Focus on "easy' markets first

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No need to curb investments abroad by Vietnamese firms


A tuk-tuk rides past a large advertising poster featuring investment fields by Vietnam's group Hoang Anh Gia Lai in the Laos capital Vientiane. Laos and Cambodia are two markets that are easy for Vietnamese firms to invest in, an expert says.

As of February, Vietnamese firms had invested in 575 projects in 55 countries and territories with a combined registered capital of US$23.7 billion, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

Vietnamese firms should not spread their investments too much and restrict it to a few foreign countries, Nguyen Mai, former vice chairman of the State Commission for Cooperation and Investment, told Thanh Nien Weekly. While Laos and Cambodia are countries firms can invest in easily, Venezuela and Russia are also good destinations, he said.

Thanh Nien Weekly: The number of projects Vietnamese firms have invested in abroad has increased in recent years. How do you assess the trend?

Nguyen Mai: From trying to lure foreign investment, we now have the capacity to invest abroad. That is progress. Some Vietnamese firms have been successful with their investments abroad. Viettel is a good example. The firm has shown a very good investment strategy. With attractive prices for poor people, it has expanded its market in Cambodia from cities to remote areas. It has become the second biggest telecommunication service provider in Cambodia.

In the first four months of this year, registered investment by Vietnamese firms abroad was estimated at $1.5-1.6 billion, and their disbursed investment at over $100 million. This is heartening progress for a country which used to receive foreign investment only. We now have investments in Peru, Russia, South Korea and Singapore.

Some people say that expanding investment abroad will negatively affect the balance of payments as well as job generation in the domestic market, so it is necessary to hold back. What do you think?

In theory, investment abroad means capital export and labor export. That investment, if used in the domestic market, could help generate jobs in the domestic market. Thus, in the aftermath of the recent economic crisis, even rich countries like the US reduced investment abroad to cope with unemployment. Job generation is very important to every country in an economic crisis.

We need capital for investing in the domestic market.

If we invested abroad impetuously without strict controls, the country's need for capital would not be met, affecting our ability to meet socio-economic development goals.

Firms must guarantee proper profits from their investments abroad, and they have to repatriate these. Thus, the issue now is not to limit investments abroad, but to encourage and strengthen surveillance over the investments to secure our country's interest.

Some people could make the corrupt use of investment abroad to launder money, so it should be strictly monitored. It is necessary to guarantee forex balance in investments abroad. When facing strains in the foreign currency supply, we should not allow ill-considered investments abroad.

Between 1989 and 2010, the profits repatriated from Vietnamese investments abroad amounted to just $39 million. Why is this figure so low?

When Viettel invested in Cambodia, it only started earning profit after several years of doing business there. Then, it had to use its profits to expand investment there. Other firms also act in similar fashion. They send home profits only after their business begins to grow.

However, the government should strengthen surveillance. As of now, we do not have a system to monitor firms doing business abroad. After licensing, we let them do what they want abroad without any restrictions. Other countries strictly monitor their firms abroad.

In the surveillance of investment abroad, what should we focus on?

It is not difficult to monitor investment abroad. We should do it by monitoring firms' money transferring via the banking system, and the license issued by the Ministry of Planning and Investment the sole agency authorized to do so. The key is not to ban, or limit investment abroad, but to instruct investors, so they can earn profits abroad and send them home.

Which foreign markets and fields should Vietnamese investors tap in the coming time?

It is difficult to say which fields we should invest in. We cannot decide the fields we will invest in abroad. The host countries will decide who will invest or which fields they will receive investment in. We have to focus on how our investments abroad can generate higher profits.

At the moment, there is no state agency monitoring the effectiveness of our investments abroad. Nobody knows how much profit our investors abroad earn, and how much they send home to offset the forex balance and contribute capital to the domestic market. This is the most important aspect.

Now, Laos and Cambodia are two markets that are easy for Vietnamese firms to invest in. We shouldn't think they are small markets. Our firms have limited capital resources, so they should do business that suits their financial capacity.

In addition, Venezuela, which has good relations with Vietnam, and traditional markets such as Russia, which has many Vietnamese workers, are very good markets for local investors.

Vietnamese firms should focus their investment into a few markets first and expand only after doing well in them. 

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