Continuing macro-economic risks is a main reason for the weakening of the Vietnam's competitiveness, discouraging foreign investors, said a local economist.
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| Vietnam’s macro-economic risks discourage foreign investors |
In 2008, Vietnam’s total registered FDI reached record high of USD64 billion, however, the figure sharply dropped to USD21.48 billion in 2009, USD18.6 billion in 2010, USD14.7 billion in 2011 and just USD8.47 billion in the first eight months of 2012.
Japan has been among the biggest investors in Vietnam over the past 20 years, however, now, many Japanese companies are also pessimistic about its investment climate when they are really sceptical about the future of the Vietnamese economy, Thanh said.
According to the economist, he recently had a meeting with Japan International Cooperation Agency (JICA) representatives discuss the Vietnamese business environment.
“JICA representatives raised concerns over Vietnam’s economic future. They are afraid that Japanese investors would move to other regional nations like Indonesia and Myanmar in the coming years,” Thanh said.
The Saigon Times cited Dang Xuan Quang Ly, Deputy Head of the Ministry of Planning and Investment’s Foreign Investment Agency, as saying that, the lower FDI could be attributed to the global economic downturn. He said that despite the decline in registered FDI decline, actual disbursement disbursement has stayed at levels equal to previous years. Between January and August this year, FDI disbursement is estimated at USD7.28 billion, equal to 99.7% of the 2011 figure. This year, total disbursed FDI is expected at USD11 billion.
However, Economist Dr. Nguyen Duc Thanh does not have such an optimistic viewpoint, specifying that “FDI inflow has continued coming to regional countries like Indonesia, Thailand, Malaysia or Myanmar, not Vietnam.”
Budget deficit to be higher than target
At the conference, Economist Dr. Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management (CIEM) said, Vietnam’s budget deficit would be higher than the set target for 2012, and the same would likely be the case next year.
“Between January and August this year, budget revenues fulfilled 56% of the target. The Government hopes this will be covered by around USD20 billion from increased petroleum prices, but petroleum prices often change,” he said.
Meanwhile, another difficulty for the economy is how to gain people’s trust in the banking system. “After the recent scandal of Asia Commercial Joint Stock Bank (ACB), people have been rushing to withdraw their deposits,” Thanh emphasised.