$2bil worth of FII injected in Vietnam (19/09)
06/08/2010 - 192 Lượt xem
Nineteen foreign investment funds have come to Vietnam so far, bringing with them $2bil of foreign indirect investment (FII) capital, according to the Ministry of Finance (MoF).
Experts said that since 2002, the foreign investment flow into Vietnam has been increasing considerably with more and more foreign investment funds coming to Vietnam to make investment deals. Economists have mentioned the so-called ‘third FII wave’, which is believed will be bigger and stronger than the two previous waves.
Foreign investors are getting more deeply involved in the domestic financial market. They make capital contributions in big equitised and joint-stock companies, while foreign banks try to purchase more shares of local joint-stock banks, and purchase Government and corporate bonds.
Nevertheless, according to Tran Van Ta, Deputy Minister of Finance, the volume of FII capital remains modest. Vietnam needs some $140-150bil of capital in the next five years for investment and development.
Therefore, FII capital of $2 or $3bil will not be enough.
Nguyen Thi Mui, Head of the Finance Science Institute, said that the FII volume was relatively low if compared to the foreign direct investment (FDI) flow. The FII volume is just 2-3% of the FDI in Vietnam, while the figure is 30-40% in other countries.
Mr Ta said that Vietnam was trying to build a suitable legal framework which will serve as an effective tool to encourage more and more FII capital. However, he stressed that it would require more exertion, caution and time to compile legal documents, because there was always latent big risks with FII-sourced capital. The Asian financial crisis in 1997 is a typical example.
Experts remain optimistic about the possibility of attracting more FII into Vietnam. An economy with a stable growth rate of 7.5% per annum is attractive in the eyes of foreign investors. In addition, the position of Vietnam in the international financial market has been improved as the credit rating given by Moody to Vietnam has been upgraded form ‘B3’ to ‘B1’. The financial market has been opening gradually since the Government decided to raise the maximum foreign ownership ratio in local joint-stock companies from 30% of total chartered capital to 49%.Source: Vietnam Net
