34 Years Of Attracting FDI In Vietnam: The Remarkable Milestones

Summary

In 2022, Vietnam celebrates 34 years since its first wave of foreign direct investment (FDI), becoming a global FDI hotspot. Key milestones include the 1987 Foreign Investment Law, the establishment of the State Committee for Cooperation and Investment in 1989, and joining the WTO in 2007. Despite the 2021 pandemic, Vietnam attracted significant FDI, ranking 19th globally in 2020. The government's supportive policies and the country's strategic location within the newly-signed RCEP make Vietnam an attractive destination for investors, with the potential for sustainable and inclusive recovery post-pandemic.

Takeaways

• 📅 Vietnam's journey of attracting FDI began in 1987 with the approval of the Foreign Investment Law.
• 🏛️ The Ministry of Foreign Economic Affairs was tasked with evaluating and licensing FDI projects in 1988.
• 🌟 In 2007, Vietnam joined the World Trade Organization, marking a significant step in its economic integration.
• 📈 Vietnam saw a threefold increase in FDI in 2008, welcoming up to 64 billion USD.
• 🏆 In 2020, Vietnam was ranked 19th globally in attracting the most FDI.
• 🛡️ Despite the Covid-19 pandemic, Vietnam's government issued resolutions to promote economic development and support FDI.
• 💹 In the first five months of 2022, Vietnam received 11.7 billion USD in FDI, indicating continued investor interest.
• 🔁 The Law on Investment established equality between domestic and FDI enterprises, fostering a level playing field.
• 📉 FDI in Vietnam fell by 2% in 2020, but this decline was significantly lower than in other countries.
• 🌐 The Regional Comprehensive Economic Partnership (RCEP) has positioned Vietnam as part of one of the largest FDI recipient groups.
• 🌱 Vietnam shows positive signs of recovery post-pandemic, making it an attractive market for new business development.

Q & A

What significant event marked Vietnam's opening to foreign direct investment in 1987?

The approval of the Foreign Investment Law by the National Assembly at the end of 1987, which formalized foreign capital flows into Vietnam.

Which government body was tasked with evaluating and licensing FDI projects in 1988?

The Ministry of Foreign Economic Affairs was tasked with evaluating and licensing FDI projects starting in 1988.

When did Vietnam join the World Trade Organization and what was its significance?

Vietnam joined the World Trade Organization (WTO) in 2007, marking a significant moment in its economic renovation journey and becoming the 150th member of the world's largest trade organization.

How much FDI did Vietnam attract in 2008, and how does it compare to the previous year?

In 2008, Vietnam attracted up to 64 billion USD in FDI, which was three times more than in 2007.

What was Vietnam's global ranking in terms of attracting FDI in 2020?

In 2020, Vietnam was ranked 19th in the world in terms of attracting the most FDI.

What measures did the Vietnamese Government take during the Covid-19 pandemic to promote economic development and support FDI businesses?

During the Covid-19 pandemic, the Vietnamese Government issued Resolutions 105/NQ-CP and 128/NQ-CP to promote economic development and help the FDI business community remain confident.

How much foreign direct investment did Vietnam receive in the first five months of 2022, and what were the types of investments involved?

In the first five months of 2022, Vietnam received a total of 11.7 billion USD in FDI, which included 4.1 billion USD in newly-licensed investment capital, 5.6 billion USD in adjusted capital, and 1.98 billion USD in share purchase capital.

What legal changes did Vietnam make to establish equality between domestic and FDI enterprises?

Vietnam combined the Laws on Domestic and Foreign Investment into the Law on Investment, which established equality between domestic and FDI enterprises.

How has FDI impacted Vietnam's economy and international standing?

FDI has helped Vietnam produce and export more, brought in more money for the Government, provided jobs, and improved its status, role, and position in the international community.

According to the World Investment Report 2021 by UNCTAD, what was Vietnam's global ranking in attracting FDI, and how did it change from 2019?

According to the World Investment Report 2021 by UNCTAD, Vietnam ranked 19th globally as an FDI host country in 2020, up five places compared to 2019.

How did the Covid-19 crisis affect global FDI flows, and how did Vietnam fare in comparison to other countries?

