In today’s globally interconnected economy, Vietnamese enterprises are stepping onto the world stage with unprecedented enthusiasm and speed. With the rapid development of the domestic economy and strong support from the government’s “going global” strategy, more and more Vietnamese enterprises are turning their attention to the global stage, looking overseas for new growth opportunities and paths to globalization. However, investment is not just an adventure across geographical boundaries, but also a comprehensive test of an enterprise’s management capabilities, risk identification abilities, and cross-cultural communication skills.
This article aims to provide a comprehensive guide for Vietnamese enterprises aspiring to engage in overseas investments. We will delve into key issues such as Vietnam’s overseas investment policies, investment processes, risk management, financing strategies, and provide practical assistance for enterprises in complex overseas investments through case studies. Whether you are a small or medium-sized enterprise considering your first overseas investment or a large group seeking to expand your global footprint, this article will provide you with valuable insights and practical advice to assist you in your journey towards internationalization.
Let’s explore together the opportunities and challenges for Vietnamese enterprises to emerge on the global stage, analyze the key factors for success, and contribute to a new chapter in Vietnam’s economy.
Overview of Vietnam’s Overseas Investment Policies
The Vietnamese government’s attitude towards enterprise overseas investment has undergone significant changes over the past decade. From initial strict restrictions to now active encouragement, this shift reflects Vietnam’s growing confidence and ambitions on the global economic stage. With the rapid development of the domestic economy and increased foreign exchange reserves, the Vietnamese government has gradually recognized the importance of overseas investment in enhancing national economic strength, expanding international markets, and acquiring technology.
In 2005, Vietnam introduced its first law specifically regulating overseas investment – the “Overseas Investment Law”, marking the formal establishment of Vietnam’s overseas investment policy framework. This law provided the basic legal basis and foundation for Vietnamese enterprises’ overseas investment activities. Subsequently, the government issued a series of related regulations and implementation rules, continuously improving the legal system for overseas investment.
In 2014, Vietnam comprehensively revised the “Investment Law”, which included significant adjustments to overseas investment policies. The new “Investment Law” greatly simplified the overseas investment application process and expanded enterprises’ autonomy in overseas investments. For projects with investment amounts not exceeding 15 billion Vietnamese dong (about $650,000), enterprises only need to register without going through complex justification procedures. This change greatly improved the convenience of overseas investment for Vietnamese enterprises.
In 2019, the Vietnamese government further relaxed restrictions on overseas investment, allowing state-owned enterprises to directly participate in overseas investment projects under specific conditions, without prior approval from the Prime Minister. This policy aims to enhance the international competitiveness of state-owned enterprises while also reflecting the government’s increased confidence in enterprises’ overseas investment capabilities.
In terms of policy industries, the Vietnamese government clearly encourages enterprises to conduct overseas investments in specific fields. These areas mainly include agriculture, forestry, fisheries, mineral development, manufacturing, construction, and some high-tech industries. The government guides enterprises to invest in these key areas through tax incentives and simplified tax procedures.
Notably, the Vietnamese government places special emphasis on investment opportunities under the “Belt and Road Initiative”. In 2017, Vietnam signed a cooperation agreement with China to jointly build the “Belt and Road”, creating favorable conditions for Vietnamese enterprises to participate in related project investments. The government actively participates in infrastructure construction and energy development projects in countries along the route and provides policy support and financing facilities for this purpose.
However, the government’s attitude towards overseas investment is not solely about relaxation. To prevent risks and ensure the quality and effectiveness of overseas investments, relevant departments such as the State Bank of Vietnam and the Ministry of Planning and Investment have continuously strengthened supervision. For example, in 2020, the State Bank of Vietnam issued new regulations on strengthening foreign exchange management for overseas investments, requiring enterprises to report more detailed information on fund usage and investment returns.
In 2021, the Ministry of Planning and Investment issued the “Guidelines for Sustainable Development of Overseas Investments”, encouraging enterprises to comply with environmental protection standards, respect local community rights, and fulfill corporate social responsibilities in overseas investments. Recently, the Vietnamese government has paid special attention to the environmental and social impacts of overseas investments, reflecting the government’s desire to change its international image in the eyes of investors.
Vietnam’s overseas investment policies are developing towards a more open, convenient, but also more regulated direction. On one hand, the government encourages enterprises to “go global” by simplifying procedures and providing support, while on the other hand, it continues to improve the balanced policy focus to ensure that Vietnamese enterprises can both seize opportunities and effectively manage risks in the globalization process, ultimately achieving mutually beneficial overseas investment goals.
Processes and Steps for Vietnamese Enterprises’ Overseas Investments
Overseas investment by Vietnamese enterprises is a complex and systematic process involving multiple stages and various considerations. From initial decision-making to final implementation, each step requires detailed planning and execution. This article will introduce in detail the main processes and steps that Vietnamese enterprises typically need to follow when conducting overseas investments.
Investment decision-making is the starting point of the entire process. At this stage, enterprises need to conduct a comprehensive strategic assessment, including analyzing their own financial status, technological advantages, and management capabilities, as well as evaluating market opportunities and risks in potential investment directions. Enterprises need to clearly define the strategic objectives of overseas investments, such as acquiring natural resources, expanding markets, or obtaining advanced technologies. Typically, enterprises will establish a dedicated project team responsible for collecting and analyzing relevant information, and may also hire external consultants such as legal experts, financial advisors, and industry experts for professional opinions.
Following this is the feasibility study, which is a key link in overseas investment decision-making. A comprehensive feasibility study report usually includes aspects such as market analysis, technical feasibility assessment, financial analysis, legal environment analysis, and risk assessment. Market analysis evaluates the size, growth potential, and competitive landscape of the target market; technical feasibility assesses whether the enterprise’s technological capabilities meet project requirements; financial analysis forecasts the project’s costs, benefits, and ratios; legal environment analysis studies the laws and regulations of the investment destination, especially policies related to investments; risk assessment identifies potential risks and formulates response strategies. The depth and breadth of the feasibility study should match the scale and complexity of the project. For large projects, this process may take several months or even longer.
Based on the results of the study, enterprises need to formulate detailed investment plans. This includes determining the investment scale, choosing suitable investment methods (such as greenfield investment, mergers and acquisitions, or joint ventures), and formulating financing plans. The investment plan should also include specific implementation timelines and milestones. Once completed, the investment plan needs to go through strict internal approval procedures. For large state-owned enterprises, it may need to be reported to higher authorities for approval. The purpose of this stage is to ensure that investment decisions align with the enterprise’s overall strategy and risk control requirements.
After obtaining internal approval, enterprises need to apply for government approval and registration. According to Vietnamese customs regulations, enterprises need to apply for an overseas investment license from the Ministry of Planning and Investment (MPI). This process includes preparing materials (such as investment application forms, investment study reports). For projects with investment amounts not exceeding 15 billion Vietnamese dong, the approval time is usually within 15 working days; projects exceeding this amount may take 30 working days.
