ESSAY

1.​ Factors affecting the balance of trade in International BoP. Current status of Vietnam's
trade balance:
Overall:
-​ Vietnam has maintained a consistent trade surplus over the past few years, including 2022
with a surplus of USD 12.09 billion.
-​ However, growth has slowed down in 2023 due to global economic challenges and trade
disruptions.
-​ The surplus remains smaller compared to the same period in 2022 (USD 1.2 billion in the
first 6 months).
Main Imports:
-​ Machinery, equipment, tools, and instruments accounted for the largest chunk of imports,
reflecting Vietnam's reliance on foreign inputs for its manufacturing sector.
-​ Computers, electrical products, spare parts, and components: This category highlights
Vietnam's role in global electronics supply chains.
-​ Mineral fuels and lubricants: Vietnam's growing energy needs necessitate significant imports
of oil and gas.
-​ Chemicals and plastics: These serve as essential raw materials for various industries in
Vietnam.
-​ Iron and steel: Construction and infrastructure development drive the demand for these
primary materials.
Main Exports:
-​ Telephones, mobile phones, and parts thereof: Vietnam has established itself as a major hub
for electronics manufacturing, especially mobile phones.
-​ Computers, electrical products, spare parts, and components: Similarly, Vietnam contributes
significantly to various components within the global electronics supply chain.
-​ Garments and textiles: Vietnam boasts a strong textile and apparel industry, catering to major
international markets.
-​ Footwear: The production of shoes constitutes another significant export sector in Vietnam.
-​ Agricultural and aquatic products: Rice, coffee, fruits, and seafood are important agricultural
exports for Vietnam.
Recent Figures (as of July 2023):
●​ Total export and import turnover: USD 316.65 billion in the first 6 months of 2023.
●​ Exports: USD 164.45 billion (down 12.1% compared to the same period in 2022).
●​ Imports: USD 152.2 billion (down 18.2% compared to the same period in 2022).
●​ Trade Surplus: USD 12.25 billion in the first 6 months of 2023.
Latest update 2024(first 2 months of 2024):
-​ Exports: USD 59.34 billion (increase 19.2% compared to the same period in 2023).
-​ Imports: USD 54.62 billion
Positive Trends:
●​ Trade Surplus: Vietnam maintains a positive trade balance, reaching USD 2.1 billion in
December 2023 and accumulating a surplus of USD 12.25 billion in the first half of 2023. This
 reflects the country's strong export performance, particularly in electronics, garments, and
footwear.
●​ Foreign Direct Investment: FDI inflows reached a record high in the first nine months of 2023,
indicating continued investor confidence in Vietnam's economic prospects. This influx could
further boost exports in the coming years.
●​ Diversification: Vietnam is actively diversifying its export markets, reducing dependence on any
single partner. This strategy helps mitigate risks associated with global economic slowdowns
and trade disruptions.
Challenges:
●​ Slowdown in Growth: Trade growth has slowed down significantly compared to previous years.
This is due to global economic slowdown, particularly in major markets like the US and China.
●​ Rising Costs: Supply chain disruptions and higher shipping costs are pushing up the prices of
imported goods and raw materials, impacting manufacturers' profitability and potentially
hindering export competitiveness.
●​ Domestic Inflation: Domestic inflation is on the rise, putting upward pressure on production
costs and potentially dampening consumer demand for imported goods. Export turnover to some
major markets decreased: the US decreased by 22.6%; Korea down 10.2%; EU down 10.1%;
ASEAN decreased by 8.7%; Japan fell 3.3%; China fell 2.2%.
●​ Currency Depreciation: The Vietnamese Dong depreciated against the US Dollar in 2023,
making imports more expensive and potentially reducing export earnings in USD terms.
Further Considerations:
- Government Policy: The Vietnamese government is implementing policies aimed at boosting
domestic consumption, strengthening domestic supply chains, and attracting further FDI. These
initiatives could help mitigate the challenges and support future trade growth.
- Global Economic Recovery: The pace and extent of the global economic recovery will significantly
impact Vietnam's trade outlook. A faster recovery would likely lead to increased demand for
Vietnamese exports.
- Trade Agreements: Vietnam's participation in free trade agreements like the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP) could open up new market opportunities
and further boost trade.
While Vietnam's trade balance remains positive, the current economic climate presents
significant challenges. The government's policy initiatives, the pace of global recovery, and the
development of new market opportunities will be key factors in determining the future trajectory of
Vietnam's trade performance.
In the coming time, to further improve the efficiency of import and export, the Ministry of
Industry and Trade needs to focus on implementing many tasks such as promoting innovation and
strengthening trade progmotion activities towards new markets, potential markets such as India, Africa,
the Middle East and Latin America, Eastern Europe… and markets less affected by inflation and
positive growth (ASEAN).
In addition, it is necessary to continue to effectively exploit Free Trade Agreements (FTAs).
