Foreign Businesses Optimistic about Vietnam's Economy (08/6)
08/06/2011 - 120 Lượt xem
At the forum, attendants discussed a range of matters which affect the macroeconomic situation in Vietnam, for example monetary and financial policies, and factors which have an impact on the business environment in Vietnam. They also proposed specific measures to maintain macroeconomic stability and improve the business environment in the country.
Foreign investor opinions
Alain Cany, the president of the European Chamber of Commerce (EuroCham) in Vietnam, said that EuroCham members are still optimistic about the business prospects in Vietnam though the level of optimism has decreased considerably compared with previous years.
Cany attributed the decrease in European business optimism mostly to their concerns about the high inflation rate and the depreciation of the Vietnamese dong. A fact which is of special concern for EuroCham members is that although the US dollar is in a weak state, the Vietnamese dong is the only currency in ASEAN (Association of South East Asian Nations) which continues to depreciate.
Other factors such as complicated administrative procedures related to investment licenses, poor infrastructure and unstable power supply also make EuroCham members less optimistic about the business environment in Vietnam.
Christopher Twomey, the president of the US Chamber of Commerce in Vietnam, said that the business environment in Vietnam remained favorable for foreign investors. In June 2011, Vietnam will host the forthcoming Trans-Pacific Strategic Economic Partnership Agreement (TPP) negotiations in Ho Chi Minh City. Participation in TPP negotiations will possibly be a competitive advantage helping Vietnam attract more foreign investment. However, Twomey attributed the success which Vietnam has achieved in attracting foreign investment mostly to investor expectations of a stable economic and political environment. But since 2008, the Vietnamese economy has revealed many signs of instability. The trade deficit has continued for a long time, while foreign currency reserves have decreased and the Vietnamese dong keeps depreciating. Such a situation highlights the need for policy changes. Recently, the Vietnamese Prime Minister announced that Vietnam would concentrate on the efforts to maintain economic stability more than on economic growth in order to ensure long-term stability.
The US Chamber of Commerce in Vietnam supports the above orientation of the Vietnamese Government and has high expectations in terms of the country's business environment.
Business environment improvements wanted
In the opinion of experts, Vietnam must improve the business environment to make it more attractive to foreign investors.
To do this, Cany said, the Vietnamese Government must give priority to improving the quality of investment in sectors which create high added value rather than allow short-term investment projects to be carried out for speculative purposes. In his opinion, Vietnam can accept a slower growth in one or two years and concentrate on boosting sustainable growth in sectors which create high added value. Therefore, he believed the 6.2-6.5 percent annual growth target set by the Vietnamese Government was reasonable.
To improve the business environment, investors want Vietnam to upgrade the infrastructure, stabilize power supply, enhance the quality of the workforce and deal effectively with corruption by simplifying administrative procedures.
Infrastructure is the foundation for a nation to thrive. Power is the key factor which helps companies maintain and expand production and business. Notably, in the opinion of Twomey, low labor costs alone cannot help Vietnam prevail over foreign rivals in the global playing-field, and to have an attractive business environment, Vietnam must be more active in improving worker skills by modernizing the education and vocational training systems.
Promises
Vietnamese Planning and Investment Minister Vo Hong Phuc said that in the early months of 2011 Vietnam had coped with numerous challenges, and although economic growth was maintained, the macroeconomic situation revealed some signs of instability. Specifically, prices continued to rise and the CPI (Consumer Price Index) in the first five months of the year increased more than 12 percent, while the trade deficit remained high. The Vietnamese Government has promulgated Resolution 11/NQ-CP proposing specific measures to stabilize the macroeconomic situation, maintain growth at a reasonable rate, and ensure social security. Thus far the resolution has been implemented for nearly three years and brought some initial results. In the future when the resolution comes into life, the business environment in Vietnam will improve considerably.
A representative from the Ministry of Transport said that the Vietnamese Government is making efforts to improve the infrastructure and that the Prime Minister has made Decision 71/2010/QD-TTg regarding the promulgation of a regulation on pilot investment in the form of PPP (Public Private Partnership). Hopefully, the infrastructure in Vietnam will improve gradually thanks to the efforts of the Government and the support of investors.
Regarding the supply of power for production and business activities, Pham Hung, the deputy director of the Energy Department of the Ministry of Industry and Trade, said that in 2011 and the years to come, the situation of power supply in Vietnam would be much improved compared with 2010. The Vietnamese Government has taken some actions to deal with electricity shortages. Specifically, the Law on Energy Efficiency and Conservation took effect on January 1, 2011; electricity prices were increased from March 1, 2011; Vietnam will experimentally develop a competitive electricity production market from July 1, 2011. Since 2010, Vietnam has promoted the attraction of foreign investment into the electricity sector. The Vietnamese Government has assigned the Ministry of Industry and Trade to expedite 11 foreign investment projects in the field of electricity. Therefore, the domestic electricity market promises to be stable in the years to come./.
Source: VEN.
Source: VEN.
