HCM City hosts Funds World Vietnam 2007

06 | 11 | 2007

This is the first time a Funds World Vietnam 2007 conference on foreign indirect investments among foreign funds straight in order to discuss issues relating to quality of investment environment and the method to control macro economy was held in HCM City on October 31 by Singapore’s Terrapinn Pte Ltd

Speaking at the conference, Dr Adam McCarty, Chief Economist from Mekong Economics Ltd in Vietnam said that Vietnam's infrastructure system such as roads and electricity has been over-capacitated and become barriers for the country's economic development.

Meanwhile, Phan Huu Thanh, head of the investment and planning ministry's Overseas Investment Department admitted that traffic jams have affected strongly to Vietnam's investment environment therefore Vietnamese government is giving priorities to solve the issue.

Regarding inflation, delegates agreed that Vietnam is paying too much attention to inflation while the issue is only a part of the growth process of a nation. Adam McCarthy added, he was very surprised when Vietnam targeted to reach inflation growth that must be lower than the economic growth. Why's that? In fact, Vietnam is controlling closely interest rates, forex rates in a bid to curb inflation. In his opinion, the Vietnamese government should not set targets and try to reach those targets by anyway. We should consider inflation to be only a predication that could be wrong, thus there is no need to curb it. The government should focus on one of key targets and the remainder depends on the market's development, he analysed.

Delegates also discussed on the overheating of Vietnam's real estate market at the moment. Last year US$4.8 billion in overseas remittance flew into Vietnam but the huge money amount without the government's control was invested freely in real estate market, which pushed up land prices.

At the conference, the question was raised how much foreign capital has been poured into Vietnam. But representatives from Vietnam's Ministry of Investment and Planning and State Securities Commission refused to answer the question whereas foreign delegates forecasted that there are now about US$4-5 billion waiting for disbursement between now and the year end.

However, Alex Hambly, managing director of Prudential Vietnam gave warnings that the foreign capital amount waiting for disbursement could create a bubble economic development. At present, Vietnam is being on a strong growth with "hot money" that is a type of money being transferred rapidly from the one to another. The money could be withdrawn as quickly as it had been brought in. Therefore, we could not prevent the appearance of short time profit earners that are strategic investors in the country due to highly potential risks of a bubble economy.

Foreign investment funds wondered how Vietnam would manage and control foreign capital inflows. Nguyen Thanh Long, vice head of SSC's securities trading management committee revealed that Vietnam has not yet any regulation to limit foreign indirect capital inflows although the capital flow contains many potential risks.

The Ministry of Finance is going to submit to the prime minister a draft regulation on the operation and rights of state agencies in case of discovering signs of risks, he said. However, the aim of the regulation is to prevent risks rather than correct errors.

Intellasia News Online

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