Facilitating and enhancing digital transformation in the granting of preferential C/O certificates of
origin, thereby supporting businesses to take advantage of commitments in FTAs.
 2.​ Discuss your opinions about the market for foreign exchange and its role in the
development of the economy. Analyze the impact of the Vietnam foreign exchange market
on the development of Vietnam's economy in the last 5 years.
The foreign exchange market plays a pivotal role in the global economy, facilitating the exchange of
currencies between countries. The foreign exchange market (also known as forex, FX, or the currencies
market) is an over-the-counter (OTC) global marketplace that determines the exchange rate for
currencies around the world. Participants in these markets can buy, sell, exchange, and speculate on the
relative exchange rates of various currency pairs.
Functions of the foreign exchange market:
The functions of foreign exchange are to facilitate currency conversions, manage foreign exchange
risk, through futures and forwards, and for speculative investors to earn a profit on FX trading. Its
significance lies in its ability to enable international trade, investment, and capital flows. In essence, the
foreign exchange market serves as the backbone of international finance, allowing businesses and
governments to conduct transactions across borders.
FOREIGN EXCHANGE MARKET’S ROLE IN ECONOMIC DEVELOPMENT:
-​ Promoting international trade and foreign investment: The foreign exchange market provides
a convenient and efficient payment channel for international transactions, helps reduce
foreign exchange risk for businesses and attracts foreign investment
-​ Mitigating foreign exchange risk for businesses and individuals: Foreign exchange risk is the
risk of loss due to exchange rate fluctuations. The forex market offers derivatives such as
futures contracts, options contracts and foreign currency swaps to hedge foreign exchange
risks
-​ Stabilize exchange rates and support macroeconomic policies: The State Bank can intervene
in the foreign exchange market to stabilize the exchange rate. Stable exchange rates help
control inflation and promote economic growth
-​ Create investment opportunities and financial diversification: The foreign exchange market
offers many investment opportunities for investors and helps investors diversify their
investment portfolios
VIETNAM FOREIGN EXCHANGE MARKET ON THE DEVELOPMENT OF VIETNAM'S
ECONOMY IN THE LAST 5 YEARS:
●​ Recent situation of the foreign exchange market in VN
Scale:
- Vietnam's foreign exchange market is one of the largest in Southeast Asia, with an average daily
turnover (ADT) of USD 16.8 billion in 2022.
- Vietnam's foreign exchange reserves reached a record high of USD 110 billion in March 2023.
Growth Rate:
- Vietnam's foreign exchange market has seen strong growth in recent years. The ADT in 2022
increased by 21.4% compared to 2021.
- Foreign exchange reserves have grown by USD 12 billion in the first eight months of 2023.
Factors Driving Growth:
- Vietnam's stable economic growth has attracted significant Foreign Direct Investment (FDI).
- The country has maintained a trade surplus for many years.
- The State Bank of Vietnam (SBV) has implemented effective policies for flexible exchange rate
management.
●​ The Vietnamese foreign exchange market (VN forex market) has a variety of participants that
play different roles in facilitating currency exchange activities.
- Commercial Banks: These are the primary providers of forex services to individuals and businesses.
They facilitate currency exchange, provide hedging instruments, and offer margin trading.
- State Bank of Vietnam (SBV): The central bank acts as a regulator and supervisor of the entire foreign
exchange market. It sets foreign exchange policies, manages foreign exchange reserves, and intervenes
in the market to maintain exchange rate stability.
- Non-bank Financial Institutions (NBFIs): These include institutions like foreign exchange companies,
securities companies, and insurance companies. NBFIs can participate in the market with specific
licenses and regulations depending on their activity. For example, foreign exchange companies are
authorized to buy and sell foreign currency to individuals and businesses.
- Businesses and Individuals: Businesses engaged in international trade need to buy and sell foreign
currency to settle payments for imports and exports. Individuals might require foreign currency for
traveling abroad, studying overseas, or overseas remittances.
Foreign Investors: Foreign investors entering or exiting the Vietnamese market need to convert their
currencies. This can involve buying Vietnamese Dong (VND) for investments or converting VND back
to their home currency when withdrawing investments.
