EVALUATING THE IMPACT OF DIGITAL

TRANSFORMATION ON ATTRACTING FDI TO VIETNAM

Advisor : TS. Vu Thanh Huong

Researchers : Nguyen Thi Hai Anh
Tran Thi Hong Gam
Vu Thi Lam
Pham Khanh Linh
Bui Phuong Thao
 THE SIGNIFICANCE OF THE RESEARCH
BENEFITS OF GLOBAL
DIGITAL ECONOMICS
TRANSFORMATION RECESSION

FASTLY DEVELOPING
(+)
WORLD'S DIGITAL DT FDI INTO COVID-19
TRANSFORMATION TREND VIET NAM

NATIONWIDE DIGITAL TRANSFORMATION

PROGRAM 2025, VISION FOR 2030
 REVIEW OF THE LITERATURE

SOME TYPICAL RESEARCH GAP NOVELTY OF THE

• Limited coverage of digital
STUDIES RESEARCH
• Nguyen Van Phuc va Nguyen transformation • Constructing an evaluation
• Limited theoretical framework
Dai Hiep (2011); framework

• Lorenzo Cicatiello và Partners and digital transformation • Quantitatively analyzing the

(2020); assessment criteria impact of digital

• Nguyen Quang Ha, Nguyen • Quantitative analysis lacking transformation on attracting

Trang Minh, Vo Minh Quan impact of digital FDI into Vietnam

(2022) … transformation on attracting • Proposed solutions

FDI into Vietnam.
 RESEARCH OBJECTIVES

GENERAL DT FDI ATTRACTION

OBJECTIVES Analysis and Evaluation of Analysis and Evaluation of
the Digital Transformation the FDI Attraction Reality

• Analyzing and Evaluating the Impact of Reality in Vietnam into Vietnam

Digital Transformation on FDI PARTICULAR
Attraction in Vietnam OBJECTIVES
• Solutions to Promote Effective Digital IMPACTS SOLUTIONS
Transformation for Attracting FDI into Impact of Digital Solutions to Promote DT
Vietnam for Enhancing FDI
Transformation on Attracting

FDI into Vietnam Attraction into Vietnam

THE SUBJECTS AND SCOPE OF RESEARCH

THE SUBJECTS OF RESEARCH SCOPE OF CONTENT

The Impact of Digital Transformation Three Aspects: Digital Government,
on Attracting FDI into Vietnam Digital Economy, Digital Society

SCOPE OF TIME SCOPE OF SPACE

2010 – 2021 Vietnam and 23 Major Partners
METHODOLOGY OF RESEARCH
• Model 1: Proposed model assesses the overall impact of digital transformation on attracting FDI
into Vietnam

FDIijt= β₀ + β₁.FDIT2ij(t-2)+ β₂.INFRit + β₃.INFLit + β₄.PSTit + β ₅.PGDPit +

β₆.DTit

+ β₇.DISTANCEij + β₈.FTAit+ εit (1)

• Model 2: Proposed model evaluates the impact of each factor in digital transformation on attracting
FDI into Vietnam
FDIijt= β₀ + β₁.FDIT2ij(t-2)+ β₂.INFRit + β ₃.INFLit + β ₄.PSTit + β ₅.PGDPit

+β₆.IUSERit + β₇.EGDIit + β₈.GIIit+ β₉.DISTANCEij + β₁₀.FTAit+ εit (2))

Two-year lagged FDI

Digital economy

H2
Infrastructure

( +)
H3
(+)

( +)
H9
Inflation H4
(-)
INWARD FDI STOCK H1 (+) DIGITAL Digital
H10 (+)
( + ) TRANSFORMATION
H 5 OF VIETNAM government
Political stability
+)
6(

H1
H

1(
H8 (+)

+)
(-)

Market size
H7

Digital society
Number of signed
trade agreements
Distance of Vietnam
VARIABLE DESCRIPTION EXPECTED SIGN SOURCE

FDIij Net inflow of FDI from country i to country j Dependent variable Statistical Yearbook

FDIt2 Two-year lagged FDI + Statistical Yearbook

INFR Infrastructure + World Economic Forum
INFL Inflation (according to CPI) - World Bank
PST Political stability + World Bank

PGDP Market size (GDP per capita) + World Bank

DT National digital transformation + Huawei

DISTANCEij Distance in kilometers between country i and j - Trademap

FTA The number of signed trade agreements of Vietnam + General Statistics Office
EGDI Digital government + United Nations
GII Digital economy + WIPO
IUSER Digital society + World Bank
 THE GLOBAL CONNECTIVITY
The level of nation
INDEX - GCI

The level of the THE E-GOVERNMENT

THE INDEX
government DEVELOPMENT INDEX -EGDI
MEASURING
DIGITAL
TRANSFORMA
TION The level of the THE GLOBAL INNOVATION
economy INDEX - GII

The level of the % OF POPULATION USING

society INTERNET
CURRENT STATUS OF DIGITAL TRANSFORMATION IN VIETNAM
DIGITAL GOVERNMENT Year Ranking of EDGI Value

• Increase 2 ranks - Place 6th out of 11 Southeast 2020 86 0.6667

Asian countries. 2018 88 0.5931
2016 89 0.5142
2014 99 0.4704
DIGITAL ECONOMY
2012 83 0.5271
• Is valued at about 21 billion USA, 7 times higher
than in 2015;
• Ranks 2nd in the region.

DIGITAL SOCIETY
• About 68.72 million Internet users;
• Accounting for over 70% of the population.

