First published by Ohmynews on 2007-02-07 13:29 (KST)
A risky investment environment in the short term, but long term growth good: LGERI
A leading South Korean economic analysis agency has just released a report about the investment prospects of foreign owned enterprises in Vietnam, forecasting that Vietnam economy might surpass Thailand and Indonesia by the year 2020.
The bold forecast was made by LG Economic Research Institute (LGERI), which was founded in 1986 to help South Korean businesses increase their competitiveness at home as well as abroad by providing them economic analysis and forecast.
The report was released at the time quite a few giant South Korean businesses and groups are flocking to Vietnam for mass investments in many fields. Earlier, the ROK Investment and Trade Promotion Agency confirmed that South Korea became the biggest investor in Vietnam in 2006, with the total capital of nearly US$2.7 billion.
According to researchers at LGERI, Vietnam's economy will continue to grow at even higher rate until 2010 or 2015.
However, the report also warns South Korea as well as international investors of risks when making decisions on investing in a "too hot environment" in Vietnam since the country is still in lack of infrastructure necessary for business activities.
Vietnam could be a risky environment for investors until 2010-2015, when the requirements in attracting foreign investors might be met thanks to the country's progress in industrialization, the report said.
Here are the risks listed by LGERI:
Firstly, foreign owned enterprises' rights are still limited.
Secondly, there is a shortage of skilled laborers, which is considered as a risk factor that foreign investors will have to face when making investments in Vietnam.
Thirdly, according to the report, Vietnam doesn’t have enough companies specializing in making accessories and spare parts to provide to manufacturers.
Fourthly, the country's transport system is old and downgraded, hindering enterprises that wish to expand production to other localities in the country.
Moreover, the "bubble" development state of the real estate and capital market due to big foreign investors flooding the small capital market can be considered a risk factor. The prices of houses in big cities of Vietnam have increased by 2-5 times in the last few years, a sign of overly hot development.
Last but not least, though the country's economy has been steadily growth at a high rate of around 8 percent per annum in recent years, the market remained too small to attract more investments, the report said.
Quite a few leading international groups are considering Vietnam a new, attractive destination since it became the 150th official member of the World Trade Organization.
According to the report, in 2006, Vietnam attracted $9 billion worth of foreign direct investment, an impressive result to be optimistic about the future.
"Vietnam is certainly a land promising many opportunities with rich natural resources and high development potentials. However, the short term prospects are not bright,” the report concluded.
A risky investment environment in the short term, but long term growth good: LGERI
A leading South Korean economic analysis agency has just released a report about the investment prospects of foreign owned enterprises in Vietnam, forecasting that Vietnam economy might surpass Thailand and Indonesia by the year 2020.
The bold forecast was made by LG Economic Research Institute (LGERI), which was founded in 1986 to help South Korean businesses increase their competitiveness at home as well as abroad by providing them economic analysis and forecast.
The report was released at the time quite a few giant South Korean businesses and groups are flocking to Vietnam for mass investments in many fields. Earlier, the ROK Investment and Trade Promotion Agency confirmed that South Korea became the biggest investor in Vietnam in 2006, with the total capital of nearly US$2.7 billion.
According to researchers at LGERI, Vietnam's economy will continue to grow at even higher rate until 2010 or 2015.
However, the report also warns South Korea as well as international investors of risks when making decisions on investing in a "too hot environment" in Vietnam since the country is still in lack of infrastructure necessary for business activities.
Vietnam could be a risky environment for investors until 2010-2015, when the requirements in attracting foreign investors might be met thanks to the country's progress in industrialization, the report said.
Here are the risks listed by LGERI:
Firstly, foreign owned enterprises' rights are still limited.
Secondly, there is a shortage of skilled laborers, which is considered as a risk factor that foreign investors will have to face when making investments in Vietnam.
Thirdly, according to the report, Vietnam doesn’t have enough companies specializing in making accessories and spare parts to provide to manufacturers.
Fourthly, the country's transport system is old and downgraded, hindering enterprises that wish to expand production to other localities in the country.
Moreover, the "bubble" development state of the real estate and capital market due to big foreign investors flooding the small capital market can be considered a risk factor. The prices of houses in big cities of Vietnam have increased by 2-5 times in the last few years, a sign of overly hot development.
Last but not least, though the country's economy has been steadily growth at a high rate of around 8 percent per annum in recent years, the market remained too small to attract more investments, the report said.
Quite a few leading international groups are considering Vietnam a new, attractive destination since it became the 150th official member of the World Trade Organization.
According to the report, in 2006, Vietnam attracted $9 billion worth of foreign direct investment, an impressive result to be optimistic about the future.
"Vietnam is certainly a land promising many opportunities with rich natural resources and high development potentials. However, the short term prospects are not bright,” the report concluded.
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