After obtaining the investment license, the next step is to remit funds. Enterprises need to submit foreign exchange remittance applications to the State Bank of Vietnam, including preparing proof of fund sources and usage plans. It is important to note that Vietnam still has strict foreign exchange controls under capital account items, and enterprises need to fully consider this factor.
After obtaining all necessary permits, enterprises can begin implementing investment projects. The main work at this stage includes registering companies or completing acquisition procedures in the destination country, remitting and perfecting funds, forming teams (including selecting and dispatching management and technical personnel), and starting specific business operations.
After project launch, subsequent management and reporting are equally important. Enterprises need to establish basic management systems to ensure smooth project operation. At the same time, according to Vietnamese regulations, enterprises need to regularly report project progress and conditions to relevant financial departments. Specifically, this includes reporting fund usage to the State Bank of Vietnam quarterly, and submitting annual reports to the MPI, describing the investment project’s operating conditions and financial status.
It should be emphasized that overseas investment is a dynamic process, and enterprises need to constantly adjust strategies based on actual situations. At the same time, enterprises should also closely monitor policy changes in Vietnam and the investment destination countries to ensure that investment activities always comply with laws and regulations.
In summary, overseas investment by Vietnamese enterprises is a process that requires systematic planning and rigorous execution. From initial strategic decision-making to final project implementation and management, every stage is crucial. Enterprises need to invest significant time and resources in thorough preparation while also possessing the ability to quickly respond to changes. By following these steps and combining them with their own actual situations, Vietnamese enterprises can better grasp overseas investment opportunities, effectively manage risks, and achieve sustainable overseas development.
Analysis of Major Investment Destination Countries/Regions
The overseas investment map of Vietnamese enterprises is constantly expanding, from neighboring countries to overseas markets across the ocean, Vietnamese enterprises are seeking investment opportunities globally. This diverse investment layout not only reflects Vietnamese enterprises’ desire for global growth ambitions but also demonstrates their profound understanding of the characteristics and opportunities of different markets. Below, we will analyze in detail the main overseas investment destinations for Vietnamese enterprises and their investment environments and opportunities.
Neighboring countries are undoubtedly the primary destination choice for Vietnamese enterprises’ overseas investments. Geographical proximity, cultural affinity, and deep integration of the ASEAN Economic Community provide unique advantages for Vietnamese enterprises. Among neighboring countries, Laos and Cambodia’s lower labor costs and abundant natural resources have become key investment destinations for Vietnamese enterprises, especially in agriculture and manufacturing. Taking Laos as an example, Vietnamese enterprises are active in investments in rubber planting, hydropower development, and mineral exploration. In Cambodia, Vietnamese enterprises mainly invest in telecommunications, banking, and agricultural planting.
Thailand and Singapore, as economic powerhouses, have also attracted significant investments from Vietnamese enterprises. Thailand’s automotive manufacturing and food processing industries offer opportunities for Vietnamese enterprises to upgrade technology and expand markets. Singapore, as a regional financial and trade center, has become an ideal platform for Vietnamese enterprises to establish overseas headquarters and expand international business. By setting up subsidiaries in Singapore, Vietnamese enterprises can not only utilize its sophisticated financial system and favorable tax policies but also leverage its international business network to expand into global markets.
Overseas, the United States, as the world’s largest economy, has naturally become an important target for Vietnamese enterprises’ overseas investments. Despite challenges such as cultural differences and strict regulatory environments, Vietnamese enterprises are still attracted by the enormous potential of the US market. Investments in the US mainly focus on high-tech, retail, and food processing sectors. For example, Vietnam’s leading technology company FPT has established a research and development center in Silicon Valley to serve global clients through localized innovation. Additionally, Vietnam’s famous seasoning company Vietnam Taste Enterprises has successfully entered the US market through acquisitions of local US brands.
The European market, especially Western European countries, presents both challenges and opportunities for Vietnamese enterprises. The implementation of the EU-Vietnam Free Trade Agreement (EVFTA) has provided favorable conditions for Vietnamese enterprises to enter the European market. Germany, France, and the Netherlands are the main investment destinations for Vietnamese enterprises in Europe. In Germany, Vietnamese enterprises mainly focus on advanced manufacturing and renewable energy sectors; in France, Vietnamese enterprises invest more in luxury goods and fashion industries; while in the Netherlands, Vietnamese enterprises view it as a strategic position as a European logistics hub, mainly investing in trade and logistics sectors.
Australia, as a developed economy in the Asia-Pacific region, is also increasingly favored by Vietnamese investors. Vietnamese enterprises’ investments in Australia mainly focus on mineral resources, agriculture, and education sectors. For example, Vietnam’s state-owned enterprise Vietnam Coal and Mineral Industries Group (Vinacomin) has invested in Australian coal mines. Additionally, with the rise of Vietnam’s middle class, more and more Vietnamese enterprises are investing in education and real estate projects in Australia to meet the growing domestic demand for overseas education and asset allocation.
Although Africa is geographically distant from Vietnam, its abundant natural resources and huge market potential have also attracted the attention of Vietnamese enterprises. Vietnamese enterprises’ investments in Africa mainly focus on agriculture, telecommunications, and infrastructure construction. For example, Vietnam Military Telecommunications Group (Viettel) has invested in building telecommunication networks in multiple African countries such as Tanzania and Mozambique, achieving significant results.
Notably, with the advancement of China’s “Belt and Road Initiative”, countries along the route have also become new hotspots for Vietnamese enterprises’ overseas investments. Countries such as Kazakhstan and Uzbekistan, with their strategic location and resource endowments, are attracting more and more Vietnamese enterprises to invest. These investments mainly focus on energy, minerals, and infrastructure construction.
However, while seizing these investment opportunities, Vietnamese enterprises also face inflation challenges. Different legal environments, cultural differences, political risks, and competitive market competition are all issues that Vietnamese enterprises need to carefully address. Therefore, when investing overseas, Vietnamese enterprises need to thoroughly research target markets, formulate detailed risk management strategies, and seek assistance from professional institutions when necessary.
Overall, the overseas investment destinations of Vietnamese enterprises are increasingly diversifying, from neighboring countries to various regions around the world. This global layout not only helps Vietnamese enterprises diversify risks and obtain new growth drivers but also provides an important path for Vietnam to integrate into the global economic system and enhance its international competitiveness.
Overseas Investment Methods and Structures
Vietnamese enterprises are actively exploring diversified overseas investment methods and structures to achieve their internationalization strategic goals. The main investment methods include greenfield investments, cross-border mergers and acquisitions, and joint ventures, each with its unique characteristics and applicable scenarios. Choosing the appropriate investment method and structure is key to the success of a project, as it not only affects the risk and return of the investment but also determines the enterprise’s operational model and development potential in overseas markets.
