4. ATTRACTING FDI EXPERIENCE WORLD-WIDE
4.1. Attracting FDI experience of some countries
4.1.1. China
Attracting foreign direct investment is an important area of foreign economic activities of China. Since the implementation of reforming and opening policies (in 1978), it is considered the "golden key" of economic growth in China until nowadays.
Over 20 years of implementation of FDI attraction policies, the FDI into China has increased each year, from $ 3 billion in 1990 to $ 40 billion in 2000, $ 72 billion in 2005, $ 92.4 billion in 2008, $ 114.7 billion in 2010 and $ 124 billion5 in 2011.
Today, China is one of the largest FDI attraction countries in the world (Duong Thi Binh Minh, 2009 and Faramarz Akami, 2008).
Attracting FDI in China can be divided into three stages as follows:
In the period 1979 - 1991: This is a trial period, FDI capital was mainly from a number of countries such as the U.S., Japan and focused on the field of processing,
trade and technology transfer. During this period, the total registered capital is 50.94 billion, 26.25 billion dollars of capital made, average size of 1.21 million / project.
In the period 1992 - 2000: This is a acquisition of large-scale and synmatic foreign investment. After 10 years of reforming and opening up, infrastructure development, new investment attraction policies, Chine have created new confidence for foreign investors to attract $623.5 billion of committed FDI and $ 323.38 billion of implemented capital .
In the period after WTO accession: Attracting $1573.71 billion of committed capital, implemented capital is 1273.19 billion, and nearly $ 55 billion / year on average. By this stage, China implemented policies to attract multi-disciplinary, multi-component, a number of areas previously restricted were opened. Thus, China has changed strategy to attract FDI from trial opening to opening under committed roadmap, moving from China unilaterally opening up into multilateral opening between China and WTO members. By 2010, there were almost 500 of the top companies in the world to invest in China and more and more transnational corporations consider China as their major investment place. Since 1993, China is the largest recipient of FDI among developing countries and since 2002 it is one of the few countries having attractive environment to get largest FDI in the world.
China has adopted measures that are extremely flexible, versatile and very effective due to:
First, China has no general law for foreign investment. Only appropriate forms of foreign investment is defined and is institutionalized by the separate law with objective to help individual investors choose the most appropriate investment.
Second, China allows foreign investors to transform flexibly their investment.
This creates opportunities for FDI enterprises to search and modify the most suitable form of investment.
Third, China has reformed administrative procedures thoroughly and sweepingly towards simplicity way. Expansion for the local authority is to develop internal resources and local creativity. Localities can decide or approve projects of lower than $ 30 million and only report for the Central Committee.
Fourth, China has built the special economic zone such as Hong Kong, Shenzhen in which there are industrial parks, export processing zones with good infrastructure, many incentives policies for tax, land use, administrative management and control.
Fifth, encourage oversea Chinese to invest in China town on the point of view of reflecting ethnicity.
4.1.2. Malaysia
Among developing countries, Malaysia is considered as successful countries in attracting FDI to implement industrialization. The starting point is a backward agricultural country, multi-ethnic, low domestic accumulation, so Malaysia always highly appreciate FDI for the country's economic development because this is considered as a key factor to implement industrial goods. Starting from this perspective, Malaysia is always actively improving its investment environment to attract FDI. Thus, FDI inflows into Malaysia are more and more increasing and have contributed to creating "miracle" growth of the economy for many years. Thanks to open investment policies, foreign investment in Malaysia in 1991 reached $ 6.4 billion and by 1996 there was more than half of total investment in the country. The largest foreign investor in Malaysia is Japan, Taiwan, reaching 2.29 billion and $ 7.02
billion respectively. According to UNCTAD, FDI in Malaysia in 2005 was 3.97 billion dollars, 6.05 billion U.S. dollars in 2006 and $ 8.4 billion in 2007; this showed FDI attracting speed in Malaysia is high. In fact, Malaysia had attracted $ 7.3 billion FDI in 2008. However, the country has attracted nearly $ 2 billion FDI in 2009 due to the impact of the world credit currency crisis. In 2010, Malaysia's economic was prosperous with GDP growth of 5%, so FDI increased significantly and reached $ 9.1 billion. I n 2011, but Malaysia has attracted $ 11.6 billion despite global economic difficulties.
