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Investors say Vietnam still attractive   2008-06-03 - ThanhNienNews

Investors and businesses have expressed concern at the macro-economic situation but say the country still remains an attractive destination for foreign investment.

Ground being broken for a US$4.2-billion resort and casino complex by Canada’s Asian Coast Development Ltd. in Vung Tau last month.  



Speaking at the Vietnam Business Forum (VBF) in Hanoi Monday, Michael Pease, chairman of the American Chamber of Commerce in Vietnam, said, “It is safe to say that all of us gathered here today are only aware of spiraling costs and the negative effect that inflation is having on the business environment in Vietnam.”

“But this is not the time to point fingers and place the blame for the causes of Vietnam’s economic woes.”

In his opening address to the forum, Minister of Planning and Investment Vo Hong Phuc underlined the government’s commitment to stick with the reduced economic growth target of 7 percent as part of its package to curb the inflation and trade deficit.

The foreign business community suggested that Vietnam should focus on monetary issues, which the chairman of the European Chamber of Commerce termed “the root of the current inflation.”

Chairman Alain Cany said the government should not be tempted to reintroduce trade barriers in response to the economic slowdown.

The EuroCham official applauded the liquidity cut and talk of a 30 percent credit cap, but said “exporters must continue to have access to adequate credit at an appropriate price.”

Vu Duy Thai, chairman of the Hanoi Association of Industry and Commerce, cited a Harvard University study that found monetary supply increased by 135 percent between 2005 and 2007 but generated only 27 percent of GDP.

The Ministry of Finance estimates that 28 of 70 state-owned corporations hold shares in companies and securities firms worth VND23.344 trillion (US$1.45 billion), he said.

Echoing what many legislators have said in the past month, he said the ineffective use of capital drove inflation “rather than the loose monetary policy alone” as the government claimed.

Pease said a significant concern to US businesses in Vietnam is wage inflation.

“Reforms to allow greater access to overseas skills will not only reduce inflation in this area but increase the learning base and technology transfer into Vietnam,” Pease said.

Just like at the previous VBF forum, the foreign business community criticized the legal constraints on foreign business despite the country’s accession to the WTO.

Glen Reinsch, chairman of the Australian Chamber of Commerce in Vietnam, said its members have expressed concern about import tariff policies.

He warned that “significant tariff changes and uncertainty over particular tariff treatment” could jeopardize investor confidence.

Reinsch said other issues that could hinder foreign businesses’ activities include access to land and issue of work visas for staff.

According to the European Chamber of Commerce, Vietnam’s delay in opening up some sectors could be detrimental to its economy.

For instance, Cany said, though the government has agreed to allow 100 foreign-owned pharmaceutical companies to operate by January 1, 2009, it has been slow in spelling out regulations and other details.

The forum, organized semi-annually by the Ministry of Planning and Investment, World Bank and International Finance Corporation, brought together representatives from local and foreign business associations and Vietnamese government officials.

It also leads up to the 16th Consultative Group Meeting for Vietnam to be held in Sa Pa this week.

International donors pledged a record $5 billion aid to Vietnam at the previous meeting in Hanoi.

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