The Covid-19 crisis caused a 35 per cent drop in global FDI flows to $1 trillion in 2020. Vietnam's FDI fell by 2 per cent, which was much lower than the decline in other countries.

Outlines

00:00

🌟 Vietnam's FDI Journey and Achievements

The video script celebrates the 34th anniversary of Vietnam's opening to foreign direct investment (FDI), highlighting its transformation into a global FDI hotspot. Key milestones include the 1987 Foreign Investment Law, the establishment of the State Committee for Cooperation and Investment (SCCI) in 1989, and Vietnam's 2007 WTO accession. The script details the government's proactive measures during the Covid-19 pandemic, such as Resolutions 105/NQ-CP and 128/NQ-CP, to sustain economic growth and investor confidence. Despite the pandemic, Vietnam attracted significant FDI, with 578 new projects and $11.7 billion in investment in the first five months of 2022. The government's efforts to create an open business environment, equalize treatment between domestic and FDI enterprises, and reduce corporate income tax are emphasized. The script also underscores the importance of FDI in boosting Vietnam's economy, exports, government revenue, employment, and international standing, with Vietnam ranking 19th globally for FDI in 2020 according to UNCTAD's World Investment Report 2021.

05:01

📉 Impact of COVID-19 on Global and Regional FDI

The script discusses the contraction of FDI in Southeast Asia, typically a growth engine for global FDI, which fell by 25% to $136 billion in 2020. It notes the decline in investment across major recipients, including Singapore, Indonesia, and Vietnam. The newly-signed Regional Comprehensive Economic Partnership (RCEP) is highlighted as a significant FDI recipient group. The global FDI flows dropped by 35% to $1 trillion in 2020 due to the COVID-19 crisis, with developed countries experiencing a 58% decline. In contrast, developing economies saw a more moderate 8% decrease, largely due to Asia's resilience. The script points out that all components of FDI fell, with new project activity and cross-border M&A slowing down. It also mentions the global policy priority of increasing investment for a sustainable and inclusive recovery, focusing on infrastructure, energy transition, resilience, and healthcare. The video concludes by encouraging viewers to consider Vietnam for new business development, offering support through ICHAM Vietnam and inviting viewers to stay updated through their channel.

Keywords

💡FDI

FDI stands for Foreign Direct Investment, which refers to an investment made by a firm or individual in one country into business interests located in another country. In the context of the video, FDI is central to Vietnam's economic growth strategy, attracting capital from abroad to stimulate the local economy and create jobs. The script mentions Vietnam welcoming a significant amount of FDI, particularly in 2008 and during the first five months of the year discussed, highlighting its importance to the country's development.

💡Investment Law

The Investment Law is a legal framework that governs the conditions under which investments can be made in a country. In the video, the approval of the Foreign Investment Law by Vietnam's National Assembly in 1987 is a milestone, as it formalized the rules for foreign capital inflows, marking the beginning of a more open economic policy towards foreign investors.

💡WTO

The WTO, or World Trade Organization, is an international organization that deals with the global rules of trade between nations. Vietnam's joining the WTO in 2007 is highlighted in the script as a pivotal moment that signified the country's commitment to global economic integration, opening up new opportunities for trade and investment.

💡SCCI

SCCI stands for State Committee for Cooperation and Investment, an entity established in Vietnam in 1989 to handle FDI projects licensed by the Ministry of Foreign Economic Affairs. The establishment of SCCI in the script illustrates the government's initiative to create a dedicated body to manage and promote foreign investments, underscoring the strategic importance of FDI to the country's economic development.

💡Resolutions

In the context of the video, 'Resolutions' refers to official decisions or policies enacted by the government to address specific issues or to guide actions. Resolutions 105/NQ-CP and 128/NQ-CP issued by Vietnam's government are mentioned as measures to combat the economic challenges posed by the Covid-19 pandemic, aiming to support economic development and maintain investor confidence.

💡Corporate Income Tax

Corporate Income Tax is a tax imposed by governments on the profits earned by corporations. The script mentions that Vietnam has been gradually reducing corporate income tax to improve the investment climate, making the country more attractive to foreign investors by lowering the cost of doing business.

