Future of development brightens with FDI

CA - This week the HCM City People’s Committee is expected to license a massive urban project by Berjaya Malaysia’s Land Berhad. The property developer will pour US$3.5 billion into the 880-ha Viet Nam International University Township in Cu Chi District.

This is set to give a strong boost to the prediction by Phan Huu Thang, head of the Foreign Investment Agency, that FDI is likely to outpace the $35 billion target for the second half of the year.

The figure for the first six months was $31.6 billion, a 3.7-fold increase compared with the same period last year, showing, according to Thang, that confidence in the Viet Nam development sector is intact.

"The FDI increase in the context of Viet Nam’s supposed economic difficulties proves foreign investors’ great confidence in the business environment," he noted.

An encouraging factor has been that work began on many major projects immediately after being licensed, with almost $5 billion being disbursed to date, the largest amount for the period ever. The disbursement figure for the whole year is expected to top $12 billion.

But one problem for investors is finding quality human resources, especially for big projects that require thousands of workers. Thang said this also requires building housing and recruiting workers before building factories.

"We found it to be the new trend and went to Shenzhen, China, to learn about its. In case of projects of around $10 billion, housing for workers and necessary infrastructure would be developed in the form of a small town."

This model is likely to be applied in Viet Nam for large projects, especially those by investors from the Middle East.

Securities management

The Government announced new regulations last week to improve management of the securities market to ensure sustainable growth.

It said companies have to register their initial public offerings with the State Securities Commission (SSC), failing which they will be cancelled and the issuers fined.

Institutions planning private placement to increase their charter capital must register with other agencies – the State Bank in case of joint stock banks and financial joint stock companies, and the Ministry of Finance in case of joint stock insurers.

The SSC will oversee private placements by public firms and securities joint stock companies, and planning and investment departments in cities and provinces will be in charge of other businesses. Public companies are joint stock companies with a charter capital of VND10 billion and above.

Enterprises without a legal status in the country will not be allowed to issue shares, except cases that fall under Viet Nam’s international commitment.

Public companies including listed ones are required to be audited, make public disclosures, and follow corporate governance norms as stipulated by the Securities Law and other regulations.

Institutions and individuals are banned from organising unauthorised securities trading.

Release of information, sales and purchases of stakes, and prices appearing in the media must all conform to regulations.

Under the Government’s instructions, the Ministry of Finance will assist the SSC to draft a plan this year to sell shares in public companies.

State-owned enterprises are prohibited from contributing to the establishment or buying shares of investment funds or securities companies.

Any participation in the stock market by them must not create any negative impact on their production or business activities.

Last week the VN Index increase rose on all five days, gaining a total of almost 27 points. Is this the effect of the Government’s move?

Inflation control successes

The Government’s efforts to control inflation appear to be working, with the price pressure showing signs of easing.

The June consumer price index (CPI) was up 2.14 per cent month-on-month, compared to 3.92 per cent in May, and officials and experts project the slowdown to continue in July and the rest of the year.

In the commodity basket for calculating CPI, food and foodstuff prices, however, increased 4.29 per cent in June compared to 2.19 per cent in May.

Nguyen Minh Phong, head of research at the Ha Noi Institute for Socio-Economic Development Studies, thinks the inflation may come down to 1.5 per cent in July. But there may not be a sharp decline because global commodity and oil prices are still in an upward trend.

Deputy Minister of Planning and Investment Cao Viet Sinh expects the price rise to slow down in the coming months since the second half is usually not the high season for imports.

Without giving specific numbers, he said pressure on food prices would reduce with the bumper crop that is being harvested.

The commitment by the Government to control prices of certain essential commodities and services until the end of the year would also help, he said.