Total FDI-related foreign direct investment 1.1. The concept of FDI According to the International Monetary Fund IMF, FDI is defined as "an investment with long-term relationship, under which an institution in a world economy (direct investor) obtained from a long-term benefits Enterprises located in a different economy. The purpose of the direct investment is like to have more influence in the management of enterprises located in other economies that United Nations Conference on Trade and Development UNCTAD also made a business of FDI. Accordingly, FDI inflows include capital provided (either directly or through related companies) by the foreign direct investment for FDI enterprises, or capital that the foreign direct investment received from FDI. FDI consists of three components: equity capital, reinvested earnings and loans within the company. The international economic definition: foreign direct investment was the purchase of property in this country or an entity controlled economy of other countries. That is an amount that investors paid to an entity's foreign economic influence decisions with economic entities that control or increase in the economic entity did. Law on Foreign Investment in Vietnam in 1987 introduced the concept: "Foreign direct investment is that the organization or individual foreign countries into Vietnam or of capital in foreign currency assets are any Vietnamese government Male approved for business cooperation on the basis of contracts or joint ventures established enterprises or enterprises with 100% foreign capital under the provisions of this law " Organization of Economic Cooperation and Development (OECD) introduced the concept: "a direct investment enterprise is an enterprise with legal personality or without legal status in which direct investor owns less most often 10% shares or voting rights. The crux of direct investment is intended to exercise the right to control the company. " However, not all of which were run, using 10% as determined milestones FDI. In fact there are cases of property ownership rate in the investor's business is less than 10% but they still are entitled to executive management of enterprises, while the much larger but still only at the portfolio investment next. From these concepts can be understood on an overview of foreign direct investment as follows: "Foreign direct investment FDI in one country is an investor in other countries to the capital in cash or any assets in that country to obtain ownership and management or control of an economic entity in that country, with the first maximize its interests. " Assets in this concept, according to international practice, be it tangible assets (machinery, equipment, process technology, real estate, contracts and other valuable licenses ...), financial intangible property (ownership of little knowledge, know-how and management experience ...) or financial assets (shares, stocks, bonds, debentures, ...). Thus FDI is always a form of economic relations with foreign elements. Two basic characteristics of FDI is a shift within capitalism and international investors (legal entities, natural persons) directly participate in the activities funded and managed objects. The common form of FDI and their basic characteristics 1. Joint venture enterprises Joint venture enterprises with foreign joint venture is called the form most widely used of foreign direct investment in the world ever. It tool to penetrate foreign markets, legally and effectively through cooperative activities The concept of joint venture is a form of economic organization donah nature international, formed from the difference between the parties on nationality, management, systems thogn financial, legal and cultural identity; activities on the basis of the contribution of capital, labor and management with responsibility for profit and risks may occur; venture activities are broad, including production and business activities, provision of services, basic research activities and research and development. For countries receiving investment -Advantages: help to solve the lack of capital, to help diversify the products, technology innovation, create new markets and create opportunities for employees to work and study experience of foreign managers -Cons: takes more time to negotiate issues related to shoulder the investment projects, often appear in conflict management of the business; foreign trade partners interested in global interests, so double lcu venture suffered losses because of interest elsewhere.; personnel changes at the parent company can influence the future development of the venture. For foreign investors; -Advantages: take advantage of available distribution system of the host country partners, is invested in the business to make profits, prohibited areas or restrictions on the form 100% foreign enterprises outside; penetrate the traditional market of the host country. Do not waste time and costs for market research and build new relationships. Sharing costs and investment risks Cons: look at the difference in cost between the two investment partners, take time to negotiate all matters relating to projects DTU, valuation of assets contributed as capital to create jobs for the laborers of domestic work; not active in business management and administration, easily lost business opportunities difficult to resolve differences in customs and culture. 2. Enterprises with 100% foreign capital Enterprises with 100% foreign capital is also a form of enterprises invested abroad but less common form of joint ventures in international investment activities. The concept of 100% foreign capital is a business entity with legal personality, was established based on the goals of investors and host countries. Enterprises with 100% foreign capital operating activities under the management of foreign investors but still must depend on conditions on the business environment of the host country, which is the DK on politics, law kt interesting cultural level of competition ... Enterprises with 100% foreign capital have legal status as an independent legal receptor activity under the laws of host countries. Established as a limited liability company or joint stock companies. For receiving countries: -Advantages: State revenue from land rent was right, although the company tax losses; solve job without using capital investment focus to attract capital and foreign technology in the flexible in export promotion, access to foreign markets -Cons: difficult to acquire management experience and technology overseas to improve their management staff, technical personnel in enterprises in the country. For foreign investors -Advantages: active management of the business done by Global Strategy Group; rapid deployment projects, the initiative is the recruitment and training of human resources to meet development requirements general corporate -Bad: investors must bear the full risk of the investment costs have more access to research new markets; not penetrate into these areas has greatly benefited the domestic market large, difficult relationship with the State management agencies in host countries. 