Tóm tắt Luận án Outward foreign direct investment from Vietnam enterprises into the People's Democratic Republic of Laos in the context of international integration

INTRODUCTION 1. The necessity of research. Laos is one of the key investment markets of Vietnam enterprises. Up to31 December 2014, Vietnam has invested 218 projects in Laos (only valid projects), with total registered capital of nearly 3.93 billion USD, estimated disbursement of nearly 1,5billion USD. However, the direct investment activities of Vietnam enterprises into Laos market over time has revealed many shortcomings. Numerous problems such as lack of information, lack of human resources, lack of adequate knowledge about the laws, customs of Laos, have not received timely support from the Government and the concerned ministries... were in concerned. These facts have led to many troubles when Vietnamese enterprises "ringing bells abroad", reducing the efficiency of capital, missing investment opportunities. Moreover, many OFDI projects of Vietnam enterprises into Laos, especially in the mining industry and the processing industry had to stop before the deadline. Only in the year 2013, 38 projects had stopped operating, in which there were 30 projects in the industrial sector. This is a new problem requiring the attention of researchers. To promote and improve the efficiency of capital flows from Vietnam into Laos, we need the stronger coordination of the related ministries, the close cooperation between the two governments as well as the initiative inseeking and seizing investment opportunities from Vietnam enterprises. To achieve this, it should has multiple solutions both at the macro level and from businesses. From that experience, I have chosen the theme: "Outward foreign direct investment from Vietnam enterprises into the People's Democratic Republic of Laos in the context of international integration" to do research. 2. Target of the research. Based on the analysis of theoretical issues of OFDI, the analysis on the actual operation of OFDI from Vietnam enterprises into Laos, the thesis will point out the limitations and causes of limitations in the current OFDI flows. On this basis, the thesis will propose the solutions and recommendations to strengthen Vietnam's OFDI flows into Laos in the future. The objectives of the study are specified in the following research questions: - Whether or not Vietnam enterprises should increase investment into Laos? - What factors affect direct investment of Vietnam enterprises into Laos? - How specific factors impact to direct investment of Vietnam into Laos (quantitative research)? In the framework of this thesis, we will focus on evaluating the impact of macroeconomic factors to Vietnam's OFDI flows into Laos. - The Vietnam enterprises should focus in what fields/locations in Laos? 3. Study subjects The object of the dissertation is the direct investment projects of Vietnam enterprises into Laos. Besides, in order to better assess the current status of the projects as well as investment opportunities into Laos in the future, the thesis will study the investment environment in Laos, the main competitors (Thailand and China), policy related to OFDI activities of Vietnam and Laos, the documents signed between enterprises as well as the two governments. 4. Scope of Research The scope of the study in terms of time is the projects in the period 1994- 2013. In terms of space, the scope of the research is Vietnam's OFDI projects into Laos. 5. Research Methodology The research methods are basically descriptive statistics, comparisons and expert interviews. Regarding quantitative research, using the thesis use Investment Development Path model (IDP) combined with quantitative analysis techniques such as SPSS, Eviews ... to assess the impact of some macro factors to the OFDI flows of Vietnam enterprises into Laos. 6. New contributions of the thesis. Firstly, the thesis applied the IDP model (IDP: Investment Development Path) to assess the effects of macroeconomic factors (GDP per capita, expenditure on science and technology, the amount of inward FDI) to OFDI flows of Vietnam enterprises into Laos. After running the regression models, the thesis pointed out that $1 million of inward FDI in Vietnam will contribute to increase by $0.0115 million OFDI flows from Vietnam into Laos (spillover effect of FDI). In addition, a 1% increase expenditure on science and technology will contribute to an increase of 3.32 million OFDI capital of Vietnam into Laos. Meanwhile, the impact of the growth of GDP per capita to the OFDI from Vietnam to Laos is unclear (PGDP variable in the model did not have statistical significance). Secondly, the thesis has shown major changes in Vietnam's OFDI flows in Laos over the period 1999-2014. After a period of overheating 2006-2010, OFDI flows into Laos had signs of leveling