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Vietnam- Wonder of FDI success

Recent lackluster geo-economic growth, dipping oil price together with devastating geopolitical atmosphere has plunged the cross border and multinational investment in recent past encountering many gigantic company bankruptcy which left no respite for law-makers, strategists, policy makers and economists. The slump hits economic hegemonies; USA, Russia and China and Eurozone badly. Against the prolonged volatile geo-economic context, Vietnam stunned and stood aside one of the hundreds as the miracle economy having progressive economic growth and tremendous growth in Foreign Direct Investment. Despite sharp global FDI decline in recent past, Vietnam gained on an average $13.5 billion yearly for last four years. Rise of FDI in Vietnam has been over 6% consistent growth and less than 2% inflation has been witnessed and widely analyzed by Least Developed Countries and big economies. The sunset manufacturing industries in Japan, China, and South Korea have preferred and relocated in Vietnam due to their strong economic commitment and mark of industrial excellence.

Investment evolution history of Vietnam outlined that slump Foreign Investment during eighties attracted many foreign companies partnered with State Owned Enterprises in Vietnam under reform initiative to create export orientation within those(The Rise of Asia, Athukorala 2010). Meanwhile USA signed FTA with Vietnam lifting their economic embargo. The first generation FDI upon investment market promotion concentrated infrastructure development. In early 2000 investments were more on electronics, telecommunication and allied sectors. The FDI has surged due to policy reform commitment by the Government. In this period investment concentration from East Asian countries was higher than what came from USA. But almost 20 Percent export of Vietnam goes to USA followed by China 16 percent of its total exports.

Foreign Invested Enterprises immensely contributed to economic Growth, 35 percent of Capital stock, and transition in economy of Vietnam. Manufacturing industries related to export business has grown by 45 percent in value addition and this sector was providing one third of total employment generation until 2006.The closed and controlled economy of Vietnam has allowed uninterrupted foreign investment to large extent and went through many policy and process reform in past decade. In 2015, 243 foreign conglomarates registered businesses in Vietnam to exploit the demographic and industrial advantages featured by low-cost semi-skilled workforce.


Vietnam has taken the attraction of foreign investment in her foreign policy and could grab almost 9 percent of Global FDI with double digit growth in 2014 whereas China topples with 36 percent and India had almost 8.5 percent. Reports revealed that another $120 Billion energy sector investment will follow in next 20 years. Prime Minster of Vietnam mentioned that FDI increase is a Foreign Policy Priority and it is embedded into it.


However, to attract more FDI, restructured investment climate, friendly open market mechanism and relevant policy development for new era of fully liberalized free market policy has been targeted by 2020. Another strong philosophy of Vietnam was friendship to all countries in east and west including neighboring countries which made them credible friend image in geopolitical climate.

Vietnam is aggressively pursuing the promotional activities for inbound Investment and coordinated, participative private and public sector engagement for continuous development of investment perspective. The Foreign Ministry of Vietnam is proactive on the investment and business development agenda with the vision 2020.

Textile Industry of Vietnam already secures an export market exceeding $27 Billion in 2015 and it is continue to grow. Boom of Textile and clothing export in Vietnam began as soon as RMG industry of Bangladesh got ravaged due to man-made massive disaster happened in 2013.

Incentive package for Vietnamese Investment is not as enriching and open as Bangladesh but their incentives are small and varied across the sectors from labour intensive to High tech, manufacturing development.

For more trade and Investment, the FTA between EU and Vietnam is underway. Most importantly Vietnem currently has joined the 12 nations’ multilateral trade and investment cooperation TPP. Upon effect of them, the trade and investment will increase by large percentage and export earning will increase by another $30 Billion. The electronic Giant, Samsung, made investment in Vietnam upon refusal from Bangladesh and earned $27 Billion which now extends investment in largest research hub.

Bangladesh despite having a set of pro-Investment policies, guidance and protection support for the potential investors, the FDI trend is not growing. I investment promotion agency of GoB keeps trumpeting the FDI policies globally but outcome is very minimum.

Bangladesh ideally requires 38 percent private investment of GDP by 2030 and 10 percent foreign investment which is currently less than 1 percent investment policy is not enough to grow the investment flow as long as other factors are unaddressed like coordination of organizations other interdependent policies like industry policy, export and import policy above all political stability and effective governance. We rarely found any focused course of actions and relentless promotion plan to grab more foreign investment.

Foreign Ministry of GoB does not bring the FDI under their jurisdiction whereas their global alliance could include the investment diplomacy for raising the investment as Foreign Ministry can change its terms of reference including trade, investment and economic matters for greater economic interest of Bangladesh.

Coordinated Public Private Partnership, reformed investment climate and simplified regulatory framework can expedite FDI regime provided political consensus and restructured terms of business of Government organizations responsible for investment promotion develops. In addition the following recommendations can be followed:

♦Private sector trade promotion organizations can strategically partnered and be on board with public agencies to promote Bangladesh bound Foreign Investment.

♦ The cross country comparison and gap analysis led reform in investment development process is crucial for Board of Investment to overcome FDI slump.

♦ BoI needs thorough reform including its management and terms of reference. The reform initiative of BoI need to be focused and result-oriented and the entire operational process, management structure should be re-examined PPP and full-fledged ‘One Stop Service’ should be operational.

♦The relocation privilege of sunset industries from Japan, China and Korea are not being properly extracted in Bangladesh despite huge potentials as low cost hub even though there is no classified statistics of relocation business in Bangladesh. l Intensive, market- oriented research-led findings and result oriented global promotional campaign by dynamic and dedicative team need to be built. Foreign diplomatic missions of Bangladesh should have a separate and dedicated wing to work for strategic roadmap for targeted investment.

♦ BoI can develop and enforce mechanism of periodic market review of potential investors’ countries and based on review findings, new information to redesign and realign their country wise periodic investment strategic plan.

♦ Frequent networking and matchmaking session with target groups based on local Industry demands. For instance, South Korea is immensely pioneering in automobile, ship building and semi-conductors, then negotiate Investment opportunities in those sectors rather than generalized investment promotion over there.

Liberal Vietnamese economy has grown as a role model of FDI-led export emerging economy in Southeast Asia despite many limitations and finite resources which created stunning mark of rapid investment hub and opportunities for learning of export-oriented Investment-led economic transition with high growth trajectory.

Bangladesh, despite having enormous and stunning potential remarked by many global economy leaders and financial giants, could not leverage substantially. Visionary Economic Transition of Bangladesh requires huge dispense of private and public sector investment to 35 percent for economic graduation by 2021 and more than 40 percent by 2030 to be 30th largest economy and additional 13 percent of GDP for Sustainable Development Goal 2030 targets which opens up the window of extensive investment. Only seventh-five-year-plan requires $410 Billion investment among which $340 Billion will be sourced from private investment. To harness the cross sectional industrial investment in Bangladesh from global FDI spree, Vietnam can categorically be an ideal customized replication to large extent regarding economic transition, investment industry selection, global outreach strategies and far-reaching trade and investment diplomacy to penetrate repealing the ineffectual and conventional investment mechanism of Bangladesh which may lighten our hopes and ease the pavement of epoch making visions for being a truly and socio-economically inclusive and developed country.

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