1. RESEARCH BACKGROUND - AN OVERVIEW OF FDI ENVIRONMENT
1.2. Trend of FDI attraction in Vietnam
Although the world economy in general and Vietnam economy in particular face many difficulties due to the effects of the financial crisis and global economic downturn, adverse evolution of the world economy due to debt crisis, social political instability in the Middle East, West Africa ... and high recent inflation and the internal weaknesses of Vietnam economy that had accumulated over the years... has negatively impacted on development of the country. But, when world economy will continue to recover in the future, Vietnam economy continues to grow and its structure shifts positively.
In the report Global Economic Prospects, published on 16.04.2013, the IMF forecasts the global GdP rose at 3.25% and the following year will be at 4%, lower than the forecast made in May 1/2013 at 3.5% and 4.1% respectively.
IMF forecasts GDP growth of Vietnam in 2013 and 2014 will reach about 5.2% higher than last year (5%) and continued to rise up to 5.5% in 2018. The agency also predicted that inflation in the next 2 years of the Vietnam will be 8.8% and 8%
respectively, lower than last year (9.1%). However, according to the IMF, the current account deficit of Vietnam may rise to 2.2% in 2 years, from 1.6% in 2012.
Table 5. Forecast of GDP of some Asia countries in coming years
Source: The world’s outlook issued April 16th2013- IMF
1.2.2. Comments about FDI from the U.S in Vietnam during 2013–2020 The total investment
Period 2013 - 2015, total FDI in general and U.S FDI in particular in Vietnam will grow again. Increasing Speed of U.S. FDI will rise higher than the average rate of FDI into Vietnam and the United States will become the largest investor in Vietnam in 2015 and became the investor No1 in Vietnam in 2018.
FDI from the United States in Vietnam would break when the Trans-Pacific trade agreement was signed between Vietnam and eight other countries, including the United States. Important point in the multifaceted relations between Vietnam and the United States is that the two countries sign an agreement on strategic economic partners in the future.
FDI from the United States in Vietnam will rise again in 2013, and will grow rapidly after 2015. It is derived from the following causes:
First, more than 25 years of the reform implementation has made economic development potential of Vietnam being stronger than before, it has forced Vietnam to expand external economy relations for its continuous development: the need to expand the market for product consumption; an the need for capital, machinery and equipment, raw materials, production ... to re-expand the production both width and depth size.
Second, the political position of Vietnam in the region and in the world is increasingly enhanced. Vietnam has established bilateral and multilateral relationships with many national and international organizations in the world.
Third, since the two countries established diplomatic relations until now, the Vietnam - America relation has made great progress on all aspects of political, cultural, educational, health ... especially in trade and investment. Vietnam - U.S.
relations will continue to make strong progress in the coming years.
Fourth, the global economy, particularly the European economy, and the U.S.
will escape the crisis, recession and enter a period of growth.
Investment structure
With the characteristics and strengths of the U.S. economy, the structure of U.S. FDI in Vietnam in the period 2013 - 2020 can continue increasing the service, construction, industry sector and few FDI projects in agriculture, forestry and fisheries. In details:
For the services sector, U.S. investors primarily invest in the majors accommodation services and food, financial - banking, insurance, real estate, professional contract, technology...
For industry and construction, U.S. investors primarily invest in specialty:
manufacturing, mining, exploration and exploitation of oil and gas, food processing industry...
For agriculture, forestry, fisheries, U.S. investors primarily invest in the majors of aquacultute and fish processing ....
In addition, U.S. FDI in Vietnam will continue to shift in the structure of the economy by territory of Vietnam. However, the FDI projects in the United States will continue to focus primarily in the provinces and cities of Vietnam - which has developed infrastructure, skilled workforce, good business environment...
Technology Transfer
United States is a top country having many MNC in the world, top 500 leading MNC, with many MNC originating from the United States. With strategy of not attracting FDI by all manners, FDI attraction is highly selective, with special policies to attract MNC investment of U.S. in Vietnam in the coming time, this will be an important prerequisite for Vietnam to acquire original, advanced and modern technologies from MNCs. That is, in the coming years, support industry, manufacturing industry, high technology industry will be replaced for the processing industry, other outdate technological industries. Besides, Vietnam will have good conditions to acquire advanced management degree from the MNC from USA.
With the development trend of knowledge economy and the popularity of global production networks, Vietnam has many opportunities to choose from a number of the manufacturing sector and high technology services from the United States. Currently, the U.S. focuses on developing high-tech industries, advanced material manufacturing, new materials, energy sector, telecommunications, aviation ...
and has been transforming abroad industries which has been standardized or lower
technological level ... Among these, many technologies have been assessed as suitable for advanced and proficiency in Vietnam.
liberalization trend to move and shift force resources and global development centers to Asia – Pacific regions makes Vietnam and many other countries in the region have good opportunities to mobilize and leverage large quantities of high- quality force resources of the world in general, from the United States in particular to Vietnam for its develoment.