UEH UNIVERSITY

UEH COLLEGE OF BUSINESS

ESSAY

Subject : International Finance

Subject Code : 22D1FIN50504008
Lecturer : Nguyễn Văn Thiện Tâm
Student’s name : Bùi Dương Hà
Class : FNC11
Student Code : 31201024489

HO CHI MINH CITY – YEAR 2022Full name: Bui Duong Ha

 I. QUESTIONS:
Within 1,000 words, you are required to answer the following two questions:
1. In your opinion, what are the key positive and negative effects of FDI inflows in
Vietnam? (5 marks)
Key positive:
- Big capital to develop the country's economy: In the period 2011-2019, the FDI sector
contributed about 25.7% to Vietnam's economic growth, accounting for about 13% of
GDP in 2010 and 19.6% of GDP in 2019. FDI also helps boost exports, contributing to
Vietnam's trade balance surplus.
- Economic restructuring in Vietnam: The participation of the FDI sector in many
industries and fields, especially in the processing and manufacturing industries and a
number of other industries, is an important factor in promoting economic restructuring in
the current direction. Contribute to building a dynamic economic environment and
increasing the production capacity of products containing high gray matter content in the
economy; agricultural restructuring, diversifying products, and enhancing the value of
exported agricultural products.
- Create job opportunities for workers in country, improve qualifications and work
morale, and solve unemployment: Increase labor productivity, increase income for
workers, contribute to solving poverty, improve people's living standards. Up to 2019, the
labor force working in FDI enterprises is about 6.1 million people. Labor productivity of
the FDI sector is about 118 million VND (price in 2010), a growth rate of about
8.7%/year (much higher than the labor productivity of domestic enterprises: 8,7/4,6).
Besides, it also improves the quality of Vietnam's human resources through an internal
training system within the enterprise or association with training institutions outside the
enterprise.
- Transfer technology and green technology to improve science and technology: FDI
becomes one of the important technology transformation channels, contributing to raising
the level of the economy - deeper integration both in terms of economy - society with
other countries in the region and in the world. Green technology fully implements social
responsibility, builds and raises awareness about green economy for employees and users
to protect the enviroment such as project of medical wastewater treatment system at Cho
Ray Hospital,…
- Expand international trade, develop markets and participate in global value chains.
Key negative:
- Pollute the environment: FDI is both an opportunity to receive new technology, but it
also turns Vietnam into a consumer of outdated technologies that no longer meet the
standards in their country - a technology dump. Formosa and Vedan are examples of
lessons for attracting FDI but not bulding system processing system, leading to actions
that pollute the environment, leaving serious consequences. Many empirical studies have
also shown that pollution has the ability to "migrate" from developed countries to
developing countries through FDI.
- The economy depends entirely on FDI: High utilization of FDI capital may lead to a
lack of concentration on the mobilization of maximum domestic capital, resulting in an
imbalance in the investment structure.
- Tax evasion through the declaration of “false loss, real gain” causes damage to the
economy of the country attracting FDI, harming the country's FDI revenue.
- Compete with domestic product: FDI's technology competes with state-managed
manufacturing industries such as sugar cane, sugar, telecommunication, etc.
- Evading responsibility for employees: failing to fully implement social insurance
regimes, ignoring workers' rights in accordance with the law of attracting foreign direct
investment...
2. Will FDI leave Vietnam due to Covid-19? (5 marks)
Covid-19 affects FDI but FDI will not leave Vietnam due to Covid-19. Detail:
In 2021, despite the complicated developments of Covid-19 in the service sector, foreign
direct investment (FDI) into Vietnam reached 31.15 billion USD, up 9.2% compared to
2020.
In 2022, capital for implementing foreign-invested projects (FDI) is estimated at 5.92
billion USD, up 7.6% over the same period in 2021.
Should I invest in Vietnam in Covid-19? - a difficult question of foreign investors who
want to invest in Vietnam.
Foreign investors should invest in Vietnam despite the epidemic are due to government
policies such as Resolution No 105/NQ-CP, Resolution No. 128/NQ-CP, etc., which have
reassured the business community. Besides, the labor force is young, abundant and cheap
with increasing skills. FDI agreements allow trade unions to import cheaper components
and better access to export markets. Our country has political stability. The business
environment is constantly improving, and many indicators of Vietnam's business
environment and competitiveness have been improved. In particular, in recent years,
Vietnam has been a member of many important multilateral and bilateral trade
agreements of great size, stature, and strength.
In addition, Vietnam has a strategic location and potential market with a population of
nearly 100 million people. Vietnam also has abundant natural resources, the legal
regulation has significantly improved. Vietnam is upgrading its infrastructure in recent
years. Open foreign investment policy, opened market, encourage and attract foreign
investors through reforming administrative procedures and investment incentives. All of
the above point to Vietnam as a promising destination for many businesses with success
stories such as Unilever Vietnam, Hanel Vietnam, Lotte hotel and resort.
II. REFERENCES:
- Why invest in Vietnam? [online] Avaiable at:
https://www.crowe.com/vn/insights/doing-business-in-vietnam/doing-business-in-
vietnam-2020/why-invest-in-vietnam [ Accessed 24 May 2022]
- M.Enc Đỗ Thị Thu. Đầu tư trực tiếp nước ngoài và vấn đề phát triển kinh tế - xã
hội ở Việt Nam. [online] Avaiable at:
https://bannoichinh.bacninh.gov.vn/news/-/details/4295857/-au-tu-truc-tiep-nuoc-
ngoai-va-van-e-phat-trien-kinh-te-xa-hoi-o-viet-nam [ Accessed 24 May 2022]
- Phạm Nguyễn Phi Hùng. Những tác động tích cực và tiêu cực của FDI đến Việt
Nam. [online] Avaiable at: https://123docz.net//document/4052366-nhung-tac-
dong-tich-cuc-va-tieu-cuc-cua-fdi-den-viet-nam.htm [ Accessed 24 May 2022]
- PhD. Lâm Thùy Dương (2021), Tạp chí Tài chính. Vai trò của vốn đầu tư trực tiếp
nước ngoài và giải pháp phát triển kinh tế Việt Nam. [online] Avaiable at:
https://tapchitaichinh.vn/su-kien-noi-bat/vai-tro-cua-von-dau-tu-truc-tiep-nuoc-
ngoai-va-giai-phap-phat-trien-kinh-te-viet-nam-333238.html