Vietnam should better manage foreign indirect investment inflows, if not the country will face financial risks, said Tran Bac Ha, chairman of the Bank for Investment and Development of Vietnam (BIDV).
“Management of foreign indirect investment (FII) is a big issue. If Vietnam cannot manage synchronously and flexibly, its financial market will be at risk ahead tremendous upheavals,” Ha said at the meeting with PM Nguyen Tan Dung and corporations to seek anti-inflation measure April 2.
Although the State Securities Commission has confirmed no bad signal about FII inflows, the global financial institutions are cutting capital limit for risky countries and hedge funds of the U.S have withdrawn money home from several markets to deal with losses, he said.
Several securities companies had also predictions about the foreign investors’ withdrawals of indirect investment and OTC last week.
“Vietnam needs to monitor movements of capital accounts and capital market timely and strongly, and increase foreign currency reserves big enough to avoid shocks in case of upheavals,” Ha said.
The government should manage direct and indirect investment inflows by supervising projects of new investment, additional investment and foreign direct investment, and concerned agencies should build mechanisms on management to analyze, evaluate and forecast about foreign investment inflows.
“Wider trade deficit and state budget is exposing great risks, especially if the world financial markets continue to be unstable or foreign investment inflows are withdrawn,” he said.
The government should have measures to closer link monetary policy to fiscal policy, widen forex trading band to 1.5 per cent-2 per cent and well maintain national foreign currency reserve fund.
Vietnam’s biggest concern is inflation. Therefore, the country can attract long-term investors if it can curb inflation, BIDV official said.
He criticized that there is a loose cooperation between the Ministry of Planning and Investment, the State Bank of Vietnam and the Ministry of Finance. These three agencies should be closer linked to make synchronous monetary to fiscal policies. (Saigon Economic Times)
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