Greenfield Investment is one of the ways Vietnamese enterprises expand overseas. This investment method refers to enterprises establishing new production and operation entities from scratch overseas. The biggest advantage of greenfield investment is that enterprises can completely design and control new business entities according to their own wishes, ensuring they align with the enterprise’s global strategy. This method is particularly suitable for enterprises with unique technologies or business models that wish to fully leverage their own advantages. For example, Vietnam’s leading dairy company Vinamilk’s investment in Cambodia adopted the greenfield investment method, establishing a brand new production base. This allowed Vinamilk to fully replicate its advanced production technology and management experience in the new market while avoiding potential cultural integration issues.
However, greenfield investment also faces significant initial costs and a longer recovery period. Enterprises need to invest large amounts of capital in land acquisition, plant construction, and equipment purchases, while also requiring time to establish supply chains, train employees, and develop markets. Therefore, greenfield investment requires enterprises to have sufficient funds and a long-term development strategy.
Cross-border Mergers and Acquisitions (M&A) is another investment method increasingly favored by Vietnamese enterprises. By acquiring or merging with existing overseas companies, Vietnamese companies can quickly gain access to key resources such as businesses, customer bases, brands, and technologies in the target market. The main advantage of this method is the ability to quickly enter new markets, bypass the learning curve, and potentially gain immediate market contributions and revenue streams. For example, Vietnam’s largest conglomerate Vingroup acquired German AI company RevoTech, quickly gaining advanced artificial intelligence technology and accelerating its layout in the smart car field.
However, cross-border M&A also carries risks such as cultural integration, overvaluation, and potential hidden liabilities. Successful cross-border M&A requires enterprises to have strong financial capabilities, professional due diligence abilities, and excellent cross-cultural management skills. Additionally, some countries have very strict scrutiny of foreign acquisitions, which poses additional challenges for Vietnamese enterprises’ cross-border M&A activities.
Joint Ventures are another frequently adopted overseas investment method by Vietnamese enterprises, especially when entering markets with significant cultural differences or complex policy environments. By establishing joint ventures with local partners, Vietnamese enterprises can leverage the local knowledge, market channels, and government relationships of their partners to reduce investment risks. At the same time, joint ventures allow Vietnamese companies to control the scale of investment while sharing resources and experiences with partners. For example, Vietnam’s largest telecommunications company Viettel has adopted diversified approaches to conduct business in multiple emerging markets such as Palestine and the UAE, enabling Viettel to quickly adapt to local market environments and obtain necessary operating licenses in strictly regulated telecommunications industries.
However, joint ventures also face potential issues such as low decision-making efficiency and interest conflicts. To ensure the success of joint ventures, Vietnamese companies need to carefully select partners, clearly agree on the rights and obligations of all parties, and establish effective communication and decision-making mechanisms.
In addition to major investment methods, Vietnamese enterprises can also consider other investment structures such as franchising and licensing agreements. Franchising is suitable for enterprises with mature brands and standardized business models, such as Vietnam’s famous chain coffee brand Highlands Coffee, which has rapidly expanded in overseas markets through franchising. Licensing agreements are suitable for enterprises with patented technologies but lacking overseas operational experience, allowing them to generate revenue by authorizing overseas companies to use their technologies or brands.
When choosing investment methods and structures, Vietnamese enterprises need to comprehensively consider multiple factors, including the enterprise’s own strategic goals, financial status, management capabilities, as well as the legal environment, competitive landscape, and cultural characteristics of the target market. At the same time, enterprises also need to consider the impact of different investment methods on tax planning and profit repatriation.
Notably, as Vietnamese enterprises accumulate overseas investment experience, more and more companies are adopting hybrid investment strategies. For example, they might first enter a market through small-scale joint ventures or acquisitions, accumulate experience and resources, and then proceed with large-scale investments. This flexible strategy allows enterprises to reduce initial risks while laying the foundation for future expansion.
Overall, the choice of overseas investment methods and structures is a complex decision-making process that requires enterprises to conduct in-depth analysis and make prudent decisions.
Financing Channels and Strategies
When conducting overseas investments, the formulation and implementation of financing strategies are key factors determining the success or failure of a project. Sufficient and stable financial support can not only ensure the smooth progress of investment projects but also provide strong support for enterprises’ smooth operations in overseas markets. Vietnamese enterprises typically consider both internal and external financing channels when financing overseas investments, with each channel having its unique characteristics and applicable situations.
Internal financing is the preferred financing method for many Vietnamese enterprises, especially large state-owned enterprises and mature small and medium-sized enterprises. This method mainly relies on the enterprise’s own funds, including retained earnings, asset liquidation, and internal fund adjustments within the group. The biggest advantage of internal financing is that enterprises can quickly mobilize funds, eliminating the need for complex external financing procedures, while also avoiding potential costs and control rights issues associated with external financing.
For example, when acquiring overseas oil and gas assets, the Vietnam Oil and Gas Group (PetroVietnam) mainly relied on its strong Vietnamese assets and reserves for financing. This approach allowed PetroVietnam to quickly seize investment opportunities and gain a competitive edge in the competitive international energy market. However, internal financing also faces challenges such as limited fund scale and potential impact on the enterprise’s daily operating funds. Therefore, for large-scale or long-term overseas investment projects, relying solely on internal financing may not meet the needs.
External financing provides Vietnamese enterprises with more flexible funding sources, especially suitable for projects with large capital requirements and long investment cycles. Bank loans are one of the most common forms of external financing. Vietnamese state-owned commercial banks such as Vietcombank and VietinBank have specialized overseas investment financing businesses providing loans for enterprises’ overseas investments. These loans require enterprises to provide sufficient collateral or guarantees, with interest rates determined based on project risk and the enterprise’s credit status.
In addition to domestic banks, Vietnamese enterprises also seek support from international financial institutions. Multilateral financial institutions such as the World Bank and Asian Development Bank actively provide various financing tools for overseas investments. For example, the International Finance Corporation (IFC) has provided loan support for Vinamilk’s investment project in Cambodia. Such financing not only provides financial support but also helps Vietnamese enterprises enhance their international reputation, laying the foundation for future financing activities.
Equity financing is another form of external financing increasingly favored by Vietnamese enterprises, especially for those planning large-scale overseas expansions. By issuing new shares in domestic or international capital markets or introducing strategic investors, enterprises can raise substantial funds for overseas investments. For example, Vietnam’s leading real estate developer Vingroup raised significant funds for its international expansion through issuing additional shares on the Vietnamese securities market. The advantage of equity financing is that it can raise large amounts of capital without increasing the enterprise’s debt burden. However, this method may also lead to dilution of existing shareholders’ equity, so enterprises need to weigh the pros and cons when choosing this option.
Bond issuance is a common financing method used by large Vietnamese enterprises, especially state-owned enterprises, when investing in large overseas projects. By issuing corporate bonds or project bonds, enterprises can directly finance from the capital market to meet large-scale, long-term funding needs. Vietnam Electricity Group (EVN) has financed hydropower projects in Laos through international bond issuances. Compared to bank loans, bond financing usually offers longer terms and larger financing scales but also requires enterprises to have credit ratings and sound corporate governance structures.
