Page 150 - Ebook HTKH 2024

export-oriented development model, which has been significantly bolstered by
increasing foreign direct investment (FDI). The 1987 Law on Foreign Investment set
the stage for foreign investments, while Vietnam’s accession to the World Trade

Organization (WTO) in 2007 marked a key milestone that accelerated the country's
integration into the global economy (Tran & Dinh, 2014). Notably, after joining the
WTO, Vietnam saw an increase in FDI inflows from OECD countries by as much as
70% (Hoang, 2019), highlighting the significant role these reforms have played in
shaping Vietnam’s economic trajectory.
Multinational companies (MNCs) have been at the forefront of this FDI-driven
growth, not only by bringing in substantial capital but also by transferring advanced

technologies and enhancing local managerial skills. Their investment has helped
integrate Vietnam into global supply chains, creating a robust production and service
network that has strengthened Vietnam’s competitiveness in the international market.
In turn, the presence of these MNCs has generated positive spillover effects for local
enterprises, pushing them to improve technologies and product quality, thus
contributing to Vietnam’s sustainable economic development. This aligns with findings

by Nguyen et al. (2017a), who emphasize the positive impacts of MNCs in facilitating
both industrial growth and integration into global markets.
According to the 2023 KPMG Vietnam report, Vietnam continues to solidify its
status as a prime destination for MNCs, with over 3,188 subsidiaries currently operating
in the country. This substantial presence reflects the growing attractiveness of Vietnam
to global investors, driven by the country’s robust economic growth, strategic
geographic location, and youthful, skilled labor force. In 2023, Vietnam recorded an
impressive USD 36.6 billion in FDI, marking a 32.1% rise compared to the previous

year. This growth was fueled by a significant surge in newly licensed projects, with a
57% year-over-year increase in investment activity.
The majority of these investments have been directed towards critical sectors such
as industrial manufacturing, energy, technology, and real estate, which are vital to
Vietnam’s ongoing economic transformation. The Vietnamese government has actively
supported this influx of investment by fostering a business-friendly environment

characterized by attractive incentives, tax breaks, and streamlined regulatory processes.
Vietnam’s strategic advantages, including its location at the crossroads of major global
trade routes and its competitive labor market, have made it a favored location for MNCs
seeking to expand operations in Southeast Asia.
As Vietnam continues to integrate into the global economy, MNCs are not only
contributing to the country’s economic growth but also promoting sustainable
development. Their efforts in transferring technology, upgrading local production

capacity, and enhancing managerial capabilities have had long-term benefits for
Vietnam. In the process, MNCs have helped elevate Vietnam’s position on the global

142