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Investments overseas on the rise

Released at: 15:43, 15/07/2015

Investments overseas on the rise

Vietnam's private sector has joined its State corporations in investing in many countries around the world.

by Quynh Nguyen-Doan Tran

Investments overseas by Vietnamese enterprises are increasing in number, not only by State corporations but also by the country’s private sector. More and more Vietnamese giants are expanding to other countries and promoting Vietnamese brands.

According to Professor Nguyen Mai, former Deputy Chairman of the State Committee for Cooperation and Investment, Vietnam has now become stronger. “From a country that only received investment, Vietnam now has reached a stage where it invests internationally,” he said.

Making an impression

Private organizations and individuals in Vietnam have not only grown rapidly in recent times in traditional markets but also in Latin America, Africa, and Europe. They haven’t just focused on sectors where Vietnam has strengths, such as agriculture, processing and manufacturing, but also in financial services, banking and aviation.

Overall, investments overseas by Vietnamese enterprises are now more diverse than previously in both markets and investment sectors. Apart from State enterprises such as Viettel, Vinamilk, and some subsidiaries of the Vietnam Rubber Group and banks with State capital, investment flows from the private sector, especially by individuals and small and medium-sized enterprises, are continually increasing.

According to figures from the Ministry of Planning and Investment (MPI), in 2014 there were 109 Vietnamese projects in 28 countries and territories with total capital of $19.78 billion. Of these, 12.5 per cent were from individuals and 76 per cent were private and other investments. FPT, the Hoa Sen Group, and the Kymdan Rubber Stock Company are among the private enterprises promoting their investments overseas in recent times.

This year MPI recognized 962 investment projects overseas with total registered capital of $15 billion. There were also 115 projects that increased their capital, by a total of $5 billion. Besides traditional markets such as Laos and Cambodia, many Vietnamese private enterprises have also invested in other countries such as Russia, with 18 projects and total investment of $968 million, Venezuela with two projects and total investment of $1.8 billion, and Peru, with six projects and total investment of $1.3 billion.

Risks ahead

Investments overseas not only help Vietnamese enterprises expand their markets but also create opportunities to access modern science and technology, thereby enhancing competitiveness, according to Mr. Bui Duc Thu, Member of the National Assembly’s Finance and Budget Committee. “Investment flows overseas show the growth of Vietnam’s economy and contribute to strengthening political relations with those countries,” he added.

He also said that although there are many opportunities from participating in global value chains, private enterprises investing in other countries will also face a lot of risks due to any volatility in the investment environment that makes business operations become inefficient.

Some businesses said they face a lot of difficulties when land rents increase significantly or when there are differences in management policies and procedures for investment. Meanwhile, the efforts of State agencies overseas such as embassies, general consulates and trade offices are not overly effective, especially in supporting investments.

As a result, Mr. Thu recommended that State management agencies pay greater attention to providing information on the host country’s investment environment and protecting the rights of enterprises when they invest in the country.

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