2.2. The impacts of the Vietnam foreign exchange market on the development of Vietnam's economy in
the last 5 years:
2.2.1. Impacts of the fluctuation of exchange rate:
Positive Negative

When the value of VND decreases (or When the value of VND decreases (or the value of
the value of foreign currency increases): foreign currency increases):
●​ Promote exports: Export prices ●​ Causes inflation: import prices increase, leading to
decrease, making Vietnamese inflation, affecting people's purchasing power
goods more competitive in the ●​ Difficulties for import businesses: Import prices
international market increase, affecting production costs and profits of
●​ Import restrictions: High import import businesses.
prices will reduce import demand, When the value of VND increases (or the value of
helping to limit the trade balance foreign currency decreases)
deficit ●​ Reduced profits for export businesses: export
●​ Attract foreign investment, businesses will receive less VND when selling
especially investment in export goods abroad, reducing profits.
fields In addition, exchange rate fluctuations can also cause
●​ Increase profits for export difficulties for the State Bank's monetary policy planning.
businesses: export businesses will At the same time, it increases risks for investors, reducing
receive more VND when selling confidence in the market
goods abroad
Example: The impact of the sharp decrease in the Japanese Yen in 2022-2023 will affect import, export
and the Vietnamese economy
The Japanese Yen has lost significant value against the US dollar in the first half of 2023. As of March
30, 2024, the Yen has depreciated by approximately 13% compared to the same period last year, and
the exchange rate is currently trading at 144.834 Yen per USD. Previously, the exchange rate had
reached a high of over 145 Yen per USD.
According to Assoc. Prof. Dr. Hoang Xuan Que, Director of the Institute of Banking - Finance,
National Economics University, the sharp decline of the Yen against the USD has 4 main impacts,
specifically as follows: First, Vietnam's real public debt will decrease. Second, it has a significant
impact on increasing Japanese investment in Vietnam. Third, it promotes Japanese exports to Vietnam
but reduces the export efficiency from Vietnam to Japan. Fourth, the real income of Vietnamese
workers in Japan will decrease.
2.2.2. Impact from foreign exchange reserves
Positive Negative

With high foreign exchange Increase foreign exchange reserves:

reserves: ●​ Waste of resources: Affects the efficiency of capital use.
●​ Minimize exchange rate ●​ Loss of income: Foreign exchange reserves are idle assets,
risks, protect the economy not bringing high returns like other investment channels.
from external shocks ●​ Buying and selling foreign exchange reserves can place a
●​ Increase investor burden on the state budget.
confidence, while
increasing foreign Decrease foreign exchange reserves:
investment attraction ●​ Increase exchange rate risk when the economy ís
●​ Support better vulnerable to external shocks
international payment ●​ Reduced investor confidence in the economy affects
capacity, ensuring import foreign investment flows.
of essential goods. ●​ Reduced international payment ability affects international
●​ Helps stabilize exchange reputation.
rates when the State Bank ●​ Causes instability in the foreign exchange market: Low
has the ability to foreign exchange reserves can cause strong fluctuations in
intervene in the foreign the foreign exchange market, affecting business operations
exchange market of enterprises.

According to sources from Bloomberg (a company providing major financial services in New York,
USA) and from VNDirect Research, the state's foreign exchange reserves have continuously tended to
increase from more than 27.8 billion USD in 2015 to more than 107.4 billion in 2021.
In the first 10 months of 2022, the State Bank had to sell a large amount of foreign exchange reserves
to stabilize the exchange rate, estimated at about 20% of foreign exchange reserves (estimated to be 89
billion USD remaining in 2022). This has caused Vietnam's foreign exchange reserves to fall below the
IMF's recommended level
Entering the last months of 2022 and early 2023, the cooling of the USD has reduced pressure on the
exchange rate. By the end of 2022, the official exchange rate on banks only increased by about 3%
compared to the beginning of the year. Accordingly, the State Bank also shifted its priority to
stabilizing interest rates to support businesses and the economy. To inject VND liquidity into the
market to cool down the interest rate level, the State Bank has signaled to return to buying foreign
currency at the end of December 2022 after 3 months of "blank" the buyer's price. Therefore, during
this period, improving foreign exchange reserves is the main priority of the State Bank now
Looking ahead, the continued development of Vietnam's foreign exchange market will be crucial for
sustaining economic growth and enhancing financial stability. Policymakers must strike a delicate
balance between promoting capital inflows, maintaining exchange rate stability, and safeguarding
against external vulnerabilities. By fostering an open, transparent, and resilient foreign exchange
market, Vietnam can harness the benefits of globalization while mitigating risks associated with
external shocks and financial imbalances. In doing so, Vietnam can position itself as a dynamic player
in the global economy, driving sustainable development and prosperity for its people.

3.​ Discuss your opinions about the foreign exchange rate. Based on your knowledge about
Vietnam's foreign exchange rate, analyze factors that have affected Vietnam's exchange
rate in the past five years.
(đoạn đầu câu 2) A foreign exchange rate is the ratio of the value of one country's currency to another
country's currency. Exchange rates involve two currencies, which are always traded in pairs on the
foreign exchange market. For example, the exchange rate between USD (the currency of the United
States) and EUR (the currency of the EU euro area) is 1.20 USD/EUR, which means that one US dollar
can be exchanged for 1.20 Euros.
