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Vietnam’s economic slowdown is opportunity for foreign investors
Representatives of foreign groups stated they don’t plan to withdraw from Vietnam, ignoring worries about inflation and credit risks.
Many Vietnamese and foreign firms are complaining of too high interest rates from the banking systems.
“The biggest difficulty for direct investors is the high increase of interest rate when many companies need capital,” said Sohn Seung Ho, Director of the Export Import Bank of Korea (Kexim) in Asia.
However, Tharabodee Adichaiwit, Vice President and Manager of the Bangkok Bank’s HCM City Branch stated that this is an opportunity for Thai and foreign companies to invest in production in Vietnam for export.
Investing in infrastructure development or in building hotels and hospitals in Vietnam is also seen as lucrative.
In the past 20 years, Vietnam attracted nearly $130 billion of foreign direct investment (FDI). Leading investors in the country are South Korea, Singapore, Taiwan, etc.
In the first half of 2008, foreign investors committed to invest $31.6 billion in Vietnam.
Tharabodee Adichaiwit confirmed that despite high inflation, the land leasing fees at industrial zones in Vietnam are reasonable and the labour cost (average monthly salary for Vietnamese workers is around $60) is competitive to other countries in the region.
Moreover, political and social stability and other business expenditures standing at low levels are factors that attract foreign investors. A leader of Posco Group (South Korea) said: “We see the current difficulties (of Vietnam) are temporary”.
To reduce economic growth rate and control inflation, the basic interest rate of the banking system was raised from 8.25% to 14%.
Tharabodee Adichaiwit said in this situation, foreign firms in Vietnam can take advantage of loans from other countries to cut financial burdens, for example the current interest rates in Thailand standing at 4-5%.
He said when the VND devaluates by around 10% this year and the Vietnamese Government exerts its effort to stabilize the exchange rate, exchange rate risk is diminished and foreign companies that export commodities will benefit largely.
VNN
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