VN embracing integration

Friday, Oct 16, 2015 09:00

Tien Phong Plastic Joint Stock Company provides local market with tonnes of plastic products every month. — VNA/VNS Photo Hoang Hung

HCM CITY (Biz Hub) — Viet Nam has been integrating robustly into the global economy, with eight free trade agreements it has signed and the Trans Pacific Partnership (TPP) negotiation it concluded recently opening up new economic opportunities for it as well as for foreign investors.

Deputy Minister of Finance Truong Chi Trung told participants at an annual investor conference held by investment management and real estate firm VinaCapital in HCM City yesterday that the country's investment environment is improving.

"We are perfecting our market economic system, with a focus on the legal framework, administrative procedures, human resources, and infrastructure, and expect to reach the ASEAN-4 average level in terms of business environment, which includes taxation, customs, and social insurance.

"Viet Nam is carrying out investment reforms to enable domestic and international investors to participate in infrastructure projects, and a list of projects in transport infrastructure, energy, water supply, and wastewater treatment seeking investment in the form of private-public partnership (PPP) will be released.

"Restructure of State-owned groups and corporations is speeding up, more SoEs will go public and list on the stock market, offering foreign investors the opportunity to participate in IPOs and mergers and acquisitions as well as invest in listed companies."

The banking sector had been made over, with 17 banks being whittled down to six to improve their financial capacity and governance, he said.

But he expressed concern about the small size of the stock market – with market cap being just 30 per cent of GDP – compared to others in the region.

He said the solutions lie in mandating that equitising SoEs should list on the stock market and increase the foreign ownership cap in companies.

The legal foundation required for creating voluntary pension funds would be developed, he said. Pension funds are major investors in securities globally.

Andy Ho, managing director of VinaCapital, said Viet Nam would benefit from the TPP with taxes cut on 18,000 items.

TPP member countries account for 39 per cent of Viet Nam's exports and 22 per cent of its imports.

Ho said low inflation (1.5-2 per cent expected for this year), stable GDP growth – 6.8 per cent in the third quarter and 6 – 6.5 per cent for 2015 – burgeoning FDI, quickly recovering property market and the devaluation of the dong were all positives for the investment environment.

Investors are showing less interest in "safe" assets and are shifting to securities and real estate, he said.

VinaCapital, founded in 2003, manages US$1.3 billion in assets. Its closed-end funds VinaCapital Vietnam Opportunity Fund, VinaLand, and Vietnam Infrastructure trade on the AIM Market at the London Stock Exchange. —VNS

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