DIGITAL ECONOMY DEVELOPS MORE DISTINCTLY AND RAPIDLY THAN

DIGITAL SOCIETY AND DIGITAL GOVERNMENT
 CURRENT STATUS OF ATTRACTING FDI IN VIETNAM

Table 5.1: Registered FDI inflows into Vietnam 2010 - 2021

Table 5.2: Structure of FDI investment partners
in Vietnam accumulated until 2021
 RESEARCH RESULTS: MODEL 1
ln(FDI)ijt= β₀ + β₁.(lnFDIT2)ij(t-2) + β₂.(dINFR)it + β₃.(lnINFL)it + β₄.(PST)it + β ₅.
(dPGDP)it + β₆.(dDT)it + β₇.ln(DISTANCE)ij + β₈.(dlnFTA)it+ εit (3)
Table 6.1: Remedying Deficiencies Using FGLS Method Results

Biến Coefficient Std. Err. z P>|z|

LnFDIT2 0.7576983 0.0405515 18.68 0.000

dINFR 0.1854724 0.3151547 0.59 0.556

LnINFL -0.0083669 0.1451554 -0.06 0.954

PST 3.802971 1.283599 2.96 0.003

dPGDP 0.0008204 0.0015329 0.54 0.593

dDT 0.1416867 0.0570693 2.48 0.013

LnDISTANCE -0.1988895 0.0673116 -2.95 0.003

dFTA 7.763587 2.733395 2.84 0.005

cons 1.906986 0.7778736 2.45 0.014

 RESEARCH RESULTS: MODEL 1
Digital transformation helps:
● Create a favorable business environment;
● Enhance Vietnam's competitiveness in the international market;
● Increase Vietnam's attractiveness to foreign investors.
Investing in digital transformation will help establish a strong digital infrastructure that meets the needs of
foreign investors.

Lag of FDI, political stability level, digital transformation, FTAs have a positive impact

Variables Distance has a negative impact

Infrastructure, inflation, and per capita GDP don’t have clear impact
 RESEARCH RESULTS: MODEL 2
ln(FDI)ijt= β₀ + β₁.(lnFDIT2)ij(t-2) + β2.(dINFR)it + β₃.(lnINFL)it + β₄.(PST)it + β₅.(dPGDP)it
+ β₆.(dUSER)it + β₇.(dlnEGDI)it + β₈.(dlnGII)it+ β₉.ln(DISTANCE)ij + β₁₀.(dlnFTA)it+ εit (4)
Table 6.2: Remedying Deficiencies Using FGLS Method Results

Biến Coefficient Std.Err. z P>|z|

lnFDIT2 0.7642905 0.0406269 18.81 0.000
dINFR -0.7455356 0.476371 -1.57 0.118
lnINFL 0.028459 0.1991013 1.43 0.153
PST 0.2231065 0.9122976 0.24 0.807
dPGDP 0.0011126 0.0015912 0.7 0.484
dlnGII 4.513114 1.724818 2.62 0.009
dUSER 0.0613024 0.0357286 1.72 0.086
dlnEGDI -0.0584543 1.0419 -0.06 0.955
lnDISTANCE -0.1925861 0.0689366 -2.79 0.005
dlnFTA 4.822602 2.504882 1.93 0.054
_cons 2.04919 0.7676872 2.67 0.008
 RESEARCH RESULTS: MODEL 2
• Digital economy (dlnGII) has a positive impact on Vietnam’s FDI:
⮚ Creating new opportunities for foreign investors to participate in emerging industries
⮚ Enhancing the competitive capabilities of Vietnamese enterprises
• Digital government (dlnEDGI) still faces several limitations:
⮚ The construction and implementation of national databases and IT infrastructure are still slow.
⮚ Data systems are fragmented and lack proper connectivity.
⮚ The quality of data and information is not promptly updated and accurate.
⮚ Budget towards the Digital Government hasn’t received enough attention.
• Digital society (dUSER) has experienced strong growth in few key sectors: education, healthcare,
and payments:
⮚ Lack of high-quality human resources.
⮚ Digital infrastructure is yet to meet market development demands.
⮚ Digital transformation access is uneven across regions.
ORIENTATION TO ATTRACT DEVELOPMENT DIRECTION
FDI IN THE CONTEXT OF OF DT TO ENHANCE FDI
DIGITAL TRANSFORMATION ATTRACTION

Focus on data security and network security

Focusing on areas with high potential growth

Promote digital transformation evenly across all

Building a consistent system of policy views fields, but still identify the digital economy as
the spearhead.

Vietnam’s strategy to attract FDI in the coming Digital transformation is associated with
cognitive transformation
years also needs to effectively serve the
orientation of the national digital transformation
program
 The lag of FDI
SOLUTIONS TO PROMOTE
DIGITAL TRANSFORMATION Political Stability
Digital Economy
Create a favorable environment for innovation, entrepreneurship and
digital economy development; Improve consumer connectivity to high- Geography Distance
speed Internet…, promote high-quality workforce training

Trade Agreement
Digital Goverment
Building digital government to create a friendly government
environment, effective and efficient operation, serving socio-economic
development,... The Infrastructure

Digital Society a digital population and culture such as building a smart city
Developing
Inflation
management center, developing smart city services
 FUTURE RESEARCH DIRECTIONS

Assessing the impact of digital transformation on specific industries

and fields in Vietnam
Assessing the impact of digital transformation on Vietnam’s FDI attraction
in the short and long term

Extending times, countries of the study

Impact of digital transformation on national competition

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