Research On The Impact Of FDI On Vietnam’s Economy And Countermeasures

In recent years, Vietnam has become one of the rapidest developing countries in theSouth-East Asia. On the aspect of attracting foreign investment, Vietnam has become a newstar in the South-East Asia. After the Reform and Opening policy started in1986, by usingforeign direct investment, Vietnamese economy has been rapidly developing, Vietnam fromthe one of the poorest countries in the world has changed into a middle-income country. Thepositive influences of FDI to Vietnamese economy were definitely exposed. However, thenegative influences of FDI also cannot be underestimated. The purpose of this study is to findout the reasonable measures and to seek weaknesses, pitfalls by analyzing the distinctivecharacteristics of Vietnamese FDI and Vietnamese economy.Focusing on the over20years of FDI history, through analyzing the statistics data,this research has discovered the traits that Vietnamese FDI has:(1) FDI mainly originatesfrom Asia region;(2) FDI is imbalance among areas and economic areas;(3) The fluctuationof capital inflow is great;(4) The proportion of independent investment is high. This researchalso discovered that the positive influences of FDI covered the problems that FDI hasbrought. For example:(1) The total amount of agreement is large, but the total amount ofsettlement is small;(2) The covering areas of FDI keep rapidly growing, but the investmentrecovery is still in the low level;(3) The effects of FDI on other Vietnamese economic areasare low, and the efficiency of technology transfer activities is low;(4) The efficiency and thelevel of FDI companies are still in the low level, although Vietnamese government invested alot on the infrastructure, it is still low;(5) The regulations and the policies about investmentneed to be improved;(6) Administrative procedures are too complicated and hard to befulfilled. Nevertheless, FDI policy has brought positive effects to Vietnamese economy:Firstly, FDI is the important source of funds in Vietnam, partly stimulates the rapid gowth ofeconomy；Secondly，FDI contributes to the large proportion of Vietnam GDP，raising theindustrial production and the export values; Thirdly，FDI created favorable condition forVietnam to become a member of global production network. Besides，FDI also brought toVietnam technical improvement and employment. However, FDI simultaneously bring the negative effects. Firstly, FDI to agriculture and natural resources and environmentalprotection fields had negative effects；Secondly，FDI to National industries can be a threatand also can restrict the Vietnamese technologies improvements. Thirdly，FDI can bringnegative effects to Vietnam financial market, constructing trade deficits in Vietnam economy.Lastly，the imbalance of FDI among areas can make some negative effects。This paper considers that Vietnamese government should take some measures tosolve and reduce the problems and the negative effects on Vietnamese social-economy thatFDI has brought: Vietnamese government has to: firstly, determine the goals of FDIattraction; secondly, improve the policy system; thirdly, improve investment environments,including the regulation and administrative procedures, encouraging the infrastrutureinvestments; forthly, raise the business and administrative efficiency of FDI businesses;fifthly, strengthen the governmental managing abilities.