INTERNATIONAL FINANCE

VIETNAM’S DIRECT INVESTMENT ABROAD

1. Overview of Direct investment abroad (1) (Hằng)

- Direct investment abroad (DIA) involves a domestic company expanding its
operations abroad.
- This is different from Foreign Direct Investment (FDI), as the company invests in its
own firm to create subsidiary firms in foreign countries for expansion.

FDI DIA

Occurs when a non-resident invests Occurs when a resident company

directly in new facilities to produce invests in a non-resident country
or market in a resident country. as part of a strategy to expand
their business

2. The situation of Vietnam’s direct investment abroad (2-ellie)

a. The DIA trend of Vietnam from 2017 to 2022

Vietnam's direct investment abroad capital flow in the past 5 years ( from 2017 to
2022 ) has had a lot of fluctuations (dao động) worth noting:
 - From 2017 to 2019, the total amount of foreign investment capital and the total
number of projects in Vietnam increased as the previous situation (since 2012). In
2019, the total number of projects reached a very high number of 164, with a total
investment capital of 403.15 million USD from Vietnam.
- In 2020, Vietnam witnessed strong growth in investment capital with 590 million
USD, the highest number from 2017 to now. However, there was a decrease in the
number of projects with 119 projects.
- For the whole year of 2021, the number of projects dropped sharply, reaching the
lowest level in the last 5 years with only 61 projects and 409 million USD in total
investment capital.
- However, Vietnam showed a dramatic increase in 2022. In 2022, nearly 180 projects
were implemented, reaching the highest number in the course of 5 years, with a total
capital increase of nearly 100 million USD compared to the previous year. 2021,
marking a period of comeback and strong development in Vietnam's foreign
investment segment.
b. The reason why there was a dramatic drop in 2021 Vietnam’s
DIA (3) (Ngọc Anh)
As you can see, the number of projects in 2021 reached the lowest in the period
between 2017 and 2022, and the main reason to explain this situation is The impact of
Covid-19.
As businesses in one country export a lot of goods and services to other countries, they
may look for opportunities to invest directly in those markets, especially if they feel there is
potential and possibility of business development there.

The chart about Vietnam’s net export from 2017 to 2022. Through this chart, we want
to emphasize the similarity of the uptrend, similar to the trend of Vietnam’s direct investment
abroad at the same period.
 -

The complex developments of the Covid-19 pandemic have had a strong impact on
many countries around the world, forcing many nations to implement strong measures,
including unprecedented adjustments to foreign policies. One of the strongest foreign policy
adjustments that many countries have made during this time is border closures, which have
affected import and export activities. The European Union (EU) had a decision to close all
borders of 30 countries, at the same time, the US and Canada also agreed to close the border
between the two countries to prevent the spread of the disease. Export helps expand the
market for Vietnamese products worldwide, increasing demand and creating more
opportunities for Vietnamese businesses to invest and expand overseas. However, border
closures have seriously reduced Vietnam's revenue, down to USD 4.08 billion in 2021. Low
exports lead to low revenue, which in turn reduces capital and decreases the demand for direct
investment abroad.

(4) Blinh

- The Covid-19 outbreak caused isolation and social distancing measures have caused
disruptions in global supply chains and affected the investment plans of businesses,
high unemployment, stagnant business, reduced revenue, and businesses facing a debt
spiral. So the government has pumped money into the market to support businesses.
The amount of capital in 2020 increased sharply but the risk market and business
confidence and investment declined, the number of Vietnam's direct investment
abroad projects in 2020 began to decrease and reached 119 projects in 2021, low at
least the past 10 years.
 - Travel restrictions have also affected the negotiation and implementation of
investment projects abroad.

c. Solution (Lâm)

1. Adjust fiscal policy (5) (Đức Lâm)

· Reducing and extending the payment of land rent; extension of payment of value
added tax, corporate income tax (30% reduction), personal income tax.

· Issuing specific support policies for a number of industries and fields

2. Apply expansionary monetary policy

Reducing lending interest rates, stabilizing operating interest rates at low levels,
promulgating regulations on debt rescheduling, exemption and reduction of interest
and fees, and keeping debt groups unchanged loans... Thereby, reducing the cost of
loans, while ensuring inflation control and macroeconomic stability.

Since then, Direct investments Abroad is also indirectly promoted through the above policies.