Recently, with the development of financial innovation, Vietnamese enterprises have begun to explore some emerging financing methods for overseas investments. These include cross-border syndicated loans and mezzanine financing. Cross-border syndicated loans involve multiple banks and can spread risks while providing larger-scale financing support. Mezzanine financing combines characteristics of debt and equity, offering enterprises more flexible financing options.
Additionally, the Vietnamese government actively supports enterprises’ overseas investment financing. The Vietnam Development Bank (VDB) has established a dedicated overseas investment credit fund to provide preferential loans for qualified overseas investment projects. The government has also gradually relaxed foreign exchange restrictions on enterprises’ overseas investments through adjustments to foreign exchange management policies, creating a more favorable environment for cross-border financing.
When formulating financing strategies, Vietnamese enterprises need to comprehensively consider multiple factors, including the scale and cycle of investment projects, their own financial status, the financial environment of the target market, and exchange rate risks. An excellent financing strategy usually combines multiple financing methods to balance loan costs, risks, and funding flexibility. For example, internal funds can be used for initial investments, followed by bank loans or bond issuances to support subsequent expansions.
At the same time, enterprises also need to pay attention to matching the financing structure with the investment cycle. Long-term investment projects should be matched with long-term financing to avoid liquidity risks caused by mismatched terms. Furthermore, for cross-border projects, enterprises need to pay special attention to exchange rate risks and consider using financial instruments such as currency swaps and forward contracts to manage risks brought by constantly changing exchange rates.
As Vietnamese enterprises’ level of internationalization continues to increase, their overseas investment financing capabilities are also continuously strengthening. More and more enterprises are adopting more sophisticated and internationalized financing strategies, fully utilizing global capital markets. However, the improvement in financing capabilities also brings higher financial management requirements. Vietnamese enterprises need to continuously improve their financial management level and establish robust risk management systems to ensure effective management of complex cross-border financing structures and support the enterprise’s long-term sustainable development.
Risk Management and Protection
Vietnamese enterprises engaging in overseas investments will first face various risks. These risks cover multiple aspects including political, economic, legal, and cultural factors. If not handled properly, they can seriously impact investment projects and even lead to investment failure. Therefore, comprehensive risk assessment and effective risk management strategies are key to the success of overseas investments.
Political risk is a severe challenge faced by Vietnamese enterprises in overseas investments. This risk mainly stems from the instability of the host country’s political environment and may include political transitions, sudden policy changes, and geopolitical conflicts. For example, in 2014, some Vietnamese enterprises’ investments in Africa were affected by local political turmoil. To address political risks, Vietnamese enterprises can take the following measures: First, conduct a comprehensive political risk assessment before making investment decisions, including analyzing the political system, party relations, and other factors of the target country. Second, consider purchasing political risk insurance, such as overseas investment insurance provided by China Export & Credit Insurance Corporation. Third, establishing good relations with the host country’s government and local communities is also an effective way to reduce political risks. Telecom enterprise Viettel often reduces political risks by cooperating with local governments in its overseas investments.
Economic risk is another area that needs close attention. This includes macroeconomic risks such as exchange rate fluctuations, inflation, and economic growth, as well as related economic risks such as market competition and supply chain disruptions. For example, the global economic outbreak caused by the COVID-19 pandemic in 2020 brought huge challenges to many Vietnamese overseas investment projects. To manage economic risks, Vietnamese enterprises can adopt the following strategies: First, establish a robust economic monitoring and early warning mechanism to keep abreast of economic dynamics in the investment destination. Second, adopt flexible investment strategies, such as phased investments, to allow for timely adjustments when the economic environment deteriorates. Third, use financial instruments such as forward contracts and currency swaps to address exchange rate risks. For example, a large Vietnamese manufacturing enterprise’s investment project in Thailand effectively reduced risks brought by constantly changing exchange rates by signing forward contracts with local banks to fix exchange rates.
Legal risk is another major challenge that Vietnamese enterprises cannot ignore in overseas investments. The legal systems of different countries vary greatly, and enterprises may face legal issues related to contract disputes, intellectual property protection, and labor relations. To effectively manage legal risks, Vietnamese enterprises can: First, hire professional institutions familiar with local laws to conduct due diligence before investing, comprehensively understanding relevant laws and regulations. Second, pay attention to the design of legal clauses during contract negotiations, especially the provisions for dispute resolution mechanisms. Third, establish a sound compliance management system to ensure that enterprise operations always comply with local legal requirements. For example, a large Vietnamese food enterprise specifically formulated compliance regulations when entering the European market to ensure its products and business activities comply with the EU’s strict food safety and environmental protection standards.
Cultural risk, although often overlooked, is equally crucial to the success of overseas investments. Cultural errors can lead to communication misunderstandings, management conflicts, and even affect market acceptance of products. To address cultural risks, Vietnamese enterprises can: First, conduct in-depth cultural research before making investment decisions to understand the cultural characteristics and consumer preferences of the target market. Second, focus on cross-cultural management capabilities when selecting personnel, considering dispatching management personnel with cross-cultural backgrounds or hiring local employees for key positions. For example, a Vietnamese clothing enterprise specifically hired Japanese cultural consultants and conducted systematic Japanese cultural training for its management team when entering the Japanese market, greatly improving its operational efficiency in Japan.
In addition to major risks, Vietnamese enterprises may also face operational risks, environmental risks, and security risks in overseas investments. Operational risks mainly involve internal management and control issues and can be reduced by establishing robust internal control systems and risk management systems. Environmental risks are receiving increasing attention, especially in industries such as mining and manufacturing. Enterprises need to strictly comply with local environmental regulations and proactively assume social responsibilities. Security risks require enterprises to pay attention to communication with local stakeholders and establish a good corporate image.
Overall, effective risk management should be a systematic and comprehensive process. Vietnamese enterprises can consider adopting the following framework for risk management:
- Risk Identification: Comprehensively review possible risk categories.
- Risk Assessment: Analyze the likelihood and potential impact of various risks.
- Risk Response: Formulate top-level risk response strategies.
- Risk Monitoring: Establish ongoing risk monitoring mechanisms to timely detect and respond to new risks.
Additionally, Vietnamese enterprises should note the dynamic nature of risk management. As investment projects progress, risk situations may change, so risk management strategies need to be regularly reviewed and updated. At the same time, enterprises should also establish crisis response mechanisms to be prepared for possible major risk events.
Although overseas investments face sudden risks, Vietnamese enterprises can effectively control these risks through scientific risk management. As Vietnamese enterprises accumulate overseas investment experience, their risk management capabilities will continue to improve, laying a solid foundation for Vietnamese enterprises’ success in the international market. At the same time, relevant government departments should also strengthen guidance and support for enterprises, helping them improve their risk management level and safeguarding Vietnamese enterprises’ international development.