💡RCEP

RCEP stands for Regional Comprehensive Economic Partnership, a trade agreement among Asian countries aimed at fostering economic cooperation and trade. The script notes that the newly-signed RCEP is becoming one of the largest FDI recipient groups, indicating that Vietnam, as a part of this agreement, is poised to benefit from increased economic integration and investment inflows.

💡UNCTAD

UNCTAD is the United Nations Conference on Trade and Development, an organization that deals with trade, investment, and development issues. The World Investment Report 2021 by UNCTAD is referenced in the script to emphasize Vietnam's rise in global rankings for attracting FDI, showcasing the country's success in attracting foreign capital.

💡Infrastructure

Infrastructure refers to the basic physical and organizational structures needed for the operation of a society or enterprise. In the video, infrastructure is mentioned in relation to global policy priorities post-pandemic, where investment in infrastructure is seen as crucial for sustainable and inclusive recovery. This implies that Vietnam sees investment in infrastructure as a key area to attract FDI and boost its economy.

💡Energy Transition

Energy Transition refers to the shift from fossil fuels to renewable energy sources. The script mentions investment in the energy transition as a global policy priority, suggesting that Vietnam is looking to attract FDI in the renewable energy sector as part of its strategy to move towards a more sustainable energy future.

💡Resilience

Resilience, in the context of the video, refers to the ability of a system or entity to withstand or recover quickly from difficulties, such as the Covid-19 pandemic. The script highlights Vietnam's efforts to build resilience, particularly in the business environment, to ensure that FDI continues to flow despite global challenges.

Highlights

2022 marks the 34th anniversary of Vietnam's opening to foreign direct investment (FDI).

Foreign Investment Law approved in 1987 formalized foreign capital flows into Vietnam.

In 1988, the Government tasked the Ministry of Foreign Economic Affairs with FDI project evaluation and licensing.

The first FDI project license was issued in 1988, initiating a series of future projects.

The State Committee for Cooperation and Investment (SCCI) was established in March 1989.

Vietnam joined the World Trade Organization (WTO) in 2007, becoming its 150th member.

Vietnam welcomed $64 billion USD in FDI in 2008, three times more than in 2007.

In 2020, Vietnam was ranked 19th globally in attracting FDI.

During the Covid-19 pandemic, Vietnam issued Resolutions 105/NQ-CP and 128/NQ-CP to promote economic development.

In 2022, Vietnam remained an appealing destination for foreign capital flows with 578 newly-licensed projects.

Vietnam received $11.7 billion USD in FDI in the first five months of 2022.

The Law on Investment established equality between domestic and FDI enterprises.

Vietnam has reduced corporate income tax to improve the investment climate.

FDI has significantly impacted Vietnam's economy, helping to produce and export more, and providing jobs.

Vietnam ranked 19th globally as an FDI host country in 2020 with $16 billion in investment capital.

FDI in Vietnam fell by 2% in 2020 due to investment contractions in manufacturing and real estate.

Inflows from major Asian countries to Vietnam declined but were lower than in other countries.

The Regional Comprehensive Economic Partnership (RCEP) became one of the largest FDI recipient groups.

Global FDI flows dropped by 35% to $1 trillion in 2020 due to the COVID-19 crisis.

Developing economies accounted for two-thirds of global FDI in 2020.

Vietnam shows positive signs of recovery after the pandemic, making it an attractive market for new business development.

Transcripts

Welcome to ICHAM Connected Channel

2022 marks the 34th anniversary of Vietnam

officially opening its doors to the first wave of direct foreign investment

and becoming a bright spot for attracting FDI investors from around the world.

Let us take a look back at the following significant milestones in the journey

that has resulted in a large number of turning points and significant achievements for the economy

and overall development of the country.

At the end of 1987, Foreign Investment Law was approved by the National Assembly,

formalizing foreign capital flows into Vietnam.

At the start of 1988, the Government tasked the Ministry of Foreign Economic Affairs

with evaluating and licensing FDI projects.

In the same year, the Ministry of Foreign Economic Affairs issued the first license for a direct foreign investment project,

paving the way for a series of future projects.

In March 1989,

the State Committee for Cooperation and Investment (or SCCI) was established

to handle FDI projects licensed by the Ministry of Foreign Economic Affairs.

In 2007, Vietnam joined the World Trade Organization (or WTO)

a bright moment in the renovation journey

when our country officially became

the 150th member of the world's largest trade organization.

