The document summarizes the key findings of a report on the impact of overseas Vietnamese investment in Vietnam. It finds that overseas Vietnamese contributions to Vietnam's economic growth are large, estimated at $8.45 billion compared to total FDI and ODA of $16 billion in 2009. However, overseas Vietnamese investment could be even greater, but is informal and inefficient due to weak legal infrastructure, lack of allocation mechanisms, and historical mistrust. Policy changes and innovative businesses can help overcome these barriers and provide more economic opportunities.
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Overseas Vietnamese investment in Vietnam
1. Thanh “Tino” Dinh | dinht10@darden.virginia.edu
The Impact of Overseas Vietnamese
Investment in Vietnam
Summary of Key Findings
(English Version)
Tino Dinh
MBA Class of 2010
Independent Research Project Advised by
Professor Peter Rodriguez, Associate Dean for International Affairs
The views expressed in this report are the author’s alone and do not reflect the opinions of the University of Virginia, the
Darden School of Business, nor its faculty. Please refer to the complete report for more detailed information on references,
data, and insights.
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Data as of: 3 MAR 2010 1
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2. Thanh “Tino” Dinh | dinht10@alum.darden.edu
The Bottom Line
• Overseas Vietnamese (OV) contributions to Vietnam’s economic
growth are large and significant--est. US$8.45 BB, compared with
US$16 BB in total FDI and ODA in 2009.
• Vietnam’s economy has large potential but still faces significant
developmental challenges. OV investment, businesses, and
knowledge transfer have the power to transform Vietnam’s
economy in ways other forms of FDI cannot.
• OV investment could be even greater. However, the flow of OV
capital is informal, dispersed and inefficient because of weak legal
infrastructure, a lack of dedicated allocation mechanisms, and
historical mistrust.
• Policy changes and innovative businesses can overcome these
barriers and provide economic opportunities for Vietnamese
domestically and internationally.
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3. Thanh “Tino” Dinh | dinht10@alum.darden.edu
Methodology
Anecdotal
Vietnam Multi-lateral US Scholarly
Reports
Government Sources Government Studies,
(media,
Sources (WB/IMF, Sources Research
interviews,
(GSO) UN, ADB) (Census) Reports
surveys)
Overseas Vietnamese Investment
(Size, Characteristics, Effect)
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4. Thanh “Tino” Dinh | dinht10@alum.darden.edu
Sources of Investment
Component Sub-components (destination) Estimated Amount to Date Significance
Remittance (for investment) Investment in family-run $3.9 billion Serves as key distribution channel
businesses for OV capital
Recorded investment projects Real estate, start-ups, joint $ 2 billion Potential of OV-led ventures and
and business ventures ventures projects is not being maximized
Asset management Portfolio funds, start-ups, real- $2.5 billion OVs serve as influential
estate, IT, mfg or infrastructure gatekeepers for foreign
investments, projects
Intellectual capital R+D/IP, scientific expertise, mgt Undetermined Greatest potential for value-
know-how, educational creation, innovation exists in gap
institutions b/w OV supply and local demand
for intellectual capital
Total $8.45 billion + Quantitatively, would make OV
the 7th largest foreign investor
(Ex. 7). Larger socio-economic
impact unquantifiable.
[1]
For illustrative purposes, 10% of total recorded remittances from 2000-2009 ($39.5 billion)
[2] Given more time and resources, a rough estimate could be determined by identifying all IP from overseas Vietnamese and calculating the profits that have
resulted from commercializing patents, publications, etc.
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5. Thanh “Tino” Dinh | dinht10@alum.darden.edu
2008 Estimated Worldwide OV Remittances
0%
0%
North America • Exterior circle: US$ 8.22
8%
Western Europe
ANZ
BB in total remittances
6%
1%
Eastern Europe-Eurasia • Interior circle: 3.75 MM
20% Asia-Pacific
6% OV pop.
Thailand-Cambodia-Laos
Other
• Population data from
48% Wikipedia, projections
8%
• Assumptions on
17%
6% remittances per
63%
4% household
13%
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6. Thanh “Tino” Dinh | dinht10@alum.darden.edu
Remittance vs. Other FDI
16000
14000
12000
10000
Est Total Remittance
8000
ODA
6000 FDI
4000
2000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
• Currency represented in current US$ MM
• Remittance consistently 9-10% GDP from 2002-2009
• Sources: World Bank, IMF BoP Statistical yearbook, CIA World Factbook, GSO
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7. Thanh “Tino” Dinh | dinht10@alum.darden.edu
Samoa
Switzerland
1549.1
1693.1
Total 1988-2008 FDI by
Australia
Fed. Russian
1811.2
1935.4 Source
Overseas Vietnamese-aggregate 2000.0
China, PR 2188.3 • Currency in US$ MM
United Kingdom 2711.1
Netherlands 3018.8 • Aggregate amount per country
France 3216.2
Cayman Islands 4352.2 during period 1988-2008
Canada 4892.4
United States 5029.0
• Recorded projects only
Thailand 6121.6
• FDI from listed countries may
Hong Kong SAR (China) 7416.7
British Virgin Islands 13824.1 overlap with OV investment (esp.
