Foreign investors fret about Vietnam economic stability

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Foreign companies are concerned about Vietnam's economic instability, making them wary of expanding in the country, a survey released last week has found.

Only 33 percent of the 1,540 foreign companies polled by the Vietnam Chamber of Commerce and Industry said they plan to expand production and business in the next two years, much lower than the 46 percent who said so in 2011 and 69 percent in 2010.

Forty eight percent of the respondents said they are worried about macroeconomic instability, with 36 percent saying it is the biggest risk to their operations in the country.

Only 60 percent of the foreign companies interviewed made profits in 2012 compared to 82 percent in 2007, while 21 percent suffered losses.

Many are not optimistic about their prospects in Vietnam, lowering the provincial competitiveness index (PCI) last year. No province or city reached 65 points to be assessed very competitive.

Dong Thap Province in the Mekong Delta topped the PCI, followed by neighboring An Giang. Ho Chi Minh City moved up to 13th from 20th in the previous survey, but Hanoi slumped 15 places to 51st.

The PCI, designed to assess the performance, capacity, and willingness of provincial governments to develop a business-friendly environment for the private sector, is based on nine criteria, including fees for firms' market participation, their access to land, transparency, support services, workers' training, and corruption levels.

The survey, which also polled 6,513 local firms, said minor corruption was down but that related to public tenders had worsened. Forty two percent of the firms said they had to pay bribes to state agencies last year to win contracts, up from 23 percent the previous year.


Hanoi falls 17 places in Vietnam provincial competitiveness survey

The construction sector had the largest number of businesses paying bribes -- 42.5 percent, according to the report. It was followed by services and trading at 35.4 percent, nearly half higher than in 2011.

Dau Anh Tuan, deputy head of the VCCI's Legal Department, said, "Firms that gave bribes seemed to cope with the economic difficulties better than others."

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