hough, foreign investors were very eager to invest in Vietnamese market promising numerous business opportunities because Vietnam has many advantages such as being a new market with big population and cheap price of labor; having rich natural resources, particularly oils, favorable geographical location and huge agricultural potential.Statistics shows that FDI commitments coming to Vietnam increased notably from 1988 to 1996, hitted the top in 1996 with US$ 8633 million and decreased sharply since 1997. Most of these commitments were made during 1995-1996. Several large construction projects were approved during this period of time, and this pushed up average project size to US$ 20.5 million, compared to US$ 13.3 million during 1988-1994. We can also realize that proportion of disbursements in comparison with commitments is low in the early of 90s. (See chart below)Sources: UNDPB. THE CAUSES OF DECLINE IN FDI IN VIETNAM IN RECENT YEARSThere are numerous factors causing the sharp decrease in FDI since 1997 up to now. In my opinion, there are 2 main kinds of causes: direct causes and indirect causes. The direct cause is the Asian financial crisis “booming” in July 1997. Yet, the critical cause we should consider strictly is indirect one that was hidden under annual increase in FDI in previous years.I. DIRECT CAUSES:The Asian financial crisis has weakened the economy of many Asia countries, made a number of enterprises go to bankruptcy and millions of employees lose their jobs. Vietnam is in the influence circle of this crisis; therefore, bearing bad impacts on Vietnamese economy is inevitable. Clearly, FDI inflows into Vietnam went down strongly since then. Over past 8 years of attracting FDI (1988-1996), there was always increase in FDI commitments with growth rate never less than 25 percent per year. In 1997, FDI commitments were just equal to 50,9% of those in 1996 and continuously decreased in 1998, 1999. Some causes can b...
