Thu. Feb 22nd, 2024

VietNamNet Bridge – While Vietnamese businesses have been flocking abroad to
seek their investment opportunities, experts fear that the businesses are
gambling with their investments.


Vietnam, outward investment, MPI, SBV, foreign exchange ordinanceInternational
investment funds keep pouring money into Hoang Anh Gia Lai because they have
been attracted by the rubber, sugar cane and real estate projects Hoang Anh Gia
Lai are developing overseas

Making outward investments are a growing tendency among Vietnamese businesses in
recent years. A report of the Foreign Investment Agency, an arm of the Ministry
of Planning and Investment, showed that by December 20, 2012, Vietnamese had
registered 712 outward investment projects with the total registered capital of
$12.4 billion.

It is expected that $1-1.5 billion worth of outward investment would be
registered in 2013, while the implemented capital would be roughly $1 billion.
To date, Vietnam has invested in 60 countries and territories. In 2012 alone, 75
new projects were licensed with the total registered capital of $1.3 billion.

The hazardous gamble

In the report reviewing the 6-year implementation of the Foreign Exchange
Ordinance released in 2012, the State Bank of Vietnam expressed its worry about
the bleeding of foreign currencies because of the outward investments.

Vietnam’s foreign currency reserves remain modest, while it regularly witnesses
the trade balance deficit and the foreign currency supplies remain unstable,
which all have put a hard pressure on the dong/dollar exchange rate.

In such circumstances, the remittance of foreign currencies abroad to pour into
outward investment projects would make the supply-demand imbalance more serious.
If the investors fail with their outward investment projects, Vietnam would lose
big sums of foreign currencies.

Dr. Nguyen Van Thuan, Dean of the Finance Faculty of the HCM City Open
University, also said the management agencies have every reason to worry, when
they can see the big foreign currency outflows at this moment.

Thuan said there has been an inflow of foreign currencies to Vietnam. But the
money is just the short term capital depositing at banks under the names of
Vietnamese people. This is just the long term investment capital.

Meanwhile, foreign currencies have been remitted abroad by the Vietnamese
enterprises which make outward investment, and the foreign invested enterprises
in Vietnam which have been trying to evade tax by the transfer pricing.

In the ideal scenario, Vietnamese businesses bring foreign currencies outward to
inject in their projects there, make profit and remit profits back to Vietnam.
However, Thuan has warned that it would be very difficult to control the capital
flow, if they make investment in some countries and from which continue
investing in the second and subsequent countries

Thuan has suggested that the State Bank needs to tighten the control over the
cash outflow and thoroughly consider the outward investment projects when
licensing the investments. The State Bank needs to find out how the investors
operate in the domestic market, how is their financial capability and why do
they want to make outward investments.

Vietnamese businesses want to “go to the open sea”

“Going to the open sea” is the way Vietnamese use to talk about the high dreams
of making money in the world market.

Vietnamese businessmen feel that they need to try playing in the international
playing fields in order to earn more money. Hoang Anh Gia Lai Group’s Chair Doan
Nguyen Duc said he made a wise move when making investment in Cambodia and
Myanmar. If he had not done this, Hoang Anh Gia Lai would have fallen into big
difficulties because of the domestic economic difficulties and the frozen real
estate market.

Duc, the second richest Vietnamese stock millionaire, said international
investment funds keep pouring money into Hoang Anh Gia Lai because they have
been attracted by the rubber, sugar cane and real estate projects Hoang Anh Gia
Lai are developing overseas.


By vivian