Tax Management and Planning
In the process of Vietnamese enterprises expanding overseas investments, tax planning and management have become a key aspect that cannot be ignored. Effective tax strategies can not only legally reduce an enterprise’s tax costs but also help enterprises avoid potential tax risks, thereby providing strong support for the enterprise’s overseas operations. When formulating tax policies, Vietnamese enterprises need to consider the tax policies of both Vietnam and the investment destination country, as well as tax treaties between countries (if they exist).
First, from Vietnam’s tax perspective, enterprises need to mainly focus on corporate income tax and foreign tax credit policies. According to Vietnamese tax regulations, the global income of Vietnamese enterprises needs to be taxed for corporate income tax in Vietnam, with a standard tax rate of 20%. However, to avoid double taxation, Vietnamese enterprises can credit taxes already paid overseas. Specifically, enterprises can choose either the country-by-country credit method or the comprehensive credit method, but the credit amount cannot exceed the tax payable on that overseas income in Vietnam. Therefore, when conducting overseas investments, Vietnamese enterprises need to carefully assess the tax rates of different countries and choose the most optimized investment structure and profit repatriation method.
For example, if the corporate tax rate in the investment destination country is higher than Vietnam’s, enterprises might consider retaining part of their profits locally for reinvestment rather than immediately repatriating them to Vietnam. Conversely, if the tax rate in the destination country is lower, enterprises might choose to repatriate more profits to Vietnam to fully utilize the foreign tax credit policy.
Secondly, the tax system of the investment destination country is another focus that enterprises need to study in-depth. Tax policies vary greatly between different countries, potentially involving taxes including but not limited to corporate income tax, individual income tax, withholding tax, capital gains tax, etc. Some countries may also provide tax incentive policies for specific industries or regions. Therefore, Vietnamese enterprises need to comprehensively understand the tax environment of the destination country and incorporate it into their investment decision-making factors.
For example, Singapore, as a regional financial center, implements a credit policy for certain types of overseas income, which has led many Vietnamese enterprises to choose to set up holding companies in Singapore to manage investments in other countries. Also, some Southeast Asian countries offer long-term tax exemptions in economic special zones to attract foreign investment, which has become an important consideration for Vietnamese manufacturing enterprises when choosing investment locations.
In specific tax planning, enterprises can consider the following aspects:
Investment Structure Optimization: Enterprises can achieve tax benefits through reasonable design of investment structures. For example, in some cases, setting up an intermediate holding company in a third country might help enterprises better utilize tax structures and reduce overall tax burdens.
Transfer Pricing Policies: The pricing of transactions within multinational enterprise groups has a significant impact on tax burdens. Vietnamese enterprises need to formulate transfer pricing policies that comply with the “arm’s length principle”, both reasonably allocating profits and avoiding questioning by tax authorities.
Financing Structure Arrangements: Different financing methods (such as equity financing and debt financing) have different tax treatments. Enterprises need to choose the most optimized financing structure based on the tax policies of different countries. For example, some countries have related issues with deducting interest expenses before tax, which may affect enterprises’ financing decisions.
Profit Repatriation Strategies: Enterprises need to consider the differences in tax treatment of different forms of profit repatriation (such as dividends, interest, royalties, etc.) and choose the most advantageous method. At the same time, they also need to pay attention to restrictions on profit repatriation and withholding tax policies in the destination country.
Permanent Establishment Risk Management: In some cases, an enterprise’s overseas business activities may be deemed to constitute a permanent establishment, thus generating additional tax obligations. Enterprises need to prudently assess this risk and take appropriate measures to manage it.
Furthermore, Vietnamese enterprises need to closely monitor changes in the international tax environment. In recent years, the “Base Erosion and Profit Shifting” (BEPS) action plan promoted by the Organization for Economic Co-operation and Development (OECD) has had a significant impact on international tax rules. More countries are tightening tax management on multinational enterprises, which brings new challenges to Vietnamese enterprises’ overseas tax planning.
To address these challenges, Vietnamese enterprises need to establish robust tax risk management systems. This includes: strengthening tax compliance management to ensure accurate and timely fulfillment of tax obligations in each operating location; establishing cross-border tax information collection and analysis mechanisms to stay informed of changes in tax policies in various locations; paying attention to tax documentation management, especially transfer pricing documentation, which requires strict tax inspections; cultivating internationalized tax talent teams and seeking help from professional tax advisors when necessary.
Tax planning and management is a complex and important aspect of Vietnamese enterprises’ overseas investments. It requires enterprises to have a comprehensive tax perspective and balance compliance requirements with tax burden optimization. Through scientific and reasonable tax planning, Vietnamese enterprises can maximize their after-tax returns on unlimited investments within legal and compliant premises. However, enterprises also need to recognize that tax planning should not be the sole consideration in investment decisions but should be combined with the enterprise’s overall strategy and business needs.
Case Studies: Successes and Challenges of Vietnamese Enterprises’ Overseas Investments
Vietnamese enterprises have actively expanded into overseas markets over the past decade, with some notable success stories and lessons worth pondering. By analyzing these cases, we can better understand the opportunities and challenges faced by Vietnamese enterprises in their internationalization process. Below, we will explore three representative cases in depth.
First, let’s look at Vinamilk’s investment in Cambodia. In 2021, Vinamilk announced a $50 million investment to establish a large dairy production base in Phnom Penh, Cambodia. This case demonstrates how Vinamilk successfully transformed its experience and advantages accumulated in the Vietnamese market into international competitiveness. Vinamilk’s choice of Cambodia as the starting point for its regional expansion had several key considerations: First, Cambodia’s geographical proximity and high cultural similarity facilitated Vinamilk’s quick adaptation to the local market; second, Cambodia’s dairy product market was not yet saturated and had huge growth potential; finally, the Cambodian government welcomed foreign investment, providing a favorable policy environment.
Vinamilk’s success is mainly reflected in the following aspects: First, thorough market research accurately grasped target market demands; second, a prudent investment strategy, first understanding the market through agency sales models, then gradually accumulating experience and increasing investment efforts; third, localized operations, not only considering local consumer preferences in product design but also actively establishing good relationships with local communities. This case tells us that in overseas investments, step-by-step, tailored strategies are often more likely to succeed than aggressive expansion.
Next, let’s look at the investment of Vietnamese telecom enterprise Viettel in Africa. Viettel began its internationalization process in 2006 and currently operates in 11 countries, including several African countries. Taking Tanzania as an example, Viettel entered this market in 2015 and became the third-largest telecom operator in the country within a few years. Viettel’s success is mainly due to its unique market strategy and strong technological advantages.
Viettel’s investment strategy in Africa has several notable features: First, it focuses on countries with backward telecommunications infrastructure, rapidly gaining market share through large-scale investments in network construction; second, Viettel adopts an aggressive pricing strategy, providing more affordable services than competitors to quickly attract users; third, Viettel attaches importance to establishing good government relations with local governments, generally adopting joint venture models to cooperate with local governments or enterprises, which not only reduces political risks but also helps it better integrate into local markets. Viettel’s case demonstrates how Vietnamese enterprises can achieve success in high-risk, high-potential emerging markets through technological advantages and flexible market strategies.
