A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration.

Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 1992

In December 1987, the Vietnamese Government passed the Law on Foreign Investment to boost the economic development of the country. Since then an increasing amount offoreign investment has flowed into Vietnam. Joint venture is a common form offoreign investment in Vietnam and that is a relatively new phenomenon in Vietnam. There are many problems and difficulties that joint venture partners have to face while establishing their business. In this research attempts are made to identify and analyze the positive and negative aspects and deficiencies oflegislation towards foreign investment andjoint ventures, the problems and difficulties the joint venture partners face in partner selection, negotiations and management ofthe joint venture and problems related to the country environment. The aim is to find out the specific problems in the Vietnam context. Attempts are also made to identify the prospects for foreign investment in Vietnam and to propose some guidelines for creating afavorable investment climate for the successful establishment ofjoint ventures. According to the findings of this research, the Law on Foreign Investment in Vietnam is considered by foreign investors as one ofthe most liberal investment laws in Asia. However, the law is found to have many limitations. The problems of establishing and running joint ventures are mostly related to financial aspects of the projects and the quality of local partners with regard to international management practice. Problems related to the country environment are mainly the USA embargo, primitive banking and poor financing system, bureaucracy, poor infrastructure, inflation and unstable currency. Prospectsfor foreign investment in Vietnam will be better when the USA embargo is lifted. Guidelines suggested to the government deal with improving the legal system and the training of personnel in management to help them adapt to new challenges. Guidelines suggested to the JV partners are mainly aimed at the practical behavior ofJV partners and the careful study of the potential sources ofproblems and at ensuring that they do not occur.