3. Forms of business cooperation on the basis of business cooperation contracts This form is a form of investment in which the distribution of responsibilities and Hia business results for each party to conduct investment business without creating a new legal entity Business cooperation contract is a document signed between the competent representatives of the parties to business cooperation contracts, clearly define the performance of distributed business results for each party Characteristics as the parties signed business cooperation contract, in the process of the partnership business may be established to monitor the coordinating and supervising the implementation of business cooperation contracts. Division business results: no form of partnership profit distribution and risk sharing, which divide them by the business results or capital contribution under the agreement between the parties. Business cooperation parties perform their financial obligations for the host country separately. Partnership is a legal business entity operating under the laws of host countries subject to the laws of host countries. Brackish rights and obligations of the parties to business cooperation contracts dowjc record in business cooperation For receiving countries: -Advantages: help to solve the lack of capital, lack cnghe, create new markets but it ensures national security and grasp the right to run the project -Cons: difficult to attract investment, made for only a few areas for income For the investor: -Advantages: take advantage of available distribution system of the host country partners in the fields of investment restrictions penetrate the traditional market of the host country; not waste time and expenses for the market research and build new relationships; not affected by large differences in cultural sharing costs and investment risks. -Cons: may not directly managing the project, cooperation with host countries for lack of nurses certainly make investors afraid. 4. Investment under BOT BOT (build - operate - transfer) is a term for a model or a structure to use private investment for the construction of the infrastructure remains dedicated to the public sector. In a building BOT project, a private business people are privileged to build and operate a project which is usually done by the government. This work may be the power plants, airports, bridges, roads, bridges ... At the end of the operation of private enterprises will transfer the ownership of government projects. In addition there BOT BTO and BT. BOT is a written contract signed between foreign investors with the competent bodies of the host country for investment in construction of infrastructure (including expansion, nagn level modernization projects ) and business in a certain time to recover capital and reasonable profits, then transferred without compensation for the whole project host country. Construction contract to transfer the business and construction contracts BTO transfer BT, formed similar to BOT but there are differences: for BTO after completion of construction works of foreign investors transferred to the host country and host country government for the right business that works or other works for a time sufficient to complete the entire investment and have a satisfactory profit on construction works development and transfer. For the BT contract, after completion of construction works of foreign investors to transfer back to the host country and host country governments paid in cash or with assets that match the capital investment has dropped and a reasonable rate of profit. Established businesses implement BOT, BTO and BT contracts, although the form of joint venture enterprises or enterprises with 100% foreign capital, but partners with contract performance management is the state agency in host countries. Narrow field of contract other than the FDI, mainly applied to development projects in infrastructure, are entitled to higher investment incentives than other forms of investment and especially when the point Expired activities, should transfer without compensation limit foundations and floors were built to exploit the host country For the host:-good: to attract capital investment into infrastructure projects co9u requires large capital investment, thus reducing pressure on the state budget, and can be quickly the complete infrastructure to help stimulate the domestic resources and attract more FDI for economic development. -Cons: difficult to get management experience and works hard to control. On the other hand, the state must bear all risks beyond the control of investors. For foreign investors: -Advantages: efficient use of capital is guaranteed; proactive management, administration and business autonomy profit sharing and hip were the host state to ensure, to avoid unexpected risks beyond control. -Bad: the negotiation and execution of BOT contracts trade more difficult and costly time and effort. 5. Investment model through the parent company and subsidiaries (Holding company) Holding company is one model of organization management is widely recognized in most countries with economies in developed markets. Holding company which owns a stake in another company sufficiently to control operations and executive management through the company or to influence selection of Board members. Holding company was established as joint stock companies and limited their activities in the ownership of capital, strategic decisions and monitor the management activities of the subsidiaries, the company maintains the right control of their business activities independently, creating a lot of advantages: -Allowing investors to raise capital to deploy many different projects but also create favorable conditions for them to coordinate activities and support subsidiaries in the tieps marketing, consumption goods regulate the income and costs of financial operations. -Management of their capital contributions in other companies as a unified and responsible decision making and strategic planning to coordinate the activities and finances of the group of companies. -To plan, direct and control the flow of capital flows in the portfolio. Holding company can perform all activities financed investments and subsidiaries provide financial services internal to the company. -Provide subsidiary services such as internal audit, external relations, market development, planning, research and development (R & D) ... 