Vietnam will continue to attract foreign investment after the crisis in the securities market thanks to its high economic growth, the Asian Development Bank has said.
If anything distinguished newly-emerging Asia from the rest of the world it was the region’s strong macro-fundamentals, Iwan Azis, head of the bank\'s Office of Regional Economic Integration. said in a report titled "Asia Capital Markets Monitor."
The current crisis in the global financial market would not stop the flow of investments in the medium term to the 11 emerging Asian economies, namely China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.
Along with the strict control of the financial market and foreign exchange reserves, the Asian region also had surplus reserves and liquidity after the Asian financial crisis in 1997. Therefore, there were many financial tools to attract investors.
The region\'s economies grew a composite 9.2 percent in 2010, and were forecast to grow 7.7 percent this year, and 7.6 percent in 2012.
However, the region\'s exports to traditional markets such as the US and Europe would decrease and policymakers needed to develop tools to deal with volatile capital flows that could lead to boom and bust cycles.
To cope with instability in the US and euro zone, drastic measures were needed to win investor trust and reduce strong fluctuations.
Analysts see Vietnam as being more vulnerable than its neighbors to seismic shifts in investor sentiment given its weaker external accounts position. But to its advantage it is not as exposed to short-term flows, or hot money, that can be quickly withdrawn.
Countries like South Korea and Indonesia that have attracted large investments in stocks and bonds could feel the pinch of foreign withdrawals more sharply than others, even though their longer-term fundamentals remain favorable.