Korea Rep. of 16666.3
Singapore 17071.0 USA, AST, CAN, FRA)
Japan 17362.2
Malaysia 18005.6
• Source: GSO, 9/10/2010
Taiwan 20951.9
0.0 5000.0 10000.0 15000.0 20000.0 25000.0
Series1
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8. Thanh “Tino” Dinh | dinht10@alum.darden.edu
2008 FDI: Licensed Projects by Activity Type
Manufacturing
Real estate, renting business
activities
Mining and quarrying
Transport; storage and • Exterior circle: US$ 6 BB
communications
Hotels and restaurants in total registered capital
Construction • Interior circle: 1171
Health and social work
projects
Agriculture and forestry
Education and training
Financial intermediation
Other
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9. Thanh “Tino” Dinh | dinht10@alum.darden.edu
Licensed
FDI Projects
by Province
• Currency in US$ MM
• Registered capital > US$ 1 BB
• Source: GSO, 3/3/2010
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10. Thanh “Tino” Dinh | dinht10@alum.darden.edu
Characteristics of Viet-Kieu Enterprises
• Geography: Concentration in South
• Scale: Mostly small businesses
• Sector: Focus on speculative real estate
development, labor-intensive manufacturing, or
back-office IT outsourcing
• Business model: simple, cash-based businesses that
offer tangible product or service
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11. Thanh “Tino” Dinh | dinht10@alum.darden.edu
Trends for OV Investment
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12. Thanh “Tino” Dinh | dinht10@alum.darden.edu
Challenges and Opportunities
Root Cause Barrier to Investment Business Opportunity Policy Recommendation
Apathy Cultural distance Acculturation Services
Risk Legal Risk Information and Risk Hanoi: Clarify legal status and rights of OV
Protection Services OVC: Establish internationally recognized, independent
association for OV-owned businesses operating in Vietnam
to represent collective interests
Systemic corruption Information and Risk Hanoi: rights-based legal reform; consistent enforcement
Protection Services Hanoi, OVC: Independent, critical media
Bureaucracy Information and Hanoi: Streamline, consolidate, and automate
Risk Protection administrative process across agencies for receiving
Services business permits and licenses (e-government)
Market Platforms
Financial risk; market Market Platforms
inefficiencies Financial Services
Lack of OV Market Platforms OVC: Coordinating or cooperative mechanism for promotion
Community Capacity Financial Services of economic development in OV community and Vietnam
and Markets across public, commercial, and civil society spheres
Establish independent research institute for OV-centered
economic, social science research
Principles Mistrust Educational Hanoi, OVC: Reconciliation process
institutions and
services
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13. Thanh “Tino” Dinh | dinht10@alum.darden.edu
Recommendations
• Systemic legal reform
Vietnam must consistently enforce basic property rights.
• Building capacity and platforms in OV community
Little Saigon must find an efficient means of pooling and
allocating its capital.
• A path to reconciliation
It is in the interests of Vietnamese everywhere to contribute
responsibly to Vietnam’s long-term economic development.
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14. Thanh “Tino” Dinh | dinht10@alum.darden.edu
Key References and Acknowledgments
Not a comprehensive list (see full report), the following highlights key people, organizations, and sources of data
that have been especially influential or helpful in completing this study
Experts/Scholars Organizations Data Sources
Mr. Ernie Bower, CSIS and American Chamber of Commerce-Vietnam 1992 Constitution of the SRV
Brooks Bowers-Asia
Mr. Don Danh, VSVN Ash Institute-Vietnam Program. Harvard JFK Asian Legal Information Institute
School of Government
Dr. David Dapice, Ash Institute National Vietnamese-American Chamber of Government Statistics Office of Vietnam
(Harvard-JFK) Commerce (Viet AmCham)
Prof. Le Xuan Khoa, SAIS (John US-Vietnam Trade Council IMF Balance of Payments Statistics
Hopkins Univ) Yearbook 2008
Prof. Nam Binh Tran, Univ of Vietnamese-American NGO Network SRV Foreign Investment Agency
NSW (Austr) (Ministry of Planning and Investment)
Dr. Lan Pham, Univ of Minnesota Vietnam Chamber of Commerce and Industry US Census Bureau: American
(SME Center) Community Survey 2007
Prof. Mark Sidel, Univ of Iowa Vietnam Strategic Ventures Network Vietnam National Administration of
Tourism
Mr. Ivan Small, Cornell Univ World Bank Development Indicators
Mr. Markus Taussig, HBS
Mr. Dat Trinh, Levlad, LLC
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