Vietnam economy yet to build investor confidence: foreign business community

“Six months ago, we were sitting together at Vietnam Business Forum. One of the proposals outlined in that was the request to rebuild investor confidence in the economy. However, since then, we see that this story has not much changed,” said Dominic Scriven, director of Capital Markets Working Group of the latest Vietnam Business Forum said. According to representatives of businesses, there are many reasons affecting the confidence of investors in the economy in the first half of 2011. Besides the general difficulties of the world market, that is the inner turmoil of Vietnam’s economy, especially high inflation. According to Christopher Twomey, chair of (AmCham), Vietnam’s success in attracting foreign investment to date is mainly based on the expectations of investors on a background economic and political stability. However, since 2008, Vietnam has continually been facing the risks of inflation and the impact of the global financial crisis. However, Twomey also appreciated the efforts of the government of Vietnam in proposing and implementing solutions in Resolution 11, which focused on macroeconomic stability and inflation control. However, the representative of AmCham also said that authorities should have more of a long-term solution than to overcome the fundamental weakness of the economy. Another problem repeated by businesses in this forum was the story of transparency and administrative reform. Quoting the results of research in 2010 on the provincial competitiveness index (PCI), Alan Cany, Chair of the European Trade Association (EuroCham), the transparency is declining sharply in Vietnam when up to 75 percent FDI firms said “the relationship is very important to access the information of provincial levels.” Meanwhile, the pace of administrative procedure reform had signs of slowdown in 2010. EuroCham said many of its members continued to endure a long time of approval and a series of late approval when applying for business registration and investment licensing. However, EuroCham also appreciated the efforts of authorities of all levels to change this situation, especially the initial results of Project 30 on the reform of administrative procedures. This agency hopes the above scheme would soon be deployed for the next steps and soon come to life. One other complaint raised pretty much by businesses at the forum was the quality of infrastructure and energy supply. Eurocham calculated, in the period from now to 2020, Vietnam will need $160 billion to develop the technical and economic infrastructure (roads, bridges, power plants, water supply systems and water treatment waste…). Meanwhile, the sources of traditional investment from the State will be slowly reduced. Thus, over 50 percent of investment must be mobilised from domestic and foreign enterprises. Before that request, the business community suggested the government should adopt policies to encourage more public private partnership model (PPP), which had been conceived many years. Speaking at the forum, minister of Planning and Investment – Vo Hong Phuc appreciated the contributions from the business community. Phuc also acknowledged that although Vietnam has made certain achievements in the first months of this year, Vietnam’s economy still has many existing problems to solve. The government representative also wanted the business community to continue to make a legitimate contribution to help the state agencies to operate more realistically, to bring the economy to gradually return to stability, regain growth momentum.

Tags: Vietnam economic, Vietnam economic growth, Vietnam economy, Vietnam economy 2011

Posted by VBN on May 31 2011. Filed under Economy News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry