Attesting FDI Confidence in Vietnam

The study shows 71 percent of small and medium-sized enterprises (SMEs) in Vietnam are very confident about a higher GDP growth rate, 23 percent believe that the growth rate will not change while only 6 percent think growth will slow down in the next six months. The confidence of FDI enterprises in Vietnam is completely reasonable.

 

In fact, according to the results of the HSBC Small Business Confidence Monitor, business confidence among Vietnam’s small and medium-sized enterprises (SMEs) climbed 10 points in the fourth quarter 2009 to reach its highest point since the financial crisis hit in fourth quarter 2008 and topping the region confidence index. This fifth wave of the survey is the largest to date, capturing the views of more than 6,000 SMEs across 20 markets in Asia, the Middle East, Europe, North America and Latin America - the largest international survey of its kind.

 

The results shows that Vietnam tops Asia in the confidence survey with 160 points (on a 0-200 point scale), followed by India (132 points), China (124) and Singapore (117). Vietnam SMEs are also more confident when it comes to investing in their own businesses in the first quarter of 2010, as 66 percent are planning to increase capital expenditures, 32 percent say they will maintain current levels and only 1 percent are planning reductions. This means an increase in employment. Up to 54 percent of Vietnamese SMEs will start to hire again; 30 percent say they will increase staff up to 20 percent; 44 per cent will maintain their staff base in the next six months; and the number planning to reduce staff dropped down at 1 percent (compared with 3 percent in the second quarter of 2009).

 

In terms of local GDP growth, 71 percent of Vietnamese SMEs expect local GDP to increase, 23 percent expect growth to maintain the same and only six percent expect growth to slow down in the next six months. In the Middle East, 47 per cent of SMEs expect the pace of growth to increase, as do 41 per cent in each of China, India and Turkey. In France, only 11 per cent expect faster growth. When Vietnamese enterprises are confident and optimistic about the overall economic growth, it is not a surprise to see the solid trust of foreign companies in a country known for its political stability and rapid growth.

 

Vietnam is known as one of the most politically stable countries in the world and is completing its legal framework. Knowing its weaknesses in infrastructure, in the past 10 years, with the overall macroeconomic policy, Vietnam has actively invested in building and upgrading infrastructure and traffic systems across the country. Moreover, as the president of ASEAN in 2010, Vietnam is heightening its political status and economic position on the international arena. With an open economic policy, foreign businesses have highly appreciated the investment environment in Vietnam and come up with many positive economic growth forecasts. This is part of the foundation of growing foreign investor confidence in Vietnam.

 

According to Mr Jean Raphael Chaponniere, a leading expert in Southeast Asian economic studies, in spite of being hit by the global economic crisis, Vietnam is still very attractive to foreign investors, given the advantages of its economy like growing family spending and a young population.

 

In a recent survey conducted by A.T. Kearney, an international business consulting firm, Vietnam tops Southeast Asia in the FDI Confidence Index, followed by Indonesia, Malaysia and Singapore. Vietnam was 12th out of 80 nations covered by the FDI Confidence Index.

 

In 2010, Vietnam's economic growth is expected to be higher than in 2009. As an industrial production company in Vietnam, our goal is to expand production and increase sales. I also agree with the forecast of the Foreign Investment Agency under the Ministry of Planning and Investment that foreign direct investment in Vietnam will reach US$25 billion in 2010. However, the degree of disbursements will depend largely on efforts to accelerate administrative reform and upgrade infrastructure systems in Vietnam.

 

In 2010, on the back of global economic recovery, the Vietnamese economy will see positive changes. To attract more foreign investment capital into the manufacturing sector, Vietnam should improve the investment environment and focus on important matters like improving infrastructure (upgrading the stable power supply system, and developing port, road and airport systems), developing supporting industries with financial aid and building the education system, with priorities given to developing skills and knowledge for supporting industries.

 

With a good roadmap and priority policy to develop supporting industries, Vietnam will not only attract many foreign investors but also create sustainable development with adequate supporting industries in line with the goal of industrialisation and modernisation of the country by 2020.

 

In my opinion, investments of the private sector, including domestic and foreign, are indeed essential for the development of education and training in Vietnam. To attract foreign investment into the education sector, there should be a balance of quantity and quality. Investment opportunities in education and training in Vietnam are huge. Many funds are prioritising education and training investment but they underestimate the challenges to operate an education and training unit in Vietnam.

The main operating purpose of Apollo is to improve the quality of the Vietnamese education system. To strengthen the quality of the education system, it is crucial to enhance the quality of teachers and make a teaching career an attractive career choice for young generations. With current limited resources, it is very difficult to realise this.

 

Vietnam is a strategic investment destination of Tata Steel. Our Vietnam project, the US$5 billion Vung Ang steel complex in Vung Ang Economic Zone, is progressing more slowly than expected due to problems arising from land transfer. However, slow progress is not an unusual problem for giant projects.

With such a project, we need very careful preparations to build sustainable operations over at least 50 years. We appreciate the efforts and policies of the Vietnamese Government in macroeconomic management to mitigate impacts of the global economic crisis.

Unlike other countries in Asia, Vietnam withstood the economic crisis considered the worst in history. The Government of Vietnam should continue to act aggressively to strengthen economic development foundations. Vietnam needs to create favourable conditions to encourage the development of the manufacturing industry, driven by all domestic and foreign capital sources. This will help Vietnam diminish its reliance on imports and reduce the trade deficit. Besides, the country needs to expand its export markets globally instead of only to the west.

 

There are three bright spots in Vietnam's economic picture in 2009. First, the impact of the global financial crisis has underscored the recovery and competitiveness of Vietnamese exporters in comparison with other competitors. This proves that creating added value for exports is essential.

Second, the activeness and flexibility of the Vietnamese Government in launching fiscal stimulus packages, monetary policies and exchange rate policies have helped mitigate the impacts of the global economic crisis on the country. Third, domestic market expansion is attributed to the plausible economic growth of Vietnam in 2009. Some policies adopted by the Government of Vietnam may have short-term impacts but they have brought in very positive results, including placing Vietnam among only four countries with positive growth in 2009.

Global economies in 2010 continue to pose major challenges for governments, policymakers and business communities. Asia is forecast to grow 7 percent in 2010, compared with 4.5 percent in 2009. In this context, inflation is not a major problem for western countries, but a threat for emerging economies such as Vietnam as domestic demand expands and prices of goods soared. Hence, central banks need to continue with tightened monetary policies to rein in inflation.

 

Vietnam is an important investment destination for Malaysian investors and we see that Vietnam has spared no effort to reforming and opening its economy to the world. The year 2010 will mark a significant milestone in Gamuda’s history as we will put our US$2 billion Yen So Park into service, just in time for the millennial anniversary of Thang Long - Hanoi.

Despite difficulties in land clearance and compensation, with the support of the Hanoi government, the project is progressing very positively. Apart from wastewater treatment plants and green zones, we are also building a modern city in Yen So Park, south of Hanoi. In 2010, beside the Yen So park project, Gamuda is considering investments in other infrastructure and real estate projects in Vietnam.