Viet Nam's Evolving Position in the Global Economy

In 1987, early in the process of transition to a more market-oriented economy, the Vietnamese National Assembly adopted the Law on Foreign Investment. Follow-up steps have been taken in the past two decades to encourage, protect and improve the quality of foreign investment. Such efforts resulted in strong investment flows in the mid-1990s (see Figure 2.1). Due to the Asian financial crisis, net foreign investment inflows dropped significantly in 1997, but began to grow again in 2001. Since 2006, there has been a major increase in the level of FDI in Viet Nam. Disbursed FDI in 2007 totalled USD 8 billion, and estimates from Viet Nam’s Foreign Investment Agency show that disbursements totaled USD 11.5 billion in 2008. Foreign direct investment as a percentage of total investment has increased also recently reached and exceeded the pre-Asian financial crisis levels, as FDI accounted for 30% of total investment in Viet Nam in 2008. Registered FDI in Viet Nam in 2008 totaled USD 71.7 billion.