The Decree No 78/2006 on outward investment management will be amended in some days. Officials of the Ministry of Planning and Investment (MPI), the compilers of the new decree, have revealed that the legal document will comprise a separate chapter stipulating the management over the outward investment using the state budget.
Analysts have commented that with the new legal document, the government is attempting to keep a stricter control over the investment abroad.
Especially, the new decree will not only impose a strict control over the outward direct investment, but over the portfolio investment as well. This means that all types of investment, including the share and bond purchases, securities investment and the investment through intermediary financial institutions.
Those, who seek the permission to make outward investment with the state’s capital, have to present the files which include the legal documents, in which competent agencies approve the plan to use state’s capital to make outward investment.
Especially, the files have to include the reports on assessing the economic efficiency of the investment projects, granted by the agencies in charge of investment project appraisal.
The same regulation will also be applied to the projects of other economic sectors. Of course, in the private run outward investment projects, the private investors will take responsibility for the reports about the investment efficiency.
The decision on imposing a strict control mechanism over the outward investment has been released after experts warned about the low efficiency of outward investment projects one year ago. The report by MPI, reviewing the 21-year of making outward investment showed that 1.8 billion dollars were transferred abroad during that time to disburse for outward investment projects. Meanwhile, the profit transferred to Vietnam from the projects remains very modest, about 39 million dollars.
Especially, the profitability of the outward investment projects in the last 21 years, since they day Vietnam’s first outward investment project was implemented in 1089, is also modest, at 0.46 percent.
Investors argue that one should not expect to see fat profits at this moment, because the investment projects are still in the first stage of investment. However, experts have pointed out that they have every reason to pose questions about the efficiency of the investment.
Dau tu quoted a senior executive of the Vietnam National Oil and Gas Group (PetroVietnam) as saying that “the revenue and the profits brought by the outward investment projects of the group do not commensurate with the money spent.”
Meanwhile, the Vietnam Coal and Mineral Industries Group (Vinacomin), agrees that the investment efficiency should be considered the top priority goal, no matter the investment projects use private or state owned capital.
According to MPI, in the first 10 months of the year, 1.99 billion dollars worth of outward investment projects have been registered, which has raised the total outward investment capital to 10.8 billion dollars. Of this amount, the state’s capital accounts for 60 percent.
In the context of the limited investment capital for domestic projects, it is understandable why tightening outward investment has been highlighted as one of the important tasks for Vietnam.
“We need to simplify the administrative procedures, but we need to tighten the post-licensing control,” an official of MPI, a member of the draft decree compiling committee, said.
The draft decree stipulates that the project implementation process, the quality of the works and arisen problems will be updated regularly to the watchdog agencies. This also aims to update information and suggest timely decisions. Therefore, competent agencies will be given the right to organize regular or extraordinary inspection tours to the projects.
Source: TBKTVN
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.
No comments:
Post a Comment