8/7/2019 Foreign Investors Were Attracted by the Potential of an Economy Which Had Not Exploited Yet

http://slidepdf.com/reader/full/foreign-investors-were-attracted-by-the-potential-of-an-economy-which-had-not 1/2

Foreign investors were attracted by the potential of an economy which had not exploited yet. In

addition, labor force was abundant, cheap labor and high literacy rates.

From 1997-1999, Vietnam had a downfall of the registered FDI ( 49% in 1997, 16% in 1998 and

59% in 1999), partly because of the financial crisis Asia. The five largest investors in Vietnam

were from Asia and facing real difficulties in their countries. To ensure that business activities intheir countries, investors were forced to postpone or cancel plans to expand abroad. The crisis

also forced investors to lower their target expansion to Asia. The crisis also led to the currency of 

South East Asian countries were devalued.

Therefore, Vietnam became less attractive to the projects which focused on exports. Moreover,

foreign investors also realized that the expected demand of the market had been exaggerated.

The barrier for the business becomes more clear.

From 2000-2002: the registered FDI in 2000 at 25.8% and 22.6% at 2001. An FDI in 2001 and

2002 were as a result of the project in Nam Con Son (2000) with a total investment of 2.43

 billion U.S. dollars, and Construction Project of Phu My (2001 ) with a total investment of 0.8 billion U.S. dollars. In 2002, registered FDI fell about 1.4 billion U.S. dollars, reaching about

54.5% of 2001.

Foreign investment support for capital on development investment, overcome the lack of 

economic capital of Vietnam in the renovation period.

1.  Advantages:

FDI is mainly currency and high technology machines which contributed new and additional

improvement of the infrastructure, adding new production capacity of the entire national

economy, especially the industrial sector.

- Through technology transfer, FDI has contributed to increase labor productivity, production

capability, management experience in several industries (telecommunications, oil exploration,

chemical, industrial production ).

FDI had contributed actively to promote the economy of Vietnam and restructuring in the

direction of progress, increasing revenue, promoting the development of industrial and service

activities in the country¶s economy.

Moreover, FDI has contributed mainly to build up the process of industrial parks, key economic

regions, the industry's key economies

Create jobs for workers, and attract staff to work in enterprises with foreign investment capital in

order to efficiently exploit the workforce in the country.

8/7/2019 Foreign Investors Were Attracted by the Potential of an Economy Which Had Not Exploited Yet

http://slidepdf.com/reader/full/foreign-investors-were-attracted-by-the-potential-of-an-economy-which-had-not 2/2

Improve the international scale

- Contribute significantly to the state budget revenues through taxes.

These are benefits that we initially obtained through FDI. Although still modest, but it also

contributes significantly to the innovation of our country.

2. Disadvantages:

- The structure of foreign investment into Vietnam is not reasonable. The foreign investment

 projects in Vietnam had just focused on some areas and industries with the ability to attract

capital faster, less risky and good infrastructure

- Investment efficiency is not high and uneven, some projects have been put into operation in 3-4

years and still lost.

- Foreign investment has created fierce competition with local firms for labor, engineering,

domestic and export market

- Besides the positive aspects of competition, also appeared several factors negatively that affect

to the growth of domestic enterprises

- The purpose of the investor is to profit as high as possible. So they have sought to exploit

comparative advantage of the host country. A great advantage of Vietnam is cheap labor. So

many investors causing disadvantage to employees

- Models of industrial parks, export processing zones are not as development planning (just the

number not effective factors).

- The biggest problem that causes FDI in the years that are transferred many worst technologies

and outdated equipment causing environmental pollution and affect to the health of workers

Poor infrastructure in Vietnam has existed for centuries

- The legal system of Vietnam is in the completing process, lack of uniformity, not clear and

specific enough.

On the other hand administrative procedures, red tape, bureaucracy, lack of responsibility fromstaff, become bottlenecks of project implementation and production.