IS IT DIFFICULT FOR VIETNAM TO ATTRACT CAPITAL

FROM TNCS?

GROUP MEMBERS

1. NGUYEN THI THANH TRA BAIU080762. LUONG KHANH NHU BAIU081023. DOAN THI HUONG THAO BAIU08155

SOCIAL & POLITICAL STABILITY

Political and social stability is the first

most important requirement,

determined on the attracting TNCs.

Under the leadership of the Party, the

management of the state, Vietnam is

considered to be one of countries

with political stability and high

economic conditions, no potential

conflict of religion and ethnicity.

That is the basic condition to ensure

the development of economic

external and attract the attention of

foreign investors in general and TNCs

in particular.

EXPANSIVE AND POSITIVE FOREIGN POLICY

The expanded foreign policy of Vietnam:

promote the implementation of strategies toward

the opening of export

expand the cooperation of foreign investment.

With the motto "Vietnam would like to make

friends and reliable partner of all countries

in the international community", Vietnam was

a 7th member of ASEAN from July 28, 1995, joined

APEC in November 1998, the first member of

ASEM and member of the WTO from July 11, 2006.

Currently, we have established

diplomatic relations with more

than 170 countries, trade

relations with more than 100

countries and territories and

receive investments of nearly

80 countries. Major expansion

of economic relations of the

Party and State have created

necessary conditions to attract

and facilitate foreign

investment of TNCs.

COMPARATIVE ADVANTAGES

Vietnam has natural conditions and

geographical location particularly convenient.

Located at the center of Southeast Asia with long seashore.

Air routes and maritime world are very close to Vietnam.

Vietnam has extremely diverse resources and ranked seventh

among 15 countries richest of resources in the world.

Large labor resource

5

- 97% Vietnam's enterprises are small and medium

enterprises (SMEs), registered capital is no more than 10

billion and 300 employees scale

- The speed of technological innovation in most enterprises

is still too slow:

Ex: Thailand: 30%

Malaysia: 51%

Singapore: 73%

Vietnam: 2%

=> too low

- Investment activities for science and technology of

Vietnam’s enterprises are still low.

Capacity of Vietnam partners still be limited:

- STILL USE OUT OF DATE TECHNOLOGY. MOST COMPANIES

HAVE BEEN USING THE TECHNOLOGY IN THE 80S OF THE

LAST CENTURY AND THE RESEARCH AND TECHNOLOGY

INNOVATION CAPACITY ARE VERY LIMITED

- 80% - 90% OF THE TECHNOLOGY IS IMPORTED (LAG FROM

2-3 GENERATIONS)

- GENERALLY FOR THE BUSINESS, THE LEVEL OF EQUIPMENT:

10% MODERN

38% AVERAGE BACKWARD

52% VERY BACKWARD

=> IT IS DIFFICUT FOR VIET NAM TO ATTRACT

CAPITAL FROM TNCS.

THE MARKET ECONOMIC IS STILL

SIMPLE

- Market with goods and services have established but still

had so much negative phenomena (fake, smuggled goods,

counterfeit brand goods make market turmoil).

- Labor market has appeared. Some referral centers for

work and labor export appears leading to the arising

negative phenomena and many crises. A highlight of this

market is the supply of skilled labor is smaller than

demand.

- Monetary market and capital market have been set up

but still a lot monitoring.

- High inflation

INSTITUTIONS AND LAWS ALSO HAVE MANY DISADVANTAGES

Transparency, consistency and stability of law is the greatest

disadvantage, and also the requirement of foreign investors

The lack of transparency of law a gap for abuse of power in

society and causing trouble for investors

The lack of consistency and stability of law unpredictable

changes in business

INSTITUTIONS AND LAWS ALSO HAVE MANY DISADVANTAGES

The legal document lack of consistency in content and

implementation. Many of content also stop at the general and

have no specific instructions.

Some central agencies and local governments voluntarily

issued documents contrary to law or not law enforcement

TECHNICAL INFRASTRUCTURE IS NOT HIGH

Infrastructure in Vietnam is not suitable with developed

economic needs about expenditure and quality

It has been improved in recent years still level average in

the area

The transportation cost of Vietnam is still expensive in the area

Traffic density in Vietnam only equal 1% of average one of the

world

TECHNICAL INFRASTRUCTURE IS NOT HIGH

Material infrastructure use a lot of capital and national budget

is essential.

Material infrastructure is lack of competing.

The reasons:

Participation of private company limits.

Managing and trading in material infrastructure pay

attention some national companies.

SUMMARY When Vietnam promulgated law on foreign investment:

The investable way of TNCs is better.

Some results of Vietnam :

Attract FDI capital of total investable capital ,some projects ,investors

---- >increasing and developing economy

However ,there are many reasons why make investable

environment unattractive.

------ > to attractive FDI capital of TNCs-----> Vietnam

needs global and consistent solutions.

At now we are still difficult to attract foreign investment

But when we point out the advantages and disadvantages of Vietnam as above, it’s easier for us to adapt with the invested requirements

Vietnam should have flexible policies to attract TNCs in short-term (industrial zones, economic activities…) and in long-term (public infrastructure, government’s military…)