Vietnam has been attracting diverse direct investments for over 30 years. Vietnam ranks third in attracting foreign direct investment in ASEAN. Vietnam has a stable and high efficiency of foreign direct investment compared to many other countries. The 7% decline in foreign direct investment last year does not change this, as there is a better disbursement performance. Integration into the global value chain is specifically linked to the strengthening of direct investment in Vietnam. A close connection between Vietnam and the global value chain promotes direct investment in Vietnam.
The first part of the study presents the theoretical basis for business linkage. Globalization and world trade have been driven forward since 1989. Globalization strengthens the business relationship between different countries. Based on the strength of partnerships, there are three types of business linkages: horizontal, vertical and cross-sector/industries. These are explained in the first part, based on the theory of business relationships, which was developed in the US in the 19th century by the economist Prof. Michael Porter. In 2010, UNIDO has published another theory, which presents the linkages of industrial clusters in combination with value chains in the productions of specific industries aims globalization to analyse the linkages between companies. This is particularly relevant for Vietnam because the business linkages between FDI and Vietnamese firms are relatively weak. This is mainly because foreign companies investing in Vietnam do not rely on other companies in Vietnam, but on resources from other countries. This mainly affects the participation of Vietnamese companies in the value chain. This development and comparisons, as well as experiences from other countries, are presented in the first part.
The second part of the study presents the development of direct investment in Vietnam over the past 30 years. Since then, Vietnam has attracted almost USD 438.7 billion in direct investment. The study looks at which countries invest how much in Vietnam. South Korea, for example, leads the direct investments with around 26.26% of all direct investments. It also looks at which sectors are particularly interesting for direct investment. In general, it can be said that investments are made in 19 out of 21 national economic sectors. Investment in the high technology and technology transfer sector has generated positive results, which the study reports on in detail. This is precisely why Vietnam needs to attract even more technological investment in the future. This becomes particularly clear when looking at the rankings regarding technology proficiency and innovation Vietnam. Here, Vietnam has the position of 90 out of 100, which is why the study precisely analyses the current situation of business relations and direct investments. It also provides an overview of the capacity that Vietnamese companies have in terms of infrastructure, supply capacity, human resources and technology level.
The third part of the study presents how political decisions can strengthen business relationships in the future. It is aimed at the industry and political decision-makers. As a basis, the study analyses past problems and the measures taken in response. The focus is on No. 80/2021/ND-CP, the Investment Act No. 31/2021/ND-CP, No. 115/NQ-CP and the support measure for the electrical sector No. 598/QD-TTg. The financial measures No. 111/2015/ND-CP are also analysed.
Based on this and the previous analyses, the study contains proposals for political decisions. Among other things, it suggests that more regional links should be established. It also calls for the promotion of the transfer of cutting-edge technology to be crucial. In addition, a strong focus must be placed on promoting the growth of supplier industries linked to the global value chain. Finally, a policy of "diplomatic order" is needed: promoting export growth and connecting domestic companies with foreign companies.
After the presentation of the study, the event on December 5 was rounded off with a panel discussion and Q&A session. As part of the panel discussion, various experts from different countries had the opportunity to talk about business relations from their countries and with Vietnam. During the Q&A session, participants spoke up and gave their opinions. Overall, it can be said that the study was a complete success and the event demonstrated this.
The full report (Vietnamese) icl. executive summary (English) can be downloaded here.