off in four years, particularly the number of project license revoked or suspended operations surge Meanwhile newly licensed projects slumped. Thirdly, being different from previous researches, the thesis pointed out that the characteristics of OFDI projects from Vietnam into Laos is mainly vertical FDI and export-oriented. Meanwhile, the Lao government is now taking action to strengthen horizontal FDI, increasing the technological application in the products and guiding to the sustainable development. On the basis of analyzing the characteristics, trends of OFDI projects and updating the current situation in Laos, the thesis has shown the fields and areas that Vietnam enterprises should focus on investing in Laos. To be specific, the fields which should be invested in in the period 2015-2020 are tourism (especially chain tourism Vietnam-Laos or Vietnam- Laos-Cambodia, Vietnam-Laos-Thailand); high-tech agriculture, especially sugarcane, corn, cattle... Besides, it should be deployed licensed projects in the fields of rubber cultivating or mining. CHAPTER 1 OUTWARD FOREIGN DIRECT INVESTMENT IN THE CONTEXT OF INTERNATIONAL INTEGRATION: AN OVERVIEW. 1.1 Overview of outward foreign direct investment. 1.1.1 Concept Foreign Direct Investment (FDI: Foreign Direct Investment) is a kind of international capital movements, in which the owners of capital are also the managers and operators of the fund. Foreign direct investment is long-term forms of investment by individuals or companies in one countries to another country by setting up production facilities in the national business investment. 1.1.2 The form of OFDI. According to the "how intrusive", OFDI is divided into two forms: - New investments (GI: Greenfield Investment): - M&A: merger & acquisition. According to the "relationship of professions between investors and recipients" OFDI is divided into two forms: - Vertical FDI - Horizontal FDI According to the "orientation of the host country", OFDI is divided into three forms: -OFDI related to Import substitution: - OFDI related to increasing exports: -OFDI Under different orientations of the Government: According to the "legal form", OFDI common forms are: - Enterprises with 100% foreign capital - Business Venture. - Contracts and business cooperation on the basis of contract - Other forms of OFDI: BOT (Build – operation- transfer), BT and BTO... 1.1.3 Characteristics of OFDI. Firstly, foreign investors have contributed an enough amount of capital in the legal capital, subject to the provisions of the Investment Law of each country. Secondly, the right of management in the enterprise depends on the level of capital contribution. Thirdly, the profits of foreign investors depends on the results of production and business activities and are divided according to the proportion of capital contribution Fourthly, direct investment abroad is a form of long-term international investment, not only associated with the movement of capital, but also in association with the transfer of technology, transfer of knowledge and the experience in managing and creating new markets for the investors. Fifthly, OFDI, although is also influenced by the government, but it's less reliant on political relations between the parties than ODA and others kind of Foreign portfolio investment. 1.1.4 Factors affecting OFDI. 1.1.4.1 The macro factors. + Elements from the home government Firstly, fiscal policy, monetary policy, import, export and foreign exchange management. Secondly, the technical assistance activities, OFDI promotion of the government. Thirdly, the financial support measures, provide information on the market, information on partnership, opportunity and trading experience, established the association, the center aims to support and encourage OFDI. Fourthly, governments can support OFDI activities through direct construction or preferential loans to form roads transnational rail system, connecting the port... +Elements from the host government Firstly, political economic and social stability. Secondly, the elements of natural resources and natural conditions, geographical location. Thirdly, the elements of the legal environment, mechanisms and policies, administrative procedures. Fourthly, the elements of the infrastructure. Fifthly, the national position of the host country. Sixthly, political, cultural, economic relations between the host countries and the home countries. 1.1.4.2. The elements from the business. Firstly, financial capacity. Secondly, scientific and technological level. Thirdly, the competitiveness of enterprises. Fourthly, human resources, especially staff of highly qualified production and business management. 