A canned fish production line at KTCFOOD factory in Kien Giang Province. — VNA/VNS Photo Le Huy Hai

"We have preliminarily analysed how the Brexit influences the world and Viet Nam. The event is yet to have any significant impacts on Viet Nam," Minister of Planning and Investment Nguyen Chi Dung said during a dialogue on investment policies in Ha Noi yesterday.

According to Dung the UK and the EU are currently not very big partners in terms of trade and investment with Viet Nam. However, the Brexit will affect currency developments in many countries, including trade partners of Viet Nam, and thus affect the country in indirect ways.

Experts agreed with this point of view as they discussed the issue during an online talk held by investment forum BizLive yesterday.

Nguyen Mai Phuong, a director of analysis with brokerage firm VNDirect, pointed out that Viet Nam's trade revenues with the UK accounted for 3-4 per cent of Viet Nam's total foreign trade values.

The value of Vietnamese exports to the UK represented about 2.3 per cent of Viet Nam's gross domestic product, according to another director of analysis, Nguyen Duc Hung Linh, from Sai Gon Securities Inc.

Here are expert answers to some major questions discussed during the online round table: 

How will Brexit affect Viet Nam's finances and its foreign investment influx?

Vo Tri Thanh, the former deputy director of the Central Institute for Economic Management (CIEM), said Viet Nam might face disadvantages in the trade balance because of possible depreciations in the currencies of a number of its trade partners.

But appreciations in some other currencies, such as the Japanese yen, would help improve the competitiveness of Vietnamese exports.

"UK direct investments in Viet Nam are not too great, but capital flows pouring into Viet Nam via the UK are significant. These inflows may slow in the short term due to the UK and EU's struggling situation," he said.

"Capital flows will also seek ‘safe havens'. If Viet Nam can prove a more stable economy and a better business environment, investors may be more interested in its market. This will depend on macro-policy responses and reforms of the country," he added.

Le Dang Doanh, the former director of CIEM, said the announcement last week that the domestic stock market lost US$1.1 billion since the Brexit vote was quite a heavy loss.

Thanh said that because foreign investors play an important role in the local stock market, the loss is "understandable". After "overshooting" investors' reactions, the market is likely to reach a new balancing point that is based on global economic developments and reforms.

What should Vietnamese policymakers do now?

"Macro policies must be more flexible, although it is not always easy to choose between policy flexibility and economic stability. The co-ordination of monetary and fiscal policies needs special attention, and assuring discipline in State budget operations is necessary for effective monetary policies," said Thanh.

"The market is interested in the European Union – Viet Nam Free Trade Agreement (EVFTA), whose progress is likely to slow," said Can Van Luc, a member of the National Financial and Monetary Advisory Council.

The top priority of the EU and the UK now is to deal with Brexit consequences, so Viet Nam will have more time for legal reviews with the EVFTA. Viet Nam may also negotiate an FTA with the UK, according to Luc.

In the meantime, the banking and finance sector should intensify risk management. "The Government should establish a derivatives market and use it as a tool to manage risks," Luc said.

Banking expert Nguyen Tri Hieu said the State Bank of Viet Nam should closely observe fluctuations of the Chinese yuan for timely adjustments of the Vietnamese dong, since China is the largest import market of Viet Nam.

What is the future for the ASEAN Economic Community (AEC), which was just established late last year?

Huynh The Du, Director of the Fulbright Economic Training Programme, said there are big gaps between Southeast Asian nations in their economic development levels. "It will take a very long time for the AEC to become lively," he said.

Nguyen Mai, Chairman of the Viet Nam Association of Foreign Invested Enterprises, reportedly told the dialogue on investment policies that members of the ASEAN community will have to work to reach a consensus on economic policies, especially those related to the law, taxes and administrative mechanism.

"This is needed for the region to avoid a ‘Brexit ASEAN,'" he said.

Nguyen Bich Lam, the head of the General Statistics Office, reportedly told a press conference yesterday that it would review UK investment projects in Viet Nam.

This agency would assess possible changes in investment policies when the UK exits the EU, and scrutinise taxes applied for relevant import and export goods, he said. — VNS