The Impact Of Overseas Vietnamese Investment In Vietnam
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Transcript of The Impact Of Overseas Vietnamese Investment In Vietnam
Thanh “Tino” Dinh | [email protected]
The Impact of Overseas Vietnamese Investment in Vietnam
Summary of Key Findings(English Version)
Tino DinhMBA Class of 2010
Independent Research Project Advised by Professor Peter Rodriguez, Associate Dean for International Affairs
Data as of: 3 MAR 2010 1Copyright Pending. Not to be reprinted
without permission of author.
The views expressed in this report are the author’s alone and do not reflect the opinions of the University of Virginia, the Darden School of Business, nor its faculty. Please refer to the complete report for more detailed information on references,
data, and insights.
Thanh “Tino” Dinh | [email protected]
The Bottom Line• Overseas Vietnamese (OV) contributions to Vietnam’s economic
growth are large and significant--est. US$8.45 BB, compared with US$16 BB in total FDI and ODA in 2009.
• Vietnam’s economy has large potential but still faces significant developmental challenges. OV investment, businesses, and knowledge transfer have the power to transform Vietnam’s economy in ways other forms of FDI cannot.
• OV investment could be even greater. However, the flow of OV capital is informal, dispersed and inefficient because of weak legal infrastructure, a lack of dedicated allocation mechanisms, and historical mistrust.
• Policy changes and innovative businesses can overcome these barriers and provide economic opportunities for Vietnamese domestically and internationally.
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Methodology
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Vietnam Government
Sources (GSO)
Multi-lateral Sources
(WB/IMF, UN, ADB)
US Government
Sources (Census)
Scholarly Studies,
Research Reports
Anecdotal Reports (media,
interviews, surveys)
Overseas Vietnamese Investment
(Size, Characteristics, Effect)
Thanh “Tino” Dinh | [email protected]
Sources of InvestmentComponent Sub-components (destination) Estimated Amount to Date Significance
Remittance (for investment) Investment in family-run
businesses
$3.9 billion Serves as key distribution channel
for OV capital
Recorded investment projects
and business ventures
Real estate, start-ups, joint
ventures
$ 2 billion Potential of OV-led ventures and
projects is not being maximized
Asset management Portfolio funds, start-ups, real-
estate, IT, mfg or infrastructure
$2.5 billion OVs serve as influential
gatekeepers for foreign
investments, projects
Intellectual capital R+D/IP, scientific expertise, mgt
know-how, educational
institutions
Undetermined Greatest potential for value-
creation, innovation exists in gap
b/w OV supply and local demand
for intellectual capital
Total $8.45 billion + Quantitatively, would make OV
the 7th largest foreign investor
(Ex. 7). Larger socio-economic
impact unquantifiable.
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[1] For illustrative purposes, 10% of total recorded remittances from 2000-2009 ($39.5 billion)[2] Given more time and resources, a rough estimate could be determined by identifying all IP from overseas Vietnamese and calculating the profits that have resulted from commercializing patents, publications, etc.
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48%
13%
4%
6%
8%
20%
1%
63%
17%
6%
6%
8%0%0%
North America
Western Europe
ANZ
Eastern Europe-Eurasia
Asia-Pacific
Thailand-Cambodia-Laos
Other
• Exterior circle: US$ 8.22
BB in total remittances
• Interior circle: 3.75 MM
OV pop.
• Population data from
Wikipedia, projections
• Assumptions on
remittances per
household
2008 Estimated Worldwide OV Remittances
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Remittance vs. Other FDI
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0
2000
4000
6000
8000
10000
12000
14000
16000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Est Total Remittance
ODA
FDI
• Currency represented in current US$ MM• Remittance consistently 9-10% GDP from 2002-2009• Sources: World Bank, IMF BoP Statistical yearbook, CIA World Factbook, GSO
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Total 1988-2008 FDI by Source
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20951.9
18005.6
17362.2
17071.0
16666.3
13824.1
7416.7
6121.6
5029.0
4892.4
4352.2
3216.2
3018.8
2711.1
2188.3
2000.0
1935.4
1811.2
1693.1
1549.1
0.0 5000.0 10000.0 15000.0 20000.0 25000.0
Taiwan
Malaysia
Japan
Singapore
Korea Rep. of
British Virgin Islands
Hong Kong SAR (China)
Thailand
United States
Canada
Cayman Islands
France
Netherlands
United Kingdom
China, PR
Overseas Vietnamese-aggregate
Fed. Russian
Australia
Switzerland
Samoa
Series1
• Currency in US$ MM
• Aggregate amount per country
during period 1988-2008
• Recorded projects only
• FDI from listed countries may
overlap with OV investment (esp.