3. Free Trade Agreement

The next solution that was used is the FTA. FTA stands for A Free Trade Agreement,
is an agreement between countries to expand markets, enhance commercial activities,
reduce prices of goods and services and eliminate or reduce tariffs. To support
import-export issues, trade relations between countries, and promote Direct
Investment Abroad activities, Vietnam has signed several trade agreements after
Covid-19.
Some trade agreements that were signed after Covid-19 were UKFTA, CPTPP, CEPA and
EAEU.

4. Economic opening after COVID-19 (6) (Hương Lê)

After the pandemic, Vietnam has had a strong recovery. In which, the macro-economy is
stable, and major balances are ensured. GDP in 2022 increased by 8.02%, reaching the
highest growth rate in the period from 2011 to 2022, due to the economic recovery. Since
then, DIA activity has also resumed.

Here is a typical case study of DIA Vietnam from Viettel, which started quite some time ago.
Although they faced some challenges during the Covid-19 period, they have found many
optimal solutions:
Peru is a special market of Viettel. In 2014 in Peru, Bitel became the first mobile
network to cover 3G nationwide and the only 3G mobile network of Viettel at that time. In the
first 6 months of 2017, Bitel accounted for 40% of Viettel Group's total foreign profit. But in
the Covid-19, Bitel faced some problems.
Difficulties in the situation of the epidemic:
- Supply chain was interrupted, the implementation of business activities and strategies
at that time faced many difficulties.
- People's consumption behavior changed: they needed to work from home. This
requires a change to quickly adapt
- The whole of Peru was quarantined -> Customers have difficulties in buying products
and services.

Solution:
- Moving to a state of rapid adaptation: building an Online sales system, a widespread
Delivery system in both urban and rural areas
- Analyzing consumer behavior based on Big Data technology

1. Vietnam’s investment abroad nowadays (7) (Huy Anh)

- In 2022, the country’s total newly-registered and additional investment raised up to
roughly 534 million USD. Of these, 26 projects registered for capital adjustment of
107.4 million USD and 109 projects were granted new investment registration
certificates, with total registered capital of 426.6 million USD, representing an
increase of 78.7% in projects and up 4.3% from last year’s.

=> These numbers show that Viet Nam remains a bright spot after COVID-19. With the
additional capital rising after hitting the lowest point in 2021, not to mention Vietnamese
investors investing in manufacturing as well as high-tech industries rather than pouring
millions of money into agriculture, forestry and mining as they used to in the past, Viet Nam’s
direct investment abroad are currently on the rise.

(8) (Anh Đức)

- In the future, the value of overseas investment of Vietnamese enterprises may exceed
1 billion USD per year from about 700 million USD per year. Many technologies,
rubber, and coffee projects have gained great success, repatriating significant profits,
contributing to the balance of international payments, and increasing foreign exchange
reserves.
- Also, the fact that Vietnamese enterprises are consistently making moves to acquire
foreign companies to expand their business on a global scale can be seen as a major
turning point in the development process of the country’s economy. Therefore, many
experts and policymakers now call for Vietnam to step up direct investments abroad to
maximize advantages from outside resources and contribute to bolstering the country’s
position and status in the regional and international arena.
 2. Government Policies (Nminh)
In recent years, Vietnam’s government has enacted many policies on the activities of
enterprises investing abroad to encourage and create appropriate conditions and opportunities
for enterprises to invest abroad. Until today, the system of policies to support and promote
Vietnam enterprises to invest overseas has become more and more complete.
There are two major policies:
● Encourage and support overseas investment projects in energy, telecommunication and
exploitation of natural resources
Over the past few years, the Ministry of Planning and Investment has presided over
the implementation of many investment promotion activities including organizing investment
promotion conferences, providing training on investment policies abroad, organize investment
environment survey missions in some areas, strengthen cooperation with foreign investment
management agencies, strengthen support activities, solving difficulties and problems of
Vietnamese investors when implementing projects abroad.
● Tax incentives for enterprises investing abroad
According to the provisions of Circular No. 96/2015/TT-BTC, when investing abroad,
the company is entitled to the CIT rate of 20%; in addition, the company only have to pay the
remainder of CIT after deducting the tax paid abroad or already be paid by the partner of the
receiving country.
Thanks to that, up to now, DIA activities have made certain impressions. Many
corporations and enterprises with registered capital for direct investment abroad have
exceeded 1 billion USD, such as: Vietnam Oil and Gas Group (Petrovietnam), Military
Telecommunications Group (Viettel), Vietnam Dairy Products Joint Stock Company
(Vinamilk)...