Types of foreign exchange rates:
- Floating exchange rate is a type of exchange rate determined based on the supply-demand relationship
in the foreign exchange market. This exchange rate changes depending entirely on market demand
without any intervention from the state. The floating exchange rate regime helps the world economy
stabilize, the balance of payments becomes balanced, and limits risks and disadvantages to the
economy. However, in the world today, no country applies this exchange rate regime. Most
governments will intervene to limit strong fluctuations in exchange rates that affect the domestic
economy.
- Fixed exchange rate is the rate established and maintained by the state bank. The use of fixed
exchange rates helps stabilize the foreign investment environment, reduces inflation rates, and
minimizes market fluctuations. This exchange rate regime is not used in countries around the world.
Because maintaining this exchange rate regime for a long time can lead to an imbalance in the balance
of payments.
- The regulated floating exchange rate regime (also known as the flexible exchange rate) is the
exchange rate between the fixed exchange rate regime and the floating exchange rate regime. This
exchange rate fluctuates according to the relationship between supply and demand in the market but
there is still intervention from the central bank. This is the exchange rate regime being applied by most
countries around the world. The floating exchange rate regime has relatively stable regulation, so it
contributes to economic stability, promotes the development of economic relations, and ensures the
relative independence of monetary policies…
(đoạn functions câu 2)
Overview of Vietnam’s foreign exchange rate
- Vietnam's exchange rate is determined according to the regulated floating central exchange rate
mechanism. The central exchange rate is announced daily by the State Bank of Vietnam (SBV), based
on factors such as:
●​ The situation of foreign currency supply and demand in the market
 ●​ Inflation forecast
●​ The Government's macroeconomic policies
- Exchange rates at commercial banks are determined based on the central exchange rate and factors
such as:
●​ Foreign currency transaction costs
●​ Exchange rate fluctuation amplitude
●​ Interest rates for foreign currency mobilization and lending
- In recent years, Vietnam's exchange rate has tended to gradually increase. As of January 20, 2024, the
USD/VND exchange rate fluctuates around 23,200 VND.
THE IMPACT OF THE FACTORS ON FOREIGN EXCHANGE RATE
Economic factors
1. Inflation
- When inflation is high, the value of currency weakens. This is because goods become more
expensive, and it becomes less attractive for investors to do business. (When there’s a significant
lowering of inflation, there tends to be more flow of money, the buying power of the currency becomes
more valuable, and the exchange rate strengthens)
- Vietnam's inflation rate has fluctuated. In 2019, it was 2.80%; in 2020, it increased to 3.22%; in 2021,
it dropped to 1.83%; and in 2022, it reached 3.16%. Higher inflation can cause the value of the
currency to decline, which can affect the foreign exchange rate.
2. Balance of Trade
- A trade deficit meaning a country imports more than it exports, often leads to depreciation of its
currency. When a country imports more than it exports, the need for foreign currency to pay for imports
increases. This leads to selling domestic currency to buy foreign currency, reducing the value of
domestic currency. With more demand for foreign currency to pay for imports than the supply from
export earnings → The value of the domestic currency will decrease. A larger current account deficit
could increase downward pressure on the currency.
- Vietnam’s trade surplus increased to USD 2.28 billion in December 2023 from USD 1.74 billion in
the same month a year earlier.
3. High interest rate
Higher interest rates offer lenders in an economy a higher return relative to other countries. Therefore,
higher interest rates attract foreign capital and cause the exchange rate to rise.
- The continuous interest rate hikes by the FED (2022) to control inflation have affected the
appreciation of the USD, putting pressure on global exchange rates, including Vietnam's. Therefore, in
the first half of 2023, the State Bank of Vietnam continuously reduced the policy interest rate to support
economic recovery and alleviate pressures on the exchange rate.
- The USD/VND exchange rate has been continuously increasing recently due to conflicting monetary
policies between Vietnam and the United States. The US Federal Reserve (FED) has been consistently
raising interest rates while Vietnam has been continuously lowering interest rates.
Political factors
1. Political stability and favorable policies
- Increased investor confidence: Political stability means lower risks for investors. A stable and
low-risk political environment creates confidence for international investors, encouraging them to
invest in that country → Increases demand for local currency → Increases the value of it.
- Monetary policy: Effective monetary policy, especially controlling inflation, can help stabilize the
value of the domestic currency. High inflation can reduce the value of the local currency, so controlling
inflation is important. Foreign direct investment (FDI) is generally encouraged by the policies followed
by the Vietnamese government, especially for businesses involved in export-oriented manufacturing.
The development of the bond, securities, and real estate markets securely and healthily was given top
priority by the Vietnamese government in 2023. These regulations may influence the foreign exchange
rate and draw in foreign investment.
- Fiscal policy: Prudent fiscal policy, ensuring budget balance and reducing public debt, can help
increase confidence in the economy and the local currency.
- Improve the business environment: A favorable business environment, with transparent regulations
and simple procedures, can attract foreign investment, helping to increase the value of the local
currency.