1.1.5 The assessment criteria to strengthen OFDI. To assess enhance OFDI by country, we may consider in terms of enhancing scale and in terms of enhancing the effectiveness of the project (to be assessed through basic indicators: revenue growth, profitability, capital reinvestment, tax budget ...). In the framework of the thesis, we just consider the strengthening of OFDI in terms of scale, being judged by the following specific criteria: Firstly, the diversity of forms of investment. Secondly, the number of newly licensed OFDI/raised capital projects during the period. Thirdly, the amount of registered capital OFDI during the period. Fourthly, the number of projects revoked during the period. Fifthly, geographical diversity of investment. 1.2 OFDI from developing countries in the context of international integration. 1.2.1 Awareness of enterprises in the developing countries on OFDI in the context of international integration. According to the World Investment Report 2014 (WIR 2014) of UNCTAD, the OFDI from the emerging economies increased rapidly in 10 years, reaching 553 billion USD in 2013, representing 39% of global OFDI capital (in 2000, this ratio was only 12%). 6 of the top 20 OFDI countries are the developing/transitional countries. This fact proves that businesses in developing countries have a growing role, contributing more and more on the overall development of the world economy. For Vietnam, we are very actively negotiating with the countries concerned to join the Agreement on the Trans-Pacific partnership (TPP). If the negotiations end successfully, Vietnam promises to embrace the new wave of investment and at the same time there will be more strongly institutional and public investment reform towards international standards. Many Vietnamese businesses are quickly seizing opportunities, conducting OFDI. Integration is an inevitable process that businesses have no right to retreat. Enterprises in developing countries, whether large or small, should be aware of the opportunities and challenges that the process of integration brings, from which encouraging technological innovation, improving management to increase competitiveness. Then, Vietnamese businesses will be stable in the domestic market and would have much chance of success as reaching out to the world market. 1.2.2 The inevitability of OFDI for developing countries. OFDI can successfully be made by the developing countries by the following main reasons: Firstly, developing countries also have their own strengths, can utilize when conducting OFDI. Secondly, in recent years, developing countries have a strong development in many aspects such as human resources, technology, legal system, financial system... It's the pedals, as a prerequisite for the country's business conduct OFDI. Thirdly, the trend of the world economy is the cooperation and competition. The promotion of OFDI benefits to both home and host countries. In a "flat world", there are only "soft borders" between countries. The FTAs such as AFTA, EU,TPP, TIPP, RCEP... are the testaments to that. When the barriers are diminishing, capital can easily flow between countries. 1.2.3 The role of OFDI to developing countries in terms of integration. Firstly, OFDI will help enterprises in developing country access to new resources, new markets, and abundant raw material. Secondly, avoid protectionist barriers. Thirdly, OFDI helps expand the export markets. Fourthly, OFDI contributes to promote economic development in the country. Fifthly, contributing to restructure the domestic economy towards "green- clean – beautiful”. Sixthly, OFDI can helps businesses improve the quality of human resources. 1.3 The experience of some countries in the promotion of OFDI. 1.3.1 The experience of Japan. - The Government of Japan has been very successful in "paving the way" for OFDI flows flowing into other countries, especially in developing countries. With its financial strength, Japan has become a leading country in ODA to the developing countries. - Japan took advantage of the success of the change in exchange rate policy. - Japan has the flexibility to switch between strategic objectives as "exports" and "investments". - Activities in support of the Japanese government through the Japan Bank for International Cooperation (JBIC) and the Japan External Trade Organization (JETRO) are very effective for OFDI activities of enterprises. - Enterprises of Japan have been very successful in adopting uniqueand advanced management experiences. - However, the strategy of technology transfer is not inclusive of Japanese corporations and the control of the parent company for the operations of its subsidiaries is strict, having a negative impact on OFDI activities. 1.3.2 The experience of China. Through practical learning about Chinese OFDI flows, we can draw some lessons as follow: Firstly, China's OFDI flows sometimes are decided according to the interests of the central government rather than the ordinary business objectives. Secondly, China's OFDI flows, especially to developing countries faced many complaint from recipient countries. Thirdly, in an effort to penetrate the market of developed countries, China faced obstacles, preventing the holding brand and high-tech approach in some key markets (Europe and America). 