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New policies needed to increase investor trust among investors

Update: February, 17/2012 - 09:57

by Quynh Hoa

 

Crossing the Tau Hu-Ben Nghe Canal, the Calmette Bridge is one of HCM City's major infrastructure projects. — VNA/VNS Photo Kim Phuong
HCM CITY — Viet Nam needs to develop specific policies and measures that will increase investors' trust, economists said at a Super Investors Day held yesterday in HCM City.

The event attracted the participation of renowned entrepreneurs and economists to discuss macro-economic issues, investment opportunities and financial investment channels for 2012.

Nguyen Tan Thang, an economist at the HCM City Securities Corporation, said: "Viet Nam needs to stabilise the macro-economy in the long term, be consistent in policies, and create a healthy investment environment."

The country should continue to restructure its banking system so that it could deal with bad debts, he added.

Banks with weak financial health and poor management capacity should be disbanded or merged with healthier banks.

Bank liquidity would need to be improved and credit growth in the non-production sector should be limited.

"Improved liquidity is a prerequisite to revitalise the stock market," he said.

The absence of standards for releasing financial statement information has led to a lack of transparency and information about stocks in Viet Nam over the past few years, according to Thang.

As a result, companies and investors have become skeptical about the market. Companies continue to insist on listing their shares despite their weak management and lack of transparency.

Alan Phan, chairman of Viasa Fund Ltd., said that other investment channels such as gold were a good defensive channel but not particularly safe.

Investing in property, for example, depends on consumer's income, economic situation and interest rates.

Foreign currency investment is safer and more profitable.

Speaking at the event, Dang Doan Kien, representative chief of Aureos Capital Viet Nam, pointed out that M&A (mergers and acquisitions) was a popular activity to develop economies. M&A activity in Viet Nam is expected to increase sharply this year and in the future.

Recent volatility in the market has directed major investors to M&A, a new investment channel.

Under this type of investment channel, corporate infrastructure, basic technology systems and personnel are ready to use.

Investors do not have to spend time training staff or wait for the completion of construction of infrastructure to do business and begin production.

They do not have to build up their brand from the start, and the customer base and networks are already available for development.

According to research from the Nexus Group, for the first nine months of last year, the value of M&A deals in Viet Nam was recorded at $2.67 billion, an increase of 150 per cent compared to 12 months in 2010.

Consumer goods, finance and property topped the list of sectors which saw high M&A activities.

Le Thanh An, the United States consul general in HCM City, said that Viet Nam's macro-economy still faced obstacles, including inflation of 20 per cent. It needed investment strategies for the medium – and long-term.

US investors want to cooperate with Vietnamese partners in trade and investment, franchising, energy, infrastructure, and in the education and health sectors.

Difficult year

Leading economist Le Dang Doanh said according to the International Monetary Fund's forecast in January, the world economy would have a slow growth rate this year.

In the first two quarters of this year, the Vietnamese economy would have a difficult period, especially for exports to Europe.

Germany, the most stable economy in the European region, would see a growth rate of only 0.4 per cent this year, according to the Organisation for Economic Cooperation and Development.

Doanh said this year would be a difficult one for Vietnamese exports. In January, export turnover fell by 28.5 per cent compared to December last year and 11.1 per cent compared to January 2011.

Viet Nam recorded a low growth rate in January. It managed to have foreign-direct investment (FDI) worth $37.3 million, only 2.5 per cent of the figure recorded last year.

New registered enterprises fell 36 per cent in number and 56 per cent in capital volume compared to the same period last year.

"The Government aims to keep this year's inflation in single digits. However, it's a very positive sign if inflation drops to 12 per cent," he said.

He said Viet Nam should seek new export markets, such as South America and the Middle East.

"However, we also need to set a firm foothold in the domestic market, especially in rural areas for sectors such as footwear and furniture, which may see a decrease in exports," he said.

Economic restructuring is a must, offering opportunities as well as many challenges. State-owned enterprises are being compelled to slash their financial expenses by 5 per cent.

"This restructuring has occurred not only in banking and investment but also in the Government apparatus and State-run bodies, and Government's policies in particular," he noted.

For increasing efficiency of foreign investment, investors should disburse more registered capital, he said.

Agencies as well as investors should also resolve problems related to issuing of licenses and site clearance, Doanh added.

The event was co-organised by Entrepreneur Magazine in collaboration with Vinabull, Le Bros Company and Info TV Channel. — VNS

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