Since then, Vietnam has been ready and confident to integrate,

open its economy, and increase international cooperation.

In 2008, Vietnam welcomed up to 64 billion USD in FDI,

which was three times more than in 2007.

In 2020, Vietnam was ranked 19th in the world in terms of attracting the most FDI.

During the Covid-19 pandemic in 2021,

the Government of Vietnam was determined to fight the pandemic with timely measures

and issued Resolutions 105/NQ-CP, and 128/NQ-CP,...

which promote economic development and help the FDI business community remain confident.

Despite the pandemic, several large investors decided to invest during the market exploration process.

Vietnam will remain an appealing destination for foreign capital flows in 2022.

In the first five months, there have been 578 newly-licensed projects,

and 395 adjusted projects, with 1339 enterprises contributing capital by shares.

Vietnam received a total of 11.7 billion USD in foreign direct investment (FDI).

The newly-licensed investment capital was 4.1 billion,

the adjusted capital was 5.6 billion,

and the share purchase capital was 1.98 billion.

The Government always promotes an open business investment environment and flexible policies.

The Law on Investment, which combines the Laws on Domestic and Foreign Investment,

established equality between domestic and FDI enterprises.

Furthermore, the state gradually reduced corporate income tax in order to improve the investment climate.

Moreover, in order to build trust with foreign partners, domestic enterprises must strive to improve capacity in all areas,

from technology to the level of workers and managers.

There is no doubt that FDI has a big impact on the economy's growth.

It helps Vietnam produce and export more,

brings in more money for the Government, and gives people jobs.

It also helps Vietnam improve its status, role, and position in the international community.

We have to notice that

For the first time, Vietnam is among the top 20 countries attracting

the most foreign direct investment (FDI) capital in the world,

according to the World Investment Report 2021

by the United Nations Conference on Trade and Development (UNCTAD).

In 2020, Vietnam ranked 19th globally as an FDI host country

with $16 billion in investment capital, up five places compared with 2019.

FDI fell by 2 per cent in Vietnam because of significant investment contractions

in manufacturing and real estate activities, the two largest recipients last year,

but was cushioned by a rise in investment in electricity projects.

Inflows from major Asian countries (e.g. China, Hong Kong (China), Japan, Republic of Korea),

which have traditionally been the largest sources of FDI to Vietnam, declined.

The decline is much lower than in other countries.

FDI in Southeast Asia – normally an engine of growth for global FDI,

contracted by 25 per cent to $136 billion,

with declines in investment in all the largest recipients,

including Singapore (-21 per cent),

Indonesia (-22 per cent),

and Vietnam (-2 per cent).

The newly-signed Regional Comprehensive Economic Partnership (RCEP) became one of the largest FDI recipient groups.

The report says that the COVID-19 crisis caused a dramatic fall in FDI in 2020.

Global FDI flows dropped by 35 per cent to $1 trillion, from $1.5 trillion in 2019.

This is almost 20 per cent below 2009 through after the global financial crisis.

The decline was heavily skewed towards developed countries, where FDI fell by 58 per cent,

in part due to oscillations caused by corporate transactions and in transforming financial flows.

FDI in developing economies decreased by a more moderate 8 per cent, mainly because of resilient flows in Asia.

As a result, developing economies accounted for two-thirds of global FDI, up from just under half in 2019.

All components of FDI were down last year.

The overall contraction in new project activity, combined with a slowdown in cross-border mergers and acquisitions (M&A),

led to a decline in equity investment flows by more than 50 per cent.

With profits of multinational enterprises (MNEs) down 36 per cent on average,

reinvested earnings of foreign affiliates – an important part of FDI in normal years, were also down.

According to the report, increasing investment to support a sustainable and inclusive recovery

from the pandemic is now a global policy priority.

This entails promoting investment in infrastructure and the energy transition,

resilience and in healthcare.

And right now, Vietnam shows many positive signs of recovery after the pandemic.

So if you have a plan for developing new business in the potential market

in Southe East Asia, especially in Vietnam,

let’s consider this time.

ICHAM Vietnam will come along with you.

Feel free to contact us via the email in the video description

and don’t forget to subscribe to our channel for new videos about Vietnam and Italy.

Grazie and Hen gap lai.