2. Good relationship with other countries
Vietnam has diplomatic ties to 189 countries that are members of the UN. The US-Vietnam relationship
has shown impressive growth, and regular and positive involvement characterizes their collaboration.
Good relations with other countries can boost commerce and investment, affecting the exchange rate.
External factors
Impact of Global Economic Conditions
The global economy faced significant challenges from the COVID-19 pandemic, slowing globalization,
and increasing vulnerability to external shocks, especially climate risks. These international
circumstances on trade and investment abroad may impact the foreign exchange rate.
Impact of Currency Fluctuations
After months of sharp growth, the US dollar hit a two-decade high versus other major world currencies
in September 2022. The value of the Vietnamese Dong on the foreign exchange market may fluctuate
in response to changes in the main currencies.
To sum up, each of these elements affects and is influenced by the others. Changes in one element may
have effects on the others. For example, governmental policy adjustments can impact economic factors
like interest rates and inflation, and changes in the state of the world economy can influence the
exchange rate. For this reason, it's critical to take into account each of these elements while examining
the foreign exchange rate.

4.​ Analysis the factors affecting foreign direct investment. Write about the direct investment
in Vietnam
The current globalization process is strongly promoting the integration of countries world and regional
economies, so foreign direct investment (FDI) is increasingly accounting important position for both
the investing country and the receiving country.
Foreign direct investment (FDI) is an investment from a party in one country into a business or
corporation in another country with the intention of establishing a lasting interest. Lasting interest
differentiates FDI from foreign portfolio investments, where investors passively hold securities from a
foreign country. A foreign direct investment can be made by obtaining a lasting interest or by
expanding one’s business into a foreign country. Foreign direct investment (FDI) is an essential factor
of economic development in all countries, especially developing countries. With the proper policy
framework, FDI can bring financial stability, promote economic growth, and strengthen society
well-being (Organization for Economic Cooperation and Development - OECD,2008).
Influential Factors on Attracting FDI in Vietnam
Objective Factors
- Economic Situation and Investment Trends Worldwide: The global economic situation and investment
trends have a direct impact on attracting foreign direct investment (FDI). When the global economy
declines, foreign investors face difficulties, reducing the FDI flow and risking FDI projects. For
example, global FDI has declined significantly in recent years, especially since 2018, due to escalating
US-China trade tensions and increasing protectionist trends, along with the rapid spread of the
COVID-19 pandemic.
- Business Strategy and Investment Market Orientation of Investors: Foreign investors decide to invest
abroad if they find it more profitable compared to domestic investment. Depending on each market’s
characteristics, foreign investors have different investment strategies and orientations based on the
investment environment of the host country.
- Financial Capacity of Investors: The financial capacity of the investing country strongly influences
FDI promotion and reception. Typically, countries with strong economic foundations, high internal
accumulations, and large foreign exchange reserves tend to invest abroad to maximize the efficiency of
surplus capital.
- Technological Level of Leading Enterprises: Through FDI attraction activities, the recipient country
receives advanced technology transfer from developed countries, significantly enhancing productivity,
shortening production time, and promoting economic growth while ensuring environmental standards.
- Competition from Other Regions and FDI Attraction Policies of the Country: Each region and country
has its advantages in terms of location, natural characteristics, and socio-economic conditions. The
competitiveness of these regions affects FDI attraction. Additionally, national FDI attraction policies
impact the overall investment climate.
Subjective Factors
- Economic Stability within the Region
- Political Environment and Security in the Economic Region
- Natural Conditions of the Economic Region
- Development Planning and Mechanisms of the Localities within the Region
- Economic and Technical Infrastructure of the Economic Region
- Quality of the Workforce in the Economic Region
- Quality of Public Services in the Economic Region
- Local Branding in the Economic Region
- Living and Working Environment for Investors in the Region
- Trade Promotion
- Regional Linkages
In summary, economic stability within the region is a prerequisite for attracting and utilizing foreign
investment capital effectively.
In Vietnam, along with the process of economic integration, FDI inflows increased sharply and had
many positive impacts on domestic enterprises economy and labor productivity. Practice shows that a
country or territory that attracts much international capital and uses it effectively will have many
opportunities for economic growth and overcome the lagging situation compared to developed
countries.
The characteristics of FDI in Vietnam
- Investment factors can be cross-country out of the box
- FDI is conducted through the establishment of new businesses. Acquisition of existing branches or
businesses, or conductingconsolidation and transfer activities.
- The owner of investment can be a foreigner, owning 100% of capital or co-owner of capital with a
certain percentage enough to control and directly participate in the management of the operation of the
business.
Types of Foreign Direct Investment
- Horizontal FDI: The most common type of FDI is Horizontal FDI, which primarily revolves around
investing funds in a foreign company belonging to the same industry as that owned or operated by the
FDI investor.