6. Form of company shares JSC (Joint Stock Company Limited) is an enterprise in which the charter capital is divided into equal portions called shares the shareholder is only liable for debts and obligations of other assets enterprises within the enterprise capital contributed to the Shareholders may be organizations or individuals with the maximum number is unlimited, but must meet requirements on minimum number of shareholders. Featured is the company's shares it may issue securities to the public and shareholders have the right to freely transfer their shares to others Organizational structure, joint stock companies must have shareholder, board and directors. Often in many countries around the world, shareholder or group of shareholders owning more than 10% of ordinary shares are entitled to participate gima close management activities of the company stock. Shareholders of all shareholders with voting rights is the highest decision body of the company shares In some countries, limited stock company with foreign capital established under way: the establishment of new shares of foreign invested enterprises (joint-venture enterprises and enterprises with 100% foreign owned) are operating, redeem shares of domestic enterprises in the equitization. 7. Mode branches of foreign companies This form is distinguished form the company 100% foreign capital in that branch is not considered an independent legal entity while the child is often a company independent legal entity. The responsibilities of the company you are usually limited in scope in the host country assets, while the responsibility of the branch under the provisions of a country, not just limited to property within the branch, but also be open wide to all the assets of the parent company overseas. Branches are allowed to deduct the losses in the host country and the costs to establish the initial earnings of the parent company overseas. In addition, the branch also deduct a portion of management costs quna overseas parent company to the taxable income in the host country The establishment of branches is often simpler than the establishment of subsidiaries. Do not set up an independent legal entity, the establishment of branches of non-compliance with regulations established companies, often through the register at the competent authorities of the host country 8. Form partnerships A partnership is an enterprise must have at least two general partners, in addition to the general partners can have limited partners. The partnership members must be individuals who are qualified, reputable professional and responsible with all their assets on obligations of the company; limited partners only liable for the debts of company within the amount of capital contributed to the company. Company or partnership may not issue any type of securities. The general partners have equal rights in deciding the issues lsy management company, while limited partners are entitled to share profits according to the rate specified in the charter company but not participate in company management and operation business on behalf of the company. Unlike venture enterprises and enterprises with 100% foreign investment form is characterized by the company for money to relatives of unlimited liability, compact structure. This form of investment is suitable primarily for small businesses, but because there are obvious advantages should also be big business interests. The company released form partnerships in countries to create more opportunities for investors to form investment choices to suit the requirements, their interests. In fact some types of services such as legal counseling, medical, architectural design .. has been growing rapidly. These are services that consumers can not check the quality of supply before using, but the health impact lives and property of consumers to use. The establishment of a partnership form of investment is appropriate in the development and provision of services mentioned above. In particular those which act as limited partners and limited also responsible professionals who are relatives organizations operating partnership, service providers and subject to unlimited liability in the entire property of them. 9. Type of investment and merger acquisition (M & A) Most M & A are made between the TNC and large focused on automotive service industry, pharmaceuticals, telecommunications and finance in developing countries. Primary purposes: -Exploiting the advantages of the new market that truog international trade or investment in new channels is not traditionally delivers the performance you expect. M & A activity creates opportunities for companies to quickly expand out activities in foreign markets. -By the way M & A, the TNC can be merged his company with another form thnah a corporate giant active dog in many cases, or different companies also operate in a field can be merged to increase the global competitiveness of corporations -The company for the purpose of internationalizing the product want to fill gaps in their distribution network on the world market -Paths through M & A company can reduce the cost of each field of research and development production, distribution and circulation. -M & A creates conditions favorable for the restructuring of industry and the structure of industry in the country, so this method plays an important role in the development industry in all countries. Activities classified into three categories: Horizontally-MA occurred when two of the same company operating a manufacturing business sector wants to form a larger company to increase competitiveness, expand markets with one of the two types of advance which the manufacturing company . Vertically-MA occurred when two company operating in two different domains but the service is dominated by a parent company, the interest for which this happens in the company thwongf transnational -MA in the direction of diversification or a combination often happens when big companies merge with each conducted with the aim to minimize risks and avoid losses when a company own market penetration. Compared to traditional investors, from the perspective of the investment-receiving countries:-The additional investment in the traditional form of additional investment on a certain amount of FDI for development investment, then all forms of MA weak transfer property from existing businesses in the host country for foreign companies. However, long term, this method was also attracted capital from outside the host country by expanding the scale of the implant business. -Regarding job creation, investment form the traditional to create immediate jobs for the host country, while the form of M & A not only does not create jobs but also increases the stress on the job ( increased unemployment) for the host country. But in the long run, this situation can be improved when firms expand production scale. Regarding the restructuring of economic activity, investment truen's direct impact in changes in economic structure knh through the construction of new enterprises, while M & A does not have an impact in the short term Regarding the competitiveness and national security, while investing tradition to boost competition, the M & A does not significantly affect the status of competition in the short term but long term may increase the monopolistic competition. On the other hand, M & A can affect the security of the host country more traditional forms đư because the host country's assets were transferred to foreigners.