However, not all overseas investments can be successful. The investment of Vietnam National Oil and Gas Group (PetroVietnam) in Venezuela is a cautionary case worth noting. In 2008, PetroVietnam signed a $11.2 billion oil refinery deal with Venezuela’s national oil company. However, due to deteriorating domestic political and economic situations, the project progressed slowly and was eventually suspended in 2013.
This case exposed several key issues: First, the Vietnamese oil company underestimated the impact of political risks on large projects. Venezuela’s political instability and economic volatility severely affected the project. Second, the project’s feasibility study was insufficient, with inadequate assessment of the host country’s economic situation and environmental policies. Third, risk management measures were not comprehensive enough, lacking effective exit mechanisms. This case reminds us that comprehensive risk assessment and flexible response strategies are crucial when conducting large-scale overseas investments.
By analyzing these cases, we can summarize several important lessons. First, thorough market research and risk assessment are the foundation for success. Enterprises need to deeply understand the political, economic, and cultural environment of the target market and accurately assess potential risks. Second, flexible market strategies and localization capabilities are crucial for adapting to new markets. Third, establishing good relationships with local governments and communities can effectively reduce political risks and increase investment stability. Finally, establishing comprehensive risk management mechanisms, including exit strategies, is crucial for dealing with unforeseen challenges.
These cases not only showcase the potential of Vietnamese enterprises on the international stage but also reflect the challenges they face in the globalization process. As Vietnamese enterprises accumulate more international experience, they will be better equipped to seize opportunities and avoid risks, achieving greater success in the global market. At the same time, these experiences and lessons also provide valuable references for other Vietnamese enterprises planning to enter international markets.
Government Policy Support: Supporting Vietnamese Enterprises to “Go Global”
In recent years, the Vietnamese government has increasingly recognized the importance of supporting domestic enterprises to “go global”, viewing it not only as an important means to enhance national economic strength but also as a key approach to integrating into the global economic system. To this end, the government has formulated a series of preferential policies and support measures aimed at encouraging and helping Vietnamese enterprises conduct overseas investments. These policies mainly cover multiple aspects including financial support, information services, and talent cultivation, establishing a comprehensive support system.
In terms of financial support, the Vietnamese government has adopted preferential measures. First, the Vietnam Development Bank (VDB) has established a dedicated overseas investment credit fund to provide preferential loans for qualified overseas investment projects. These loans usually have lower interest rates and favorable conditions. Second, the government also provides investment matching services for enterprises through the Vietnam Investment Development Fund (VIDF), helping enterprises more easily obtain loan support from commercial banks. Additionally, the State Bank of Vietnam has been gradually relaxing foreign exchange controls on enterprises’ overseas investments, simplifying fund remittance procedures, and creating a more favorable environment for enterprises’ cross-border financing.
Information service is another important aspect of government support. The Ministry of Planning and Investment (MPI) of Vietnam has specifically established an overseas investment information platform to provide enterprises with comprehensive market information, policy updates, and investment opportunities. This platform not only collects investment environment reports, laws and regulations, and market analyses from various countries but also provides real-time investment opportunity information. Furthermore, Vietnamese embassies, consulates, and trade representatives abroad also play an important role. They regularly issue updates on economic policy changes and investment opportunities in their host countries to domestic enterprises and provide assistance when necessary. These information services greatly reduce the cost for enterprises to obtain overseas market information, helping them make more informed investment decisions.
Talent cultivation is the foundation for supporting enterprises to “go global”. The Vietnamese government recognizes the importance of internationalized talents for enterprises’ overseas investments and has therefore introduced a series of cultivation measures. For example, the Ministry of Education and Training collaborates with the Ministry of Planning and Investment to set up overseas investment-related majors in multiple universities. The government also cooperates with international organizations to regularly hold overseas investment training courses, covering topics such as cross-cultural management, international finance, and risk management. Additionally, the government encourages enterprises to send employees abroad for study. These measures help cultivate talents with international perspectives and professional capabilities, providing human resource support for the internationalization of Vietnamese enterprises.
To reduce investment risks for enterprises, the Vietnamese government has also adopted a series of protective measures. First, it actively signs bilateral investment protection agreements with other countries to provide legal protection for Vietnamese enterprises’ overseas investments. As of 2023, Vietnam has signed such agreements with over 60 countries. Second, the government encourages enterprises to purchase overseas investment insurance and provides partial premium subsidies. Although Vietnam currently does not have a dedicated overseas investment insurance institution, the government is studying the possibility of establishing such an institution to better serve enterprises’ needs.
The government also supports enterprises to “go global” by simplifying administrative procedures. In 2021, Vietnam revised its Investment Law, significantly simplifying the approval process for overseas investments. For projects with investment amounts not exceeding 20 billion Vietnamese dong (about $870,000), enterprises only need to register to obtain an investment license. This measure greatly improves the convenience of enterprises’ overseas investments and shortens project start-up times. At the same time, the government has also launched “one-stop” service windows where enterprises can complete all administrative procedures related to overseas investments in one place, greatly improving efficiency.
Furthermore, the Vietnamese government actively utilizes bilateral and regional cooperation mechanisms to create a favorable environment for enterprises. For example, within the framework of the ASEAN Economic Community, Vietnam actively promotes the implementation of investment facilitation measures between member countries, creating a favorable environment for Vietnamese enterprises to invest in ASEAN countries. In the “Belt and Road” initiative, Vietnam also seeks cooperation with China in third-party markets, providing opportunities for Vietnamese enterprises to participate in related projects.
However, it should be noted that while the government has provided sudden support policies, the implementation effects of these policies still need further improvement. Some enterprises report that the application processes for certain preferential policies are complex and time-consuming. Additionally, some new policies still lack specific implementation rules, leading to uncertainties in the execution process. Therefore, the government needs to continue refining these policies to improve their operability and effectiveness.
Overall, the Vietnamese government has established a comprehensive policy system to support enterprises in “going global”, covering multiple aspects such as financial support, information services, talent cultivation, risk protection, and administrative convenience. These policies provide strong support and create a favorable environment for Vietnamese enterprises to conduct overseas investments. As these policies are continuously and effectively implemented, it is believed that Vietnamese enterprises will play an increasingly important role on the international stage, making significant contributions to the globalization of Vietnam’s economy.
Cross-cultural Management: Challenges and Responses in Vietnamese Enterprises’ Globalization
In the process of accelerating internationalization of Vietnamese enterprises, cross-cultural management has become a crucial aspect that cannot be ignored. Cultural differences not only affect the daily operational relationships of enterprises but can also directly impact the success or failure of overseas investment projects. Vietnamese enterprises expanding into overseas markets generally face challenges in multiple aspects such as language barriers, management style differences, and value conflicts. How to address these cultural differences and improve effective cross-cultural management capabilities has become an important topic for Vietnamese enterprises going global.