- Vertical FDI: A vertical FDI occurs when an investment is made within a typical supply chain in a
company, which may or may not necessarily belong to the same industry.
- Conglomerate FDI: When investments are made in two completely different companies of entirely
different industries, the transaction is known as conglomerate FDI. As such, the FDI is not linked
directly to the investors business.
- Platform FDI: In the case of platform FDI, a business expands into a foreign country, but the products
manufactured are exported to another, third country.
Components of foreign direct investment: Flows of FDI comprise capital provided (either directly or
through other related enterprises) by a foreign direct investor to an enterprise, or capital received from
an investing enterprise by a foreign direct investor. FDI has three components: equity capital,
reinvested earnings and intra-company loans.
Scale of FDI in Vietnam
Notably, the event of Vietnam joining the World Trade Organization in 2007 has sharply increased
registered FDI capital in Vietnam from 21.35 billion USD in 2007 to 71.73 billion USD in 2008 alone.
This shows that the expectations are great.
However, the US financial crisis in 2008, which then spread globally, seriously affected FDI capital
flows into Vietnam. In the period from 2010 - 2014, registered FDI capital fluctuated continuously and
increased slightly from 19.89 billion USD in 2010 to 21.92 billion USD in 2014. After 2015, the total
registered FDI capital in Vietnam There has been a strong and continuous increase, with total
investment capital in Vietnam in 2015 being 22.7 billion USD, by 2019 this number increased to 38.95
billion USD.
In 2020, due to the impact of the Covid-19 pandemic, the global economy was seriously affected, so
registered foreign investment capital in Vietnam decreased, reaching only 28.53 billion USD, down
25% compared to the previous year. with 2019
Despite these favorable conditions, Vietnam faces challenges in sustaining FDI inflows and
maximizing their impact on economic development. Key challenges include addressing infrastructure
bottlenecks, enhancing labor productivity and skills, addressing environmental concerns, and
promoting innovation and technology transfer. Additionally, geopolitical tensions, global economic
uncertainties, and shifts in supply chain dynamics pose risks to FDI prospects, underscoring the
importance of diversifying sources of investment and building resilience in the face of external shocks.
In conclusion, foreign direct investment plays a vital role in Vietnam's economic development,
contributing to job creation, technology transfer, and export growth. The country's attractiveness as an
investment destination is underpinned by factors such as macroeconomic stability, institutional reforms,
sectoral advantages, and government policies. However, addressing remaining challenges and seizing
new opportunities will be essential for Vietnam to sustain FDI inflows and harness their full potential
for driving inclusive and sustainable development in the years to come.

5.​ Compare foreign direct investment and foreign indirect investment. Write about foreign
indirect investment in Vietnam.
Foreign direct investment (FDI) and foreign indirect investment (FII) are two distinct forms of
international capital flows, each with its own characteristics, benefits, and implications for host
countries like Vietnam.

Aspect Foreign Indirect Investment Foreign Direct Investment (FDI)

(FII)
Definition Investment in foreign financial Investment in a foreign business
assets such as stocks, bonds, or with lasting interest and control
other securities. over management and operations.
Type of Indirect Investment Direct Investment
Investment
Nature of Short-term investment with no Long-term investment commitment
Investment intention of controlling or
managing the business
Purpose Capitalize on market opportunities Establish or expand business
or diversify your investment operations in a foreign country.
portfolio.
Time Horizon Short-term investment focus Long-term investment commitment.
Level of Control Very low or no control High control
Entry & Exit Relatively easy Difficult

Return on Returns come from dividends, Profits are generated through

Investment interest, or capital gains on business operations and direct
financial assets. ownership.
Risk Volatility Stable
 Impact on Can impact financial markets and Potential to contribute to
Economy liquidity, but with limited direct employment, technology transfer,
impact on the economy. and economic growth.
Regulatory Focuses on regulating capital Subjected to specific regulations
Considerations flows and investor behavior. and government approvals.
Relationship with Passive investment without Active involvement in the
Company involvement in the company's company's operations and
operations. decision-making.
Examples Purchasing shares of a company's Establishing a manufacturing plant
stock or investing in a mutual fund or acquiring a controlling stake in a
that holds various securities. local company.
Mekong Enterprise Fund Toyota, Honda…

Foreign Indirect Investment (FII) in Vietnam

Overview
Between October 2022 and January 2023, foreign capital has massively poured into Vietnam as a net
buyer, taking advantage of the sharp decline of the VN-Index and some supporting information such as
the decline in USD price, China reopens after a long period of pursuing a Zero-COVID policy.
However, foreign investors have started net selling since mid-February 2023 with a value of nearly
23,000 billion VND across all three exchanges. The selling pressure mainly stemmed from passive
fund flows.
