FDI in Vietnam

Drawbacks vs Benefits

Lecturer:
Group 13

Members List
BAFNIU16037 Vũ Thị Thùy Dung
BABANS16060 Bùi Thanh Huyền
BABAIU16167 Ung Đoàn Thùy Linh
BABAIU16096 Nguyễn Thị Thanh Nhạn
BABANS16061 Trần Thị Ngọc Trang
BABAIU16140 Nguyễn Phương Vy
BABAIU16131 Nguyễn Thị Minh Thư
Timeline of the speech
01 Introduction
What is FDI ? Types of FDI.

02 Benefits of FDI in Vietnam

03 Drawbacks of FDI in Vietnam

04 Case Study
Honda Vietnam Joint Venture
Introduction
FDI definition, types of FDI
Definition
• Foreign direct investment (FDI) is an investment made by a firm or individual in
one country into another country.
Types of 1. By target 2. By direction
FDI: + Greenfield investment:
no previous facilities exist
Inward FDI: when foreign
capital is invested in local res
1. By target. +Mergers and Acquisitions: ources
dealing with the buying, selling and Outward FDI: sometimes
2. By direction. combining of different organisations called "direct investment
that can aid, finance, or help a growing abroad", is when local capital
company is invested in foreign
+Horizontal Foreign Direct Inve resources
stment:
in the same industry abroad
+Vertical Foreign Direct
Investment:
a. Backward vertical FDI
b. Forward vertical FDI
Benefits of FDI
In Vietnam
 1. Development of Human
Capital Resources

2.Increment in Income

Benefits 2. Increased Productivity

The facilities and
of equipment provided by
foreign investors can
increase a workforce’s
FDI productivity in the target
country.

4. Increasing choice
the multinational manufactures for do
mestic markets as well as for export
Drawbacks of FDI
In Vietnam
 Drawbacks of
FDI
1. . Environmental and resources problems

2. Loss of taxes and revenues

3. Employment issues.

4. Harm local manufacturing industry

Case Study
HONDA VIETNAM JOINT VENTURE COMPANY
 What is Joint Venture?
a business entity created by two or more parties to undertake economic
activity together and is also one of the most common forms of
Foreign direct investment.
Honda Vietnam
Joint Venture Company
One of the biggest joint-venture
companies in Vietnam
established in 1996 by the co- operation amongst
three parties:
+ Honda Motor Company (Japan – 42%)
+ Asian Honda Motor Company ( Thailan – 28%)
+ VEAM corporation: Vietnam Engine and
agricultural machinery corporation (30%)
 Benefits
Of Honda Vietnam

Contribute to capital accumulation

Improving competitiveness in country
Important source of capital
necessary for industrialization There is a pressure for domestic producers
to increase efficiency and quality in order
to compete
More jobs and improve HR
Honda creates thousands jobs and Contribute to economic growth
improves quality of labor through
pervasive effect of labor, updating -Apply modern tech in operation help increase
skills for suppliers and buyers. productivity thus help develop country economy
-Providing domestic market with high-quality
products manufactured by domestic enterprises
Transfer technology
Honda uses cutting-edge equipment an
d technology in operation that lead to m
anufacture at highest efficiency, and
all the machinery is environmentally
friendly and user-friendly.
 Drawbacks
Of Honda Vietnam

Competitive High corporate Instability between

market income tax buying and production
has to face the while FDI has
competitions the culture barriers
among firms.
 Lessons for Vietnam
In attracting FDI

Vietnam should break these barriers

01 Ambiguity in laws, Red-tape, Bribery

Create an attractive FDI environment

Improve infrastructure, Improve skill of
02 labor, Create stable political environment,
improve finance system

Selective FDI
03 Attract FDI that bring both capital and
knowledge
Attract FDI
 Lessons for Vietnam
In managing FDI

01 Environment regulations

02 Claims more benefits for labor

Increase the management and

03 share of Vietnamese partners in
FDI
Managing FDI
 Thank you
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