Discuss Of The Challenge And Supportive Factor To Foreign Investors In Vietnam Country.

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  • 1. “Analyze the Economic and Non-Economic factor of Environment in VN”3- Discuss about Challenge and Supportive Factorto Foreign Investors: There are 10 first factors to be considered by investors when choosing the location for investment: 1) Customers approach 2) A stabilized social and political environment 3) Easy commercial condition 4) Reliability and quality of infrastructure 5) The capacity to hire qualified staff 6) The capacity to hire managers 7) Level of corruption 8) Cost of labor 9) Crime 10)The capacity to hire technical staff ________________________ (Source: MYGA, survey on direct foreign investment, January 2002)18/11/2010 34
  • 2. “Analyze the Economic and Non-Economic factor of Environment in VN”3- Discuss about Challenge and Supportive Factor to Foreign Investors (Cont.) 3-A- Challenge to Foreign Investors in Vietnam: Vietnam’s economy has shown one of the strongest growth rates in Asia over the past two years (8.2% in 2006 and 8.5% in 2007) and this level of growth is anticipated to continue into 2008. Strong economic growth together with low labor costs and a young and highly motivated workforce had attracted significant overseas interest and increased investment in both the industrial and real estate sectors. Foreign direct investment in approved projects in 2007 amounted to some US$ 20 billion, a significant increase from the US$10.2 billion secured in 2006. Membership of the WTO, which was achieved in January of 2007, has encouraged further large scale investment interest, particularly as privatization of State Owned Enterprises is expected to be completed by 2010. This should encourage joint ventures and foreign investment in previously non-accessible sectors. 18/11/2010 35
  • 3. “Analyze the Economic and Non-Economic factor of Environment in VN”3- Discuss about Challenge and Supportive Factor to Foreign Investors (Cont.) 3-A- Challenge to Foreign Investors in Vietnam (Cont.): Vietnam ranked 116th (out of 178 countries) on Transparency International Corruption Perception Index 2010 Information and Regulation: - public reporting, disclosure and accountability are developing -“too many laws “ For long and wide perspective of Vietnam: Vietnam will become an industrializing country toward modernization by the year 2020, 80- 90b.USD FDI in 2006-2010 WTO commitments: Clearance of trade barriers, market access and strong reform towards a market economy under socialism 18/11/2010 36
  • 4. “Analyze the Economic and Non-Economic factor of Environment in VN”3- Discuss about Challenge and Supportive Factor to Foreign Investors (Cont.) 3-B- Supportive Factor to Foreign Investors in Vietnam: To perfect its investment environment, Vietnam will focus on improving the quality of its human resources, upgrading infrastructure and ensure transparency and consistency of investment policies. Vietnam integrated itself to the region and the world: Asia Pacific Economic Conference (APEC) - Member since 1998 Vietnam hosted the APEC Summit 2006 WTO (World Trade Organization), - Became a WTO member in 2006, ASEAN Free Trade Agreement (AFTA) - Cutting tariffs to join the AFTA - complete by early 2006 Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy ACMECS(Thailand): - Vietnam admitted to ACMECS as an official member in 2005 18/11/2010 37
  • 5. “Analyze the Economic and Non-Economic factor of Environment in VN”3- Discuss about Challenge and Supportive Factor to Foreign Investors (Cont.) 3-B- Supportive Factor to Foreign Investors in Vietnam: Changes in Political and Legal Framework: Constitution 1992: private sector granted equal treatment with state sector. Trade liberalization: - Bilateral Trade Agreement with USA; - AFTA implementation from 2003-06; - targeting accession to WTO in 2006. Macroeconomic Stability Maintained: • GDP Growth 7.2% in 2003; 7.69% in 2004; 7.5%e in 2005. • Industrial Output increased by 16.1%yoy in 2003; 16% in 2004 and 16%e in 2005. • Reasonable interest rates and modest devaluation of VND in spite of CPI of 9.5% in 2004. 18/11/2010 38
  • 6. “Analyze the Economic and Non-Economic factor of Environment in VN”3- Discuss about Challenge and Supportive Factor to Foreign Investors (Cont.) 3-B- Supportive Factor to Foreign Investors in Vietnam (Cont.): Improved Investment Climate: Development of about 110 Export Processing Zones, Telecommunication Industrial Zones, High Tech Zones. About 5,110 foreign-direct investment projects (75% wholly-foreign owned, 25% joint ventures) with a total approved capital of around USD 46bn In 2003, the monopoly in the telecom sector started to phase out; internet telephony was allowed; four more Transportation Mobile phone operators entered the market. Infrastructure Projects: Increasing capacity and efficiency of currently 16 operational and 9 new airports. Expanding the number of deep sea ports. Up-grading highways Improving internet-access, telephone and mobile phone availability and reduce cost. 18/11/2010 39
  • 7. “Analyze the Economic and Non-Economic factor of Environment in VN”3- Discuss about Challenge and Supportive Factor to Foreign Investors (Cont.) 3-B- Supportive Factor to Foreign Investors in Vietnam (Cont.): Competitive Quality of Workforce: Over 50% populations are below 25 years old, 60% less than 30 years old Working-age Population accounts 59.3% of total Population (46.7m People) Literacy Rate about 90-92% Special Focus on IT-Training in schools fuelling software industry development Strong work ethic, desire to learn and will to get ahead Vietnamese workers have proven to be skilful, reliable and highly trainable FDI companies allowed transferring loss to next year to calculate corporation income to pay CIT: Freedom to repatriate profit after completing all stipulated obligation with Government (tax rate is 0%). Import Tax Exemption for commodity to create fix asset Land rental fee reduction 18/11/2010 40