First, Vietnamese enterprises need to profoundly recognize the importance of cross-cultural management. Many enterprises in their early stages often overly focus on hard power such as technology and capital, while neglecting the cultivation of soft power like cultural adaptation. In fact, cultural differences can lead to communication misunderstandings, team conflicts, and even affect the execution of company strategies. For example, a Vietnamese manufacturing enterprise’s investment project in Eastern Europe once encountered difficulties due to cultural conflicts between the Sri Lankan enterprise and local Vietnamese employees. Therefore, enterprises should incorporate the cultivation of cross-cultural management capabilities into the core content of their internationalization strategies.
To improve cross-cultural management capabilities, the key task is to strengthen cultural awareness and orientation training. Vietnamese enterprises can work on the following aspects: First, conduct systematic cross-cultural training before dispatching personnel overseas, including content on the target country’s cultural background, customs, and business etiquette. Second, encourage management personnel to learn local languages, which not only helps with daily communication but also deepens understanding of local culture. Third, consider hiring cross-cultural background consultants to provide professional cultural consulting services for the enterprise.
In actual operations, Vietnamese enterprises need to adopt flexible management strategies to address cultural differences. An effective method is to build “cultural bridges”. Specifically, enterprises can focus on cultivating talents who understand both Vietnamese culture and local culture. These talents can serve as cultural translators, helping to resolve potential cultural conflicts. For example, a large Vietnamese IT enterprise specifically established the position of “cultural liaison officer” in its Japanese branch, responsible for coordinating cultural differences between the Vietnamese headquarters and the Japanese team, achieving good results.
At the same time, Vietnamese enterprises also need to pay attention to localization strategies. This not only includes hiring local employees but more importantly, giving them sufficient development space and decision-making power. By promoting local talents to management positions, enterprises can better understand and integrate into local cultures. For example, the success of a Vietnamese chain restaurant enterprise in Singapore is attributed to its highly localized operational strategy, not only adjusting the menu according to local tastes but also having the management team mainly composed of local talents.
Furthermore, building an inclusive corporate culture is also part of cross-cultural management. Vietnamese enterprises should cultivate an open, inclusive organizational atmosphere that encourages interaction between employees from different cultural backgrounds. This can be achieved through organizing cultural exchange activities, establishing diversity committees, etc. For example, a large Vietnamese manufacturing enterprise regularly holds “cultural day” events at its factory in Malaysia, which not only enhances understanding among employees but also improves team cohesion.
In terms of cross-cultural communication, Vietnamese enterprises need to pay special attention to differences in communication styles. For example, Vietnamese communication styles are usually more implicit, while Western countries may tend to express more directly. Therefore, enterprises need to train employees to identify and adapt to different communication styles. At the same time, in important business negotiations or cooperations, consider using professional cross-cultural communication consultants to avoid losses caused by cultural misunderstandings.
Notably, cross-cultural management involves not only personnel management but also the cultural adaptation of products and services. When entering new markets, Vietnamese enterprises need to carefully evaluate whether their products or services align with local cultural habits and consumer preferences. For example, a Vietnamese food enterprise successfully launched a halal-certified product line in the Middle East market by fully considering local dietary culture and religious customs, receiving a good market response.
Finally, Vietnamese enterprises should also establish long-term cross-cultural learning mechanisms. This includes regularly evaluating the effectiveness of cross-cultural management, summarizing experiences and lessons, and continuously adjusting strategies. Enterprises can build cross-cultural case libraries and conduct regular cultural training to transform accumulated cross-cultural management experiences into core competitiveness.
Cross-cultural management is an important aspect that Vietnamese enterprises must overcome in their internationalization process. By improving cultural awareness, adopting flexible management strategies, focusing on localization, strengthening cultural inclusiveness, and improving cross-cultural communication, Vietnamese enterprises can gradually enhance their cross-cultural management capabilities. This not only helps reduce risks brought by cultural conflicts but also creates unique competitive advantages for enterprises.
Compliance and Legal Risks: Key Challenges in Overseas Investments
In the process of Vietnamese enterprises actively expanding into overseas markets, compliance and legal risk management have become crucial key aspects that cannot be ignored. Transnational operations not only need to comply with Vietnam’s domestic laws and regulations but also need to adapt to the legal environment of the investment destination country. This dual compliance requirement poses enormous challenges for Vietnamese enterprises. Effective compliance management can not only help enterprises avoid legal risks but also lay a solid foundation for the long-term stable development of enterprises in overseas operations.
First, when conducting overseas investments, Vietnamese enterprises must strictly comply with relevant domestic laws in Vietnam. The Investment Law, Enterprise Law, and relevant foreign exchange management regulations are the core laws that enterprises must pay attention to. For example, according to Vietnam’s recently revised Investment Law, enterprises need to obtain an investment license for overseas investments and fulfill corresponding registration and reporting obligations. At the same time, enterprises also need to comply with the State Bank of Vietnam’s regulations on cross-border fund flows. Violating these regulations may lead to serious legal consequences, including fines and license revocation. Therefore, when formulating overseas investment plans, Vietnamese enterprises should first ensure compliance with domestic legal requirements and establish a robust compliance management system.
Secondly, adapting to and complying with the laws and regulations of the investment destination country is another major challenge faced by Vietnamese enterprises. Legal systems in different countries have significant differences, involving areas including but not limited to company establishment, labor employment, taxation, environmental protection, and anti-corruption. For example, a Vietnamese manufacturing enterprise once faced huge fines when investing in the United States due to unfamiliarity with local environmental regulations. Therefore, before entering new markets, Vietnamese enterprises must conduct comprehensive due diligence on the legal environment of the target country and hire local legal advisors to help understand and comply with relevant legal requirements. At the same time, enterprises should also establish dynamic legal monitoring mechanisms to timely track changes in laws and regulations, ensuring continuous compliance.
Cross-border mergers and acquisitions are an area where Vietnamese enterprises need to pay special attention to compliance in overseas investments. In recent years, with the increase in overseas M&A activities by Vietnamese enterprises, they are increasingly facing complex legal challenges. For example, in M&A transactions, special attention needs to be paid to procedures such as antitrust reviews and national security reviews. Some countries have very strict scrutiny of foreign acquisitions, requiring Vietnamese enterprises to fully assess potential legal obstacles and formulate response strategies in the early stages of transactions. At the same time, the post-merger integration process also contains various legal risks, such as handling labor contracts and transferring intellectual property rights, all of which require enterprises to handle prudently.
Intellectual property protection is another compliance area that Vietnamese enterprises need to highly value. As Vietnamese enterprises’ technological levels improve, they increasingly face legal issues related to intellectual property in overseas markets. On one hand, enterprises need to focus on protecting their own intellectual property, including patents, trademarks, and trade secrets; on the other hand, they also need to avoid infringing on others’ intellectual property rights. It is recommended that enterprises timely register relevant intellectual property rights when entering new markets and establish a comprehensive intellectual property management system.