The reasons for FII outflows originate from fundamental factors such as the underperformance of
foreign active fund investments, leading to capital withdrawal pressures, alongside new tax regulations
in countries with significant investments in Vietnam. The second reason is the interest rate differential
between the USD and VND, as well as the bond interest rate differential between Vietnam and other
countries. Thirdly, the profit rates in other markets in 2023 were higher than those in Vietnam.
Financial analysts believe that the possibility of the US Federal Reserve stopping its interest rate hike
trajectory will positively impact FII indirect investment into Vietnam.
Besides the net selling trend, foreign capital flows are still quietly pouring into the market through
strategic share purchases. Typically, SMBC bought 15% of VPBank shares in a private offering with a
value of about 1.5 billion USD in mid-2023; Daytona Investments buys shares of International Dairy
(IDP); Hana Securities becomes a strategic shareholder of BSC Securities; ASKA Pharmaceutical
continuously increases its ownership in Ha Tay Pharmaceutical (DHT) through private offerings.
Types of FII in Vietnam
There are two main types of FII in Vietnam: foreign institutional investors (FIIs) and foreign individual
investors (FIIs). FIIs are typically large-scale investors, such as mutual funds, pension funds, and
insurance companies, that invest in the Vietnamese market on behalf of their clients. FIIs, on the other
hand, are individual investors who invest in the market directly.
Factors driving FII in Vietnam
Money supply: Interest rates: External debt: Economic growthInflation: Foreign Exchange
ratesForeign Direct Investment, Government Policies:
In conclusion, both FDI and FII play important roles in Vietnam's economic development, contributing
to growth, employment, and integration into the global economy. FDI provides long-term capital and
technology transfer, while FII enhances liquidity and efficiency in financial markets. However,
policymakers must strike a balance between promoting FDI inflows to support productive investment
and managing FII flows to maintain financial stability and mitigate risks. By leveraging the benefits of
both forms of investment and implementing sound policies and regulations, Vietnam can maximize the
positive impact of foreign capital inflows on its sustainable development goals.
6.​ Write about the case of Vinfast listing in Nasdaq exchange.
As one of Vietnam's most prominent success stories in the automotive industry, VinFast has garnered
significant attention both domestically and internationally. The decision of VinFast to list on the
Nasdaq exchange marks a significant milestone not only for the company but also for Vietnam's
burgeoning presence in the global market.
VinFast's journey from inception to its planned listing on the Nasdaq exchange is a testament to
Vietnam's growing ambition and capabilities in the automotive sector. Established in 2017 as a
subsidiary of Vingroup, one of Vietnam's largest conglomerates, VinFast quickly emerged as a key
player in the domestic market, producing a range of vehicles from electric cars to motorcycles. With
ambitious plans for expansion and innovation, VinFast set its sights on international markets, aiming to
position itself as a global automotive brand.
The decision to list on the Nasdaq exchange reflects VinFast's strategic vision and desire to access
international capital markets to fuel its growth and expansion plans. By listing on one of the world's
largest and most prestigious stock exchanges, VinFast aims to raise funds to finance research and
development, expand production capacity, and accelerate its entry into new markets. Moreover, the
Nasdaq listing provides VinFast with greater visibility and credibility among global investors,
enhancing its reputation as a leading player in the electric vehicle (EV) industry.
The timing of VinFast's Nasdaq listing is significant, given the growing interest and investment in EVs
worldwide. As governments around the world implement policies to reduce carbon emissions and
combat climate change, the demand for electric vehicles is expected to soar in the coming years. By
positioning itself as a manufacturer of electric cars and investing in cutting-edge technology and
design, VinFast is well-positioned to capitalize on this growing trend and establish itself as a major
player in the global EV market.
Furthermore, VinFast's Nasdaq listing represents a vote of confidence in Vietnam's economic potential
and attractiveness to international investors. Historically, Vietnamese companies have faced challenges
in accessing international capital markets due to factors such as limited liquidity, regulatory constraints,
and concerns about corporate governance. However, VinFast's successful listing on the Nasdaq
exchange demonstrates Vietnam's ability to produce world-class companies capable of competing on
the global stage and attracting foreign investment.
The listing of VinFast on the Nasdaq exchange is not without risks and challenges. As a relatively
young company operating in a highly competitive and capital-intensive industry, VinFast faces pressure
to deliver on its ambitious growth targets and differentiate itself from established players. Moreover,
the success of VinFast's Nasdaq listing will depend on factors such as market conditions, investor
appetite, and the company's ability to execute its business strategy effectively.
In conclusion, VinFast's decision to list on the Nasdaq exchange represents a significant milestone in
Vietnam's economic development and the country's emergence as a global player in the automotive
industry. By accessing international capital markets and positioning itself as a leading manufacturer of
electric vehicles, VinFast aims to capitalize on the growing demand for EVs worldwide and establish
itself as a formidable competitor in the global automotive market. While challenges lie ahead, VinFast's
Nasdaq listing underscores Vietnam's potential to produce world-class companies capable of competing
and thriving in the global economy.
