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Indirect investment climbs to 3% of GDP

16-Sep-2006 Intellasia | 14/Sep/2006 Thoi Bao Kinh Te Vietnam | 8:41 AM

Indirect investment capital in Vietnam has mounted to almost US$2 billion, deputy finance minister Tran Van Ta told today in Hanoi. As of June, there are 19 foreign investment funds with nearly US$2 billion operating in Vietnam.
Foreign investment flow in Vietnam has seen considerable growths since 2002 that is signified in the increasing number of foreign investment funds and their business expansion in Vietnam, said experts. Many are optimistic that the third foreign investment wave with larger scale and better quality has swept over the country. As a reflection, foreign investors have been investing actively in local equitised state-run firms, commercial banks, corporate and governmental bonds.
However, indirect foreign investment to the country is still far from its full potential, said Ta.
In the next five years, Vietnam said it needs some US$140-150 billion for its development goals. If indirect investment stands at its existing just US$2-3 billion level, the country will face difficulty to realise its goals.
Compared with FDI, indirect investment in Vietnam accounts for 2-3% of GDP while the figure of other regional economies is 30-40%, said Nguyen Thi Mui, from the National Institute of Finance.
Vietnam is now working to develop policies and strategies to intensify this channel of investment, said Ta. However, it is said that this source of capital bears latent risks and the Asian financial crisis 1997 is a good example. Therefore, the policy development will be prudently carried out.
Experts insist that the prospects of indirect investment in Vietnam are rosy. Their projection is not groundless at all. Vietnam’s economic growth rate has maintained at averagely 7.5% recent years. The upgraded national credibility ratio from B3 to B1 polled by Moody has made Vietnam more attractive to foreign investors. Smart policies have been implemented by the central government and local financial market are offered with favourable conditions to develop, such as, lifting up ownership ratio of foreign investors in listing firms from 30% to 49% and abolishing the status that a foreign organisation owns many banks at the same time.

 


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