For 20 years ago, Malaysia remains a country exporting crude oil, vegetable oil, rubber, lead, wood and other materials. The ratio of industrial products in total exports reached only 22% in the 1980, but that proportion was 80% since 1996.
Today, Malaysia is one of the centers for producing advanced electronic products worldwide. The FDI attraction experience of Malaysia focused mainly on:
First, building a stable political system and national unity Second, building modern infrastructure systems
Third, programming economic development plans of short and long terms with clear objectives. Strict control of short-term investment capital that help the short-term investors in Malaysia can accurately estimate investment cost in Malaysia.
At the same time, they adjust the percentage of ownership to encourage and stabilize long-term investment environment.
For FDI property and ensuring, in order to increase the confidence of foreign investors, Malaysian government committed not to nationalize or confiscate legal assets of foreign investors and does not require foreign parties to adjust contribution rates for the project which has been granted. At the same time, they created all favorable conditions for foreign investors to transfer profits, capital and other assets in
their countries. These commitments are outlined in the security agreement and the investment agreement to avoid double taxation of Malaysia.
Encouraging investment in the manufacturing sector, large investment projects, high-tech and export-oriented. Malaysia has become one of the manufacturing centers of the world's biggest electronics. Nowadays, due to labor shortages in the country, so the government has launched a number of criteria for investment licensing as investment capital per labor must be greater than $ 18,300, then the project is considered as less labor using ... this suggests Malaysia has been active in regulating investment activities in accordance with reality.
Malaysia has implemented many favourous measures to attract FDI more strongly, such as tax incentives for businesses who pioneered within 5 years. In fact, the enterprises have to pay only 30% of taxable income since starting date of production with the number of products reaching at least 30% of capacity; incentives for high-tech enterprises, for the projects having nature of industrial linkage, for the important project of the country. In particular, Malaysia also encouraged to invest in the forms of industrial parks, promoting private to invest in the industrial zones which have many big major projects to attract investment as the project "Vision 2020".
4.1.3. Thailand
FDI inflows into Thailand increased each year, 2005 is 8.05 billion dollars, 9.01 billion dollars in 2006 and 9.56 billion in 2007. Thailand is considered as a successful nation in the management of foreign investment:
First, Thailand has Trade Promotion Law defining clearly which agency or branch has specific tasks in promoting investment, decentralization, decentralization implementation, raising more powers to the provinces, cities and autonomous regions in the state management for FDI enterprises.
Second, Thailand implemented well planning activities and publicized the country's development plans for each phase, in the short and medium term.
Third, Thailand focused on infrastructure investment: roads, railways, airport systems, ports, industrial parks, warehouses modern, which are convenient for economic development and tourism.
Fourth, Thailand has investment policies to encourage flexibility investment:
Thailand spare income tax from 3 years to 8 years, 90% import duty exemption for raw materials, 50% for machines which are not produced in Thailand yet ...
4.1.4. Singapore
In the early 60s of the twentieth century, Singapore–a national island separated from Malaysia - is an economically poor country, obsolete technology. However, this small island has become, in the late 80s, the 4th largest financial and monetary markets in the world, and has been attracting many high-technologies inthe world… FDI capital into Singapore was 13.93 billion USD in 2005, 24.74 billion USD in 2006 and 24.13 billion USD in 2007. Thus, many developing countries have learnt the experience for creating favorable investment environment of the island to implement open economy strategies.
Firstly, Singapore does not enact foreign direct investment laws. Depending on the different stages of development, the government identifies the key economic sectors in order to enact appropriate policies to encourage investment.
Second, Singapore has built perfect management systems. In 2003, Singapore was elected as a country having no corruption government system which created good conditions for business, the second rank in the "World Competition" list and being elected, by the “Global Investment Climate Organization”, as the second rank of highest profit countries for investors.
Third, for huge investment and slow profitable spearhead projects, time exemptions of taxes are paid more attention. Otherwise, tax exemption is accepted for low investment projects but producing high quality product or being more profitable.
Fourth, Singapore allows foreign financial institutions to engage in foreign exchange in order to develop financial services, support additional funding for economic development.