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Investors to reap higher gains in VN

Update: October, 18/2013 - 08:36
Export value was US$95 billion and the figure is expected to reach $129 billion by the year-end, up 12.6 per cent from 2012.1— File Photo

HCM CITY (VNS)— Viet Nam will in the long term offer higher returns to foreign investors, given the positive prospects of its economy, the recovery of the global economy and the Government determination to restore investor confidence.

The statement was made by Deputy Prime Minister Hoang Trung Hai yesterday at a conference in HCM City.

Hai said the Government has designed a series of solutions to address challenges with top priority given to the stability of the macro-economy, a reasonable growth rate, inflation control, production acceleration and improvement of State management efficiency.

"We have achieved positive results in the first nine months of this year," he told participants at the VinaCapital Investor Conference.

The country posted GDP growth of 5.54 per cent for the third quarter, up from the second quarter's 5 per cent and the first quarter's 4.76 per cent.

This year's rate is expected to stand at 5.4 per cent, and is hoped to rise to 5.8 per cent next year.

"Interest rates have continued to fall while credit growth saw signs of improvement," he said.

Businesses, though, are still faced difficulties, but are recovering, he noted.

Export value was US$95 billion and the figure is expected to reach $129 billion by the year-end, up 12.6 per cent from 2012.

The registered capital of foreign direct investment was $15 billion, up by more than 36 per cent over the same period last year.

He said the country would continue its economic restructuring with a focus on completing the market economy mechanism; creating a fair competition environment; and improving administrative reform.

Rapid human resource development, especially highly skilled staff, and infrastructure development, are also priorities.

Economic restructuring, with an emphasis on public investment, the banking system and State-owned enterprises, will be linked to sustainable growth.

As for handling bad debts, the Viet Nam Asset Management Company has been yielding positive results.

The deputy prime minister also promised a new legal framework to allow participation by foreign investors.

Beginning in 2014, the corporate income tax will be lowered to 22 per cent from the current 25 per cent, and in some special cases the rate will fall further to 20 per cent.

Further efforts will be made to tackle investors' difficulties, he said.

Andy Ho, managing director and investment head of VinaCapital, said the investment opportunity has potential and the investment window will open if signs of stability return, such as stronger GDP growth, declining interest rates and improved credit growth.

If this occurred, it would help business expansion and the resolution of non-performing loans.

He also cited a P/E (price to earning) ratio of around 12-13, while elsewhere in Southeast Asia it stands between 16 and 20.

"Top companies in defensive sectors like consumer goods, healthcare and agriculture continue to produce good earnings growth," he said.

He added even with the banking sector in difficulty, investment opportunities are created due to low prices, citing VinaCapital's investment in commercial banks like Eximbank and Military Bank.

VinaCapital manages $1.5 billion in three funds listed with the London Stock Exchange (Alternative Investment Market), VinaCapital Vietnam Opportunity Fund, VinaLand, Vietnam Infrastructure, and another unlisted one, the DFJ VinaCapital L.P.

During the one-day conference, investors were introduced to several topics including the country's real estate and securities markets, infrastructure development in HCM City and opportunities in Myanmar. — VNS

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