VietnamNewsToday.com

Vietnam shocks could put damper on foreign investment

Exchange rate shocks in Vietnam, and the economic imbalances that led to them, could cause U.S. companies to rethink investments there, an official with the U.S.-Asean Business Council said.

U.S. firms doing business in Asia are able to manage exchange rate fluctuations that aren’t extreme, said Marc Mealy, vice president of the trade group. But a string of devaluations of the Vietnamese dong and the government’s tenuous control of inflation may lead firms to think twice, he said.

“Because of the challenges Vietnam has had in getting their hands around these issues, it would seem to have an impact when companies assess expanding their business in the Vietnamese market,” Mealy told Dow Jones Newswires.

He said he didn’t know of specific examples of firms putting investments on hold. The interview was on the sidelines of the annual meeting of finance ministers of the Association of Southeast Asian Nations.

Vietnam in February devalued the dong by 8.5% against the U.S. dollar, seeking in part to narrow chronic trade deficits that have depleted its foreign currency reserves.

The move was praised by some economists as necessary to correct economic imbalances — but it risks exacerbating inflation.

A sharply weaker dong raises input prices for firms that manufacture in Vietnam. Meanwhile, the country’s low foreign currency reserves, which the devaluation attempts to address, could pose a headache for firms to the extent that Vietnam is unable to guarantee import payments.

“In some ways, Vietnam is quite an attractive place to do business right now,” Mealy said, citing the economy’s red-hot growth in recent quarters. “But it isn’t Singapore, and it’s not Malaysia, countries which have stronger institutions and are in a better position to manage these kinds of externalities.”

The business council group promotes expanded U.S. trade and investment with Southeast Asian nations. It counts many of the largest U.S. multinational firms among its members, including Coca-Cola Inc., Chevron and Ford Motor Company.

Mealy said a proposal from some Asean countries, discussed in this week’s meetings, to pursue linkages among their home stock exchanges could be a boon for U.S. financial services firms.

He said Southeast Asia will remain a hot destination for U.S. investment, even as economic growth in the region is projected to cool from the past couple of years.

“Even with Asean and Asia cooling down to 7 or 8 percent annual growth, multinational companies will recognize that this is still where the growth is,” Mealy said.

From DowJones

Newer Articles
  • Adb: policy tightening will lower inflation
  • HSBC, Barclays to advise Vietinbank’s planned overseas dollar bond sale
  • Vietnam govt to service debt for troubled cement projects
  • Calm heads prevail as the forex market to remain cool
  • Further fiscal & monetary tightening in coming months
  • IMF cuts Vietnam’s inflation forecast to 9.5pct in 2011
  • Vietnam’s dong has best week since 1997 after dollar rates curb
  • Vietnam tightens control over state-bank partnership
  • Foreign investors list problems in Vietnam
  • Foreign invested enterprises complain about customs procedures
Older Articles
  • Vietnam’s credit growth above 5pct in Q1
  • Economic recessions always leave aftershocks on consumers: expert
  • Vietnam’s real GDP growth may reach 6.3 pct: American magazine
  • Vietnam hikes key rates in inflation fight, more moves seen
  • Vietnam Dong edges up in black market, steady at banks – Feb 28
  • Feb 9: Vietnam gold flirts VND36Mln/tael, Dollar down
  • Petro Vietnam to stabilize fertilizer market
  • Vietnam to regulate fiscal policy more actively and closely
  • Vietnam forex reserves above $10Bln in 2010
  • Current regulations hinder business associations
Latest News
  • Vietnamese software firms consider Japan as the major market
  • Despite problems, 2011 FDI spending equals 2010
  • EVNTelecom asks for government’s approval to sell 12pct stake for VTC
  • Vietnamese enterprises expanding into international markets
  • Ernst & Young Vietnam role to be examined
  • Vietnamese firms invest over $24.5b in foreign countries as of July-end
  • Vietnam Insurance Market: Keeping Double-digit Growth
  • Vietnam’s economy looks grim with ADB’s forecast
  • Ministry rejects import-export tax changes
  • Government okays anti-dumping suit against US
For Foreigners
  • Adb: policy tightening will lower inflation
  • HSBC, Barclays to advise Vietinbank’s planned overseas dollar bond sale
  • Vietnam govt to service debt for troubled cement projects
  • Calm heads prevail as the forex market to remain cool
  • Further fiscal & monetary tightening in coming months
  • IMF cuts Vietnam’s inflation forecast to 9.5pct in 2011
  • Vietnam’s dong has best week since 1997 after dollar rates curb
  • Vietnam tightens control over state-bank partnership
  • Foreign investors list problems in Vietnam
  • Foreign invested enterprises complain about customs procedures

BusinessTradeVietnamGovernmentFDIWorld economyVietnamese PartyEconomyEconomicMarketState managementPrime MinisterHCM cityHanoiHo Chi MinhCPIAsianWorldAmericaEuropeNguyen Tan DungHau GiangMekong DeltariceStandingMekongCambodiausajapanchinakoreaLai ChauHoa BinhHoi AnChu LaiQuang NamDa nangCan thoSon LaPower PlantMinistry of IndustryDung QuatOilSingaporeThailandMalaysiaIndonesiaLaosVietnameseFDI capitalinvestorsforeign investorNetherlandsUSservicetransportationinfrastructuretourismVNPostExpressSpainGoldTra fishexportcontractstouristMiddle AreaConstructionShipbuildingIndustryCompanyIndustrial ZonebudgetDong NaiBinh DuongVung TauTay NinhBinh PhuocTay NinhLong AnTien GiangUS investorshydropower plantQuang NinhNha TrangStock ExchangeHNXIndexcapitalAgricultureDong ThapAn GiangExport-Processing ZoneYen BaiLao CaiLai ChauDien BienSon LaHoa BinhPhu ThoHa GiangTuyen QuangBac KanLang SonCao BangmanufacturersAseanRussiadevelopmentAviationinflationHong KongAmericanChamber of CommerceSeafoodODAWBIMFFEDAsia-PacificAssociationcountriesEuropeanmarine economyThanh HoaNghe AnNam DinhHa TinhPhu LýVinh PhucBac NinhBac GiangHung YenHai DuongBinh ThuanBinh PhuocLam DongGia LaiKon tumQuang NgaiQuang BinhQuang TriNinh ThuanCa MauBac LieuSoc TrangTra VinhKien GiangVinh LongBen TreincomespoliciesLawassetsNatural GasBuildingstatisticsstrategyDa Latmineral exploitationprocessingindustrieselectricitywatersupplyEnterprisesforestryfisherycommunicationsreal estatetransportationCorruptionbauxiteSecuritiesInsuranceBankFinanceAccountgoodsTrade BalancecoffeeCoalfestivalHa NamNinh BinhHoa BinhUniversityArtsBooktravelVietnam VisaVisaPagodaCommitteePeople's CommitteeVinashincompaniesHoa PhatHSBCACBvietcombankvietinbank

Copyright 2010 © VietnamNewsToday.com 
Powered by: CIINS Design by: Webdesign.vn