1.3.3 Lessons for Vietnam From the experience of China, Japan, we can draw some lessons for Vietnam as follow: - Firstly, the government should create favorable conditions, build a clear and transparent legal framework, towards simplification in order to create conditions for enterprises to quickly conduct OFDI and to take advantage of investment opportunities. - Secondly, the government needs to "pave the way" for the flow of capital into the potential markets with the signing of the trade and investment agreements... with the partner countries. With the key markets, the government can make a non-refundable aid, preferential loans (ODA) to pave the way for domestic enterprises going global. -Thirdly, the government needs to be flexible in implementing the objectives of promoting exports or promoting direct investment abroad. It should maintain an appropriate exchange rate policy, ensuring the value of the domestic currency in order to encourage enterprises to export capital. - Fourthly, the government should have a mechanism to encourage, facilitate and promote the role of non-state sector in the implementation of OFDI. -Fifthly, toward enterprises, enterprises need to be proactive in integrating and actively seek investment opportunities, applying advanced management methods, enhancing internal resources in all aspects: finance, technology, manpower... - Sixthly, besides the initiative integration of each individual enterprise, we need to strengthen the role of associations, the business community, entrepreneurs abroad. CHAPTER 2. LITERATURE REVIEW 2.1 Theoretical basis. Group of macroeconomic theories has the following main points: Firstly, the HOS theory (Heckscher, Olin and Samuelson) Secondly, the theory about the marginal profitability of capital (Mac dougall- Kemp, 1960). Thirdly, the theory about the market scale of the market of Balas. Fourthly, the theory of national competitive advantage - the diamond model of Porter (1990, 2002). Fifthly, the theory of Investment Development Path (IDP, 1989, 1999, 2002) of Dunning. It is considered as the most popular theory now to explain about the capital flows between countries, including FDI and OFDI. Group of microeconomic theories has the following main points: Firstly, the lifecycle product theory of Raymond Vernon. Secondly, the monopoly advantage theory (Stephen Hymer). Thirdly, the ownership – location - internalization theory (OLI) of Dunning (1977). 2.2. The researches in the world and in Vietnam related to the thesis. 2.2.1 Researches in the world. Beside World Investment Report (WIR) of UNCTAD, many scholars, researchers analyzed the OFDI from developing and transitional countries. The notable studies are as following: Regarding China's OFDI, Wang (2011) based on the basis of studying China’s OFDI to developing countries in Africa and some countries in Asia to confirm that the support of the government and the industrial structure of the home country play an important role in the implementation of OFDI, while technological factors and advertisement are less important. Wang also confirmed the policy environment and infrastructure in host countries have a key role in attracting FDI. Wong (2011) affirmed that although the non-state economy has gradually been "unleashed", China’s OFDI activity is still heavily influenced by the state enterprises. Sylvie Laforet (2011) analyzed the current situation of China's OFDI flows into countries which are rich in natural resources but weak in political institution. Regarding Japan's OFDI, Tamami Okawa (2001) analyzed the relationship between the exchange rate of the US dollar to the Japanese Yen and Japanese OFDI to Asia. Okawa insisted that the increase of Japanese Yen price in the mid- 80s decade of the previous century paved the way for a new wave of Japanese OFDI to other countries. Herzer (2008) insisted that Japan succeeded in maintaining a strong Yen during the 1990s to promote OFDI activity. Linda Low (2010) studied the role of the government to OFDI flows in the Asian country. LOW indicated that in the East Asian model, the government has encouraged OFDI activities based on the level of success of the business, not based on political relations. Regarding Russia's OFDI, Kalman Kolatay (2010) studied OFDI flows in the period 1990-2010, Kolatay confirmed the change in investment strategy abroad of Russian enterprises. In the early 1990s, OFDI activity is carried out mainly by the private company directing to the “safe” country, aiming at reducing the impact of economic uncertainty in the country. About 10 recent years, Russia’s OFDI has been carried out main