7.​ Discuss your opinions about the International Monetary System and its role in
international trade. Describe how to invest in bitcoin market and make profit
The International Monetary System (IMS) serves as the framework through which countries facilitate
international trade and financial transactions, manage exchange rate regimes, and maintain monetary
stability. It encompasses a complex network of institutions, agreements, and currencies that govern the
flow of money and capital across borders. The IMS plays a crucial role in supporting global economic
integration, promoting financial stability, and facilitating economic development.
One of the key functions of the IMS is to provide a mechanism for determining exchange rates between
different currencies. Historically, the IMS has evolved through various stages, from the gold standard to
the Bretton Woods system and, more recently, to the current regime of floating exchange rates. Under
the gold standard, currencies were pegged to the value of gold, providing stability but limiting
policymakers' ability to pursue independent monetary policies. The Bretton Woods system, established
after World War II, fixed exchange rates to the US dollar, which was convertible to gold, providing
stability while allowing for flexibility in monetary policy. However, the collapse of the Bretton Woods
system in the early 1970s led to the adoption of floating exchange rates, where currencies are
determined by market forces, with central banks intervening to manage volatility and ensure stability.
The IMS also includes institutions such as the International Monetary Fund (IMF), the World Bank,
and regional development banks, which provide financial assistance, technical support, and policy
advice to member countries. These institutions play a crucial role in stabilizing financial markets,
providing liquidity during crises, and promoting economic development through loans, grants, and
capacity-building initiatives. Additionally, bilateral and multilateral trade agreements help facilitate
international trade by reducing tariffs, quotas, and other trade barriers, thereby promoting economic
growth and integration.
In recent years, the IMS has faced new challenges and opportunities arising from globalization,
technological innovation, and shifts in economic power. The rise of emerging economies such as
China, India, and Brazil has led to calls for reforms to better reflect the changing global economic
landscape and address issues such as currency manipulation, capital flows, and financial stability.
Moreover, advances in information technology and the emergence of cryptocurrencies such as Bitcoin
have raised questions about the future of money, payment systems, and the role of central banks in
regulating financial markets.
Overall, the IMS plays a crucial role in supporting international trade, investment, and economic
development. By providing a framework for managing exchange rates, facilitating financial
transactions, and promoting cooperation among countries, the IMS helps ensure stability and
predictability in the global economy. However, the IMS also faces challenges such as volatility,
imbalances, and regulatory gaps, which require continued cooperation and coordination among
policymakers, central banks, and international institutions to address effectively.
Investing in the Bitcoin market has become increasingly popular in recent years, driven by the potential
for high returns and the emergence of cryptocurrencies as an alternative asset class. Bitcoin, the first
and most well-known cryptocurrency, operates on a decentralized network known as blockchain, which
enables secure, peer-to-peer transactions without the need for intermediaries such as banks or
governments. While investing in Bitcoin can be lucrative, it also carries risks and requires careful
consideration of several factors.
Firstly, investors should conduct thorough research and due diligence before investing in Bitcoin or any
other cryptocurrency. This includes understanding the underlying technology, market dynamics,
regulatory environment, and potential risks associated with investing in cryptocurrencies. Additionally,
investors should consider factors such as market liquidity, volatility, and security when evaluating
investment opportunities in the Bitcoin market.
Secondly, investors should determine their investment objectives, risk tolerance, and investment
horizon before entering the Bitcoin market. Cryptocurrency markets are highly volatile and speculative,
with prices subject to rapid fluctuations based on factors such as market sentiment, regulatory
announcements, and technological developments. As such, investors should be prepared for the
possibility of significant price swings and potential losses when investing in Bitcoin.
Thirdly, investors should choose a reputable and reliable platform or exchange to buy, sell, and store
Bitcoin securely. With the proliferation of cryptocurrency exchanges and wallets, investors should
exercise caution and select platforms that offer robust security measures, regulatory compliance, and a
user-friendly interface. Additionally, investors should consider factors such as fees, liquidity, and
customer support when choosing a cryptocurrency exchange or wallet provider.
Finally, investors should consider diversifying their investment portfolio to mitigate risk and maximize
returns. While Bitcoin and other cryptocurrencies can offer attractive investment opportunities, they
also carry inherent risks and uncertainties. By diversifying across different asset classes such as stocks,
bonds, real estate, and commodities, investors can spread risk and potentially enhance their
risk-adjusted returns over the long term.
In conclusion, investing in the Bitcoin market can be a lucrative opportunity for investors seeking
exposure to cryptocurrencies and alternative assets. However, it also requires careful consideration of
factors such as market dynamics, risk management, and regulatory compliance. By conducting
thorough research, defining investment objectives, and diversifying their portfolio, investors can
navigate the Bitcoin market effectively and potentially profit from the opportunities presented by
cryptocurrencies.