Asm Mac.docx - 1a FDI is an investment of an entity in one country by either set up business operations or obtain business asset in other

Asm Mac.docx - 1a FDI is an investment of an entity in one...

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1a FDI is an investment of an entity in one country by either set up business operations or obtain business asset in other countries ( Investopedia n.d ). Over the years, Foreign Direct Investment has been able to improve the economy by encouraging export activities, transferring technologies and providing investment capital, leading to more job opportunities,etc ( Economywatch 2010). 2016 was a very successful year for Vietnam’s economy as full year GDP came in at an estimated 6.21%, in which, per capita GDP for 2016 was 48.6 million VNĐ (US$2,215). This impressive growth is largely driven by the strong improvement of Foreign Direct Investment (FDI) inflow to Vietnam and Export throughout the period. The total Vietnam’s FDI in 2015 reached more than $23 billion USD, in which, nearly $15.6 billion USD came from 2,013 licensed FDI projects, exceeding 26.8% in terms of the number of projects compare with 2014 ( HKTDC 2016 ). Moreover, with the cheap labour, Vietnam is becoming even more appealing destination to foreign investors. Thus, in 2016, Vietnam attracted 2,556 approved projects with $15.1 billion USD in total register capital, received a record $24.4 billion USD in total FDI capital inflow. Figure Reproduced from HKTDC Research As can be seen from the graph, the Republic of Korea was the leading investor in both 2015 and in the first three quarter 2016 with a registered FDI of US$2.7 billion and US$4,6 billion respectively. The two most remarkable FDI projects in 2016, Samsung and LG Display led by South Korean, have been pouring funds into manufacturing and processing sector. As a consequence, this sector was having the largest share of $15.53 billion USD, accounting for 63.7% of FDI capital ( Thu Minh 2016 ). With this constant and strong increase of FDI flows, Mr. Do Nhat Hoang, Director of the Foreign Investment Agency, expected that the number of foreign
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investment into Vietnam will continually increase with an annual growth rate of 9% in 2017 ( Tuan Minh 2017 ) Exports performance is another important determinant of Vietnam’s economic growth. Along with a surge of FDI inflows, Vietnam’s exports also witnessed outstanding result in recent years. Total export turnover value of the country in 2016 was US$175.9 billions, increasing by 8.6% from the previous year. Surprisingly, according to Tu Uyen 2016 , Vietnam was ranked among the top countries has the fastest-growing economies. The figure shows that Vietnam still remained its export outperformer while the exports growth rate of other countries in the region stagnant at lower percent or even collapse like Indonesia. This phenomenon was probably due to the complementary relationship of Exports and FDI, in other words, FDI can help to promote exports activities by stimulating trade flows between Vietnam and other countries. As mentioned above, Vietnam has the advantage of ‘highly competitive labor and low cost’, which can help Vietnam to lure FDI inflows, the more FDI, the more exports, the better economy ( Tu Uyen 2016 ) For example, with the investment of South Korea Samsung and LG Display in
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