The journey of "reaching out to the open sea"

However, in order to have more Vietnamese brands with a global scale, it is time for us to reform the mechanisms and policies related to OFDI.

Vinamilk 's Driftwood dairy factory in the US. (Photo by Minh Thi)

Notable achievements

Looking back at the entire journey of "reaching out to the world" since the promulgation of Decree 22/1999/ND-CP (Decree 22) regulating OFDI for Vietnamese enterprises, Dr. Phan Huu Thang, former Director of the Foreign Investment Department ( Ministry of Planning and Investment ), Chairman of the Board of Directors of the International Investment Research Institute (ISC), said that the journey can be divided into four stages.

Specifically, in phase 1 (1999-2004), Vietnam's OFDI activities began to take off. Decree 22 created the legal framework for businesses to implement OFDI projects. Phase 2 (2005-2010) was the period of explosive growth for OFDI, following the adoption of the 2005 Investment Law and the promulgation of Decree No. 78/2006/ND-CP regulating OFDI by Vietnamese enterprises.

During this period, there were 341 active projects with a total registered capital of nearly US$10.1 billion, accounting for 46.5% of Vietnam's total OFDI. Phase 3 (2010-2016) saw OFDI remain at a high level, with 512 active projects. Phase 4 (2017-2022) saw a decline in Vietnam's OFDI, although the number of OFDI projects increased significantly compared to the previous period, the registered capital only reached US$2.73 billion...

According to Dr. Phan Huu Thang, over the past 24 years, in addition to efforts to build and perfect the legal framework and promote the attraction of foreign direct investment (FDI), Vietnam has allowed domestic enterprises to invest abroad to expand markets for goods, exploit strategic assets, absorb advanced foreign management experience and technology, expand community relations, and promote people-to-people diplomacy … contributing to the socio-economic development of the country in general and the development of Vietnamese enterprises in particular.

Along this journey, many businesses have established and gradually affirmed Vietnamese brands on the international stage, contributing to Vietnam's deeper and more effective integration into the global economy, and joining hands with international friends to build a peaceful and prosperous world.

One of the exemplary businesses that can be mentioned when talking about OFDI in Vietnam is FPT Group (FPT), with a network of 290 headquarters, offices, and branches across four continents and 29 countries and territories worldwide. It is a key partner of hundreds of large corporations in many fields, and a high-level technology partner of Airbus, Siemens, Microsoft, Amazon Web Services, etc.

FPT's revenue in 2022 reached VND 44,010 billion, of which revenue from overseas markets contributed 41.2%.

In 2022, FPT opened four new offices in the US, Denmark, Japan, and Thailand, owned 31 projects worth over $5 million, and achieved sales of $1 billion from overseas markets.

For TH Group, the OFDI journey officially reached a significant milestone when TH invested in large-scale agriculture in Russia (May 2016). After more than seven years of implementation, the high-tech dairy farming and milk processing complex of TH Group, with a total investment of 2.7 billion USD, has made significant progress.

Hero of Labor Thai Huong, founder and Chairwoman of the Strategic Council of TH Group, shared that in Russia, with feelings of gratitude to the great and benevolent country of Russia, TH has been continuously implementing projects. We hope that TH products in Russia will be trusted and accepted by consumers as national brand products of Russia, manufactured by a Vietnamese enterprise.

In Australia, TH is also firmly holding the position of the largest Vietnamese enterprise investing in the country…

Not everything is smooth sailing, but with experience, strengths in high-tech dairy farming, and as a Vietnamese brand with many internationally certified products, TH is confident in moving forward on its OFDI journey.

In reality, the picture of Vietnamese businesses investing in foreign markets has both bright and dark sides. However, a common point is that business strategies are thoroughly researched before implementation to proactively and promptly respond to the unpredictable and complex geopolitical situation…

"Dual tasks" in global integration

Having spent many years managing, accompanying, and supporting Vietnamese businesses on their journey to "reach out to the world" and establish and affirm Vietnamese brands internationally, and understanding and sharing the difficulties and obstacles faced by businesses, Dr. Phan Huu Thang stated that OFDI is a journey filled with countless hardships and difficulties.

Besides successful businesses that have firmly established their brand image, such as FPT, Viettel, Vinamilk, and TH, many businesses are facing difficulties, and some have even had to temporarily suspend operations or dissolve due to various reasons such as inability to adapt, lack of knowledge about the laws and market information of the host country.

Therefore, with the goal of achieving both effective FDI attraction into Vietnam and boosting Vietnam's OFDI, it is time for us to conduct a deeper study of Vietnam's OFDI. This is a "dual task" that Vietnam needs to achieve when conducting international investment activities, especially in the context of the current global economy facing many uncertainties and complexities.

This is not the first time Mr. Thang has mentioned this. Remember, at the launch of the book "Vietnam's Direct Investment Abroad and in Myanmar" held on May 31, 2023, Dr. Phan Huu Thang, in his role as Chairman of the book's editorial board, stated that caution is inevitable for a developing country striving for deep integration into the regional and global economy.

However, Vietnamese businesses are still plagued by apprehension and self-doubt regarding the size of their economy and their level of development. In the past, excessive caution in adjusting the legal and policy systems, along with limitations in state management of OFDI activities, has diminished the aspirations of Vietnamese businesses to "venture into the global market," slowing down development and reducing the effectiveness of OFDI.

Therefore, according to Mr. Phan Huu Thang, it is necessary to clarify the reasons for both the success and failure of OFDI in Vietnam through the current investment situation and the production and business results of enterprises… in order to conduct in-depth research and propose appropriate solutions.

Specifically, the published OFDI data lacks specific assessments of revenue, financial status, and tax contributions from businesses receiving OFDI funds. Therefore, specialized investment research agencies find it quite difficult to fully and comprehensively assess the current state of OFDI in Vietnamese businesses.

Furthermore, it is necessary to clearly analyze the legal framework for OFDI in Vietnam as well as in recipient countries to identify the advantages and disadvantages for businesses when implementing OFDI, ensuring it aligns with the country's socio-economic development strategy from now until 2030 and beyond.

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