USA, AST, CAN, FRA)
• Source: GSO, 9/10/2010
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2008 FDI: Licensed Projects by Activity Type
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Manufacturing
Real estate, renting business activities
Mining and quarrying
Transport; storage and communications
Hotels and restaurants
Construction
Health and social work
Agriculture and forestry
Education and training
Financial intermediation
Other
• Exterior circle: US$ 6 BB
in total registered capital
• Interior circle: 1171
projects
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Licensed FDI Projects by Province
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• Currency in US$ MM
• Registered capital > US$ 1 BB
• Source: GSO, 3/3/2010
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Characteristics of Viet-Kieu Enterprises
• Geography: Concentration in South
• Scale: Mostly small businesses
• Sector: Focus on speculative real estate development, labor-intensive manufacturing, or back-office IT outsourcing
• Business model: simple, cash-based businesses that offer tangible product or service
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Thanh “Tino” Dinh | [email protected]
Trends for OV Investment
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Thanh “Tino” Dinh | [email protected]
Root Cause Barrier to Investment Business Opportunity Policy Recommendation
Apathy Cultural distance Acculturation Services
Risk Legal Risk Information and Risk
Protection Services
Hanoi: Clarify legal status and rights of OV
OVC: Establish internationally recognized, independent
association for OV-owned businesses operating in Vietnam
to represent collective interests
Systemic corruption Information and Risk
Protection Services
Hanoi: rights-based legal reform; consistent enforcement
Hanoi, OVC: Independent, critical media
Bureaucracy Information and
Risk Protection
Services
Market Platforms
Hanoi: Streamline, consolidate, and automate
administrative process across agencies for receiving
business permits and licenses (e-government)
Financial risk; market
inefficiencies
Market Platforms
Financial Services
Lack of OV
Community Capacity
and Markets
Market Platforms
Financial Services
OVC: Coordinating or cooperative mechanism for promotion
of economic development in OV community and Vietnam
across public, commercial, and civil society spheres
Establish independent research institute for OV-centered
economic, social science research
Principles Mistrust Educational
institutions and
services
Hanoi, OVC: Reconciliation process
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Challenges and Opportunities
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Recommendations
• Systemic legal reform
Vietnam must consistently enforce basic property rights.
• Building capacity and platforms in OV community
Little Saigon must find an efficient means of pooling and allocating its capital.
• A path to reconciliation
It is in the interests of Vietnamese everywhere to contribute responsibly to Vietnam’s long-term economic development.
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Thanh “Tino” Dinh | [email protected]
Key References and Acknowledgments
Experts/Scholars Organizations Data Sources
Mr. Ernie Bower, CSIS and Brooks Bowers-Asia
American Chamber of Commerce-Vietnam 1992 Constitution of the SRV
Mr. Don Danh, VSVN Ash Institute-Vietnam Program. Harvard JFK School of Government
Asian Legal Information Institute
Dr. David Dapice, Ash Institute(Harvard-JFK)
National Vietnamese-American Chamber of Commerce (Viet AmCham)
Government Statistics Office of Vietnam
Prof. Le Xuan Khoa, SAIS (John Hopkins Univ)
US-Vietnam Trade Council IMF Balance of Payments Statistics Yearbook 2008
Prof. Nam Binh Tran, Univ of NSW (Austr)
Vietnamese-American NGO Network SRV Foreign Investment Agency (Ministry of Planning and Investment)
Dr. Lan Pham, Univ of Minnesota Vietnam Chamber of Commerce and Industry (SME Center)
US Census Bureau: American Community Survey 2007
Prof. Mark Sidel, Univ of Iowa Vietnam Strategic Ventures Network Vietnam National Administration of Tourism
Mr. Ivan Small, Cornell Univ World Bank Development Indicators
Mr. Markus Taussig, HBS
Mr. Dat Trinh, Levlad, LLC
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Not a comprehensive list (see full report), the following highlights key people, organizations, and sources of data that have been especially influential or helpful in completing this study