Anti-corruption and business ethics compliance are also aspects that Vietnamese enterprises cannot ignore in overseas operations. Many countries have strict anti-corruption laws, such as the Foreign Corrupt Practices Act (FCPA) in the United States and the Bribery Act in the United Kingdom. The extraterritorial effect of these laws means that Vietnamese enterprises may also be subject to jurisdiction overseas. Therefore, enterprises need to establish robust anti-corruption compliance systems, including formulating clear policies, conducting employee training, and implementing internal controls.
Data protection and privacy compliance is an area that has received increasing attention in recent years. With the development of the digital economy, many countries have strengthened legislation on data protection. For example, the European Union’s General Data Protection Regulation (GDPR) imposes strict data processing requirements on enterprises. Vietnamese enterprises need to pay special attention to the compliance of data collection, storage, transmission, and other aspects when conducting cross-border business to avoid huge fines and losses.
To effectively manage compliance and legal risks, Vietnamese enterprises can consider the following measures: First, establish a dedicated compliance department or designate personnel responsible for compliance matters to ensure compliance management receives sufficient attention. Second, formulate comprehensive compliance policies and procedures, and regularly update them to adapt to the constantly changing legal environment. Third, strengthen compliance training for employees to raise compliance awareness among all staff. Finally, conduct regular compliance audits to timely discover and correct potential issues.
Compliance and legal risk management are important pillars in Vietnamese enterprises’ overseas investments. It requires enterprises to invest significant resources and energy, but these investments are worthwhile in the long run. By establishing a robust compliance system, Vietnamese enterprises can not only effectively avoid legal risks but also enhance international taxation, laying a foundation for sustainable development.
Economic Impact of Overseas Investments: New Driving Force for Vietnam’s Economic Development
Overseas investments by Vietnamese enterprises are not only an important strategy for the enterprises’ own development but also have a necessary impact on the overall development of the national economy. With the in-depth implementation of Vietnam’s “going global” strategy, the impact of overseas investments on the domestic economy has become increasingly significant, involving multiple aspects such as industrial structure optimization, technological innovation, and employment market. In-depth analysis of these impacts helps us more comprehensively understand the strategic significance of overseas investments and provides important references for policy formulation and enterprise decision-making.
First, overseas investments provide new impetus for Vietnam’s industrial upgrading. By establishing production bases or R&D centers overseas, Vietnamese enterprises can better integrate into global value chains and elevate their position in the industrial chain. For example, a large Vietnamese textile enterprise acquired a high-end fabric manufacturer in the United States, not only gaining advanced production technology but also successfully entering the high value-added product market. This trend of rising in the industrial chain has promoted Vietnam’s textile industry from pure processing stages to design and production of higher value-added products. At the same time, overseas investments have also promoted the diversification of Vietnam’s industrial structure. As Vietnamese enterprises venture into emerging industries overseas, such as clean energy and biotechnology, related domestic industries have also developed accordingly, injecting new vitality into Vietnam’s sustainable economic development.
Technology introduction and innovation capability enhancement is another important impact brought by overseas investments. Through cross-border mergers and acquisitions or establishing overseas R&D centers, Vietnamese enterprises can directly acquire advanced technologies and management experience. For example, Vietnam’s leading technology company FPT has significantly improved its artificial intelligence and software development capabilities by setting up an R&D center in Silicon Valley. These technologies and experiences acquired overseas gradually spread to the domestic market through internal technology transfer and talent flow, elevating the technological level of the entire industry. Additionally, in the fierce competition in international markets, Vietnamese enterprises proactively increase R&D investments, enhancing their independent innovation capabilities, which in turn promotes the improvement of the domestic innovation environment. Statistics show that Vietnam’s investment in R&D as a proportion of GDP has been continuously rising in recent years, with overseas investments playing an important role.
The employment market is another important area affected by overseas investments. On one hand, overseas investments create new job opportunities for Vietnamese labor. Many Vietnamese enterprises dispatch management personnel and technical experts from their home country when setting up overseas branches, providing international development platforms for high-quality talents. At the same time, overseas investments also drive employment in related domestic industries. For example, a large Vietnamese telecommunications company’s investments in Africa not only created jobs locally but also drove employment in domestic communications equipment manufacturing, indirectly creating numerous job opportunities. However, it should be noted that the transfer of certain labor-intensive industries overseas may create short-term employment pressures in some domestic regions. Therefore, the government needs to formulate corresponding policies to help these regions undergo industrial transformation and enhance labor skills.
Overseas investments have also impacted Vietnam’s balance of international payments. With the expansion of Vietnamese enterprises’ overseas businesses, important capital inflows such as profit repatriation and royalties have been increasing year by year, becoming an important factor in improving the balance of international payments. According to banking statistics, in 2022, the overseas investment income of Vietnamese enterprises reached $1 billion, a year-on-year increase of 15%. These earnings not only increase the country’s foreign exchange reserves but also provide funding support for further internationalization of Vietnamese enterprises. At the same time, overseas investments have also promoted bilateral trade between Vietnam and investment destination countries. Many Vietnamese enterprises have attracted exports of Vietnamese products by setting up production bases or sales networks overseas, further optimizing the trade structure.
At the macroeconomic level, overseas investments help enhance the globalization level and risk resistance capacity of Vietnam’s economy. By deploying in different countries and regions, Vietnamese enterprises can diversify risks from single markets and enhance their adaptability to global economic fluctuations. For example, during the COVID-19 pandemic, those Vietnamese enterprises with baseline layouts in overseas markets showed stronger risk resistance compared to enterprises that only relied on the domestic market. Furthermore, overseas investments have also enhanced Vietnam’s voice and influence in international economic affairs, creating conditions for Vietnam’s deeper participation in global economic governance.
However, we also need to be aware of some challenges that overseas investments may bring. For example, large-scale capital input may affect domestic investment and growth, especially during periods of economic output. Additionally, if overseas investments are excessively concentrated in certain fields, it may lead to structural imbalances in the domestic economy. Therefore, while encouraging enterprises to “go global”, the government needs to formulate reasonable policies to ensure that overseas investments are coordinated with domestic economic development strategies.
Overall, the impact of overseas investments on Vietnam’s economy is multifaceted, with not only direct economic benefits but also long-term strategic significance. It not only promotes industrial upgrading and technological innovation but also optimizes the employment structure, improves international payments, and enhances the globalization level of Vietnam’s economy. Although there are some challenges, as long as the government and enterprises can plan scientifically and make prudent decisions, overseas investments will become an important force driving high-quality development of Vietnam’s economy. With the continuous improvement of Vietnamese enterprises’ internationalization level, it is believed that the positive impact of overseas investments on the national economy will become more significant, winning greater development space for Vietnam on the international stage.
