the process of attracting FDI in Vietnam in the period before joining the WTO. Issues arising after joining the WTO that policies must intervene to resolve such as the environment, workers' rights must be guaranteed according to the criteria of this organization, ... have not been mentioned. Furthermore, the policy solutions proposed by the study aim to address socio-economic issues arising in the process of attracting FDI, and do not include regulatory policies for the economic “sector” with foreign direct investment. In addition, the study is based on summarizing experiences from only one country, China. Therefore, the scope of the study may not be representative enough for comparison.[4].
- Tran Thi Minh Chau (editor) (2007) researched "On investment incentive policies in Vietnam" in a broad scope covering "the overall investment incentive policies of the State" for both domestic and foreign investment. The research approached the economy with foreign investment capital from the perspective of investment activities. This is one of the few comprehensive studies on investment incentive policies, including specialized studies on policies for FDI. The research focused on: clarifying the theoretical basis of our State's investment incentive policies in the socialist-oriented market economy; analyzing and evaluating the current status of our State's investment incentive policies; proposing some basic orientations and solutions to continue to improve the policy.