International donor representatives said at the Vietnam Business Forum (VBF) held in Hanoi on May 30 that the country will face and need to overcome new development challenges.

Amanda Tucker, Chief Representative of Nike, in Ho Chi Minh City, told Vietnam News Agency reporter that Vietnam is currently facing a number of hurdles regarding infrastructure that must be met in order to attract greater amounts of foreign direct investment (FDI).

Tucker urged the government to speed up the implementation of infrastructure projects and strengthen transparency in the planning and managing of key projects so as to make better use of infrastructure and port systems.

In 2006, Vietnam attracted more than 10.5 billion USD in FDI. In the first five months of this year, the total registered FDI capital reached over 4.37 billion USD, an increase of nearly 18.7 percent against the same period last year.

The Nike representative said that Vietnamese Minister of Planning and Investment Vo Hong Phuc also stressed the importance of dealing with foreign investors’ concerns.

“It is a very good sign. The Vietnamese government is committed to working on these problems and indicated that infrastructure development will remain a top priority,” she said.

Tucker also said that Vietnam is a fantastic place for business. “It is a very valuable country for us. We have been here for 11 years.”

Meanwhile, Dominic Scriven, Director of the Dragon Capital investment fund and Head of a Working Group on Banking at VBF, said that Vietnam’s capital market has not yet matured.

“It is much smaller in absolute terms and also relative terms to other markets, but the dynamics are very powerful, so I think the stock market will continue to grow as will the debt and bond markets.”

Regarding the development of the capital market in Vietnam, Scriven said “I think the capital market should be able to meet 25-30 percent of the Government’s target of 140 billion USD in foreign investment till 2010 to support GDP growth of 8 percent. I think that’s the role the Vietnamese capital market can play, and that means raising money for companies and the government and also offering opportunities to investors in Vietnam,” he said.

He warned however that there were still many roadblocks to development of the capital markets that needed to be overcome. Pointing in particular to risks of supply and demand not being met, companies performing poorly or reneging on their bond commitments, governance problems, market manipulation and foreign investor protections.

“The job of Vietnamese policy makers is to balance the risk and try to create a market that has the right balance between growth and stability,” he stressed.

The VBF is held on the eve of the two-day Mid-term Vietnam Consultative Group Meeting scheduled for June 1-2 in the northern resort city of Ha Long, Quang Ninh province. It is a platform for investors to hold a dialogue with the Vietnamese government on the development of the banking sector and capital market as well as challenges in implementing WTO commitments and the Investment Law and the Enterprise Law.

Source: VNA