phân tích nguồn vốn FDI và môi trường kinh doanh tại việt nam e

Moreover, in comparison with other countries in the region,the credit growth rate to high GDP level in previous years have caused manyconsequences to the economy.. In the context of decr

I Overview

Vietnam is considered a great market opportunity as the country is undergoing a strongeconomic and developmental transformation The “Doi Moi” cause includingsignificant economic reforms started in 1986 has made Vietnam transform from acentralized economy to the socialism-oriented market economy in which directive andplanning are used as instructions Vietnam is one of top ten countries in attractingForeign Direct Investment (FDI) in the latest International Investment Prospect SurveyProgram of the UN The Vietnam’s entry into the World Trade Organization (WTO) inthe early of 2007 created greater market freedom and encouraged foreign investmentflow Recently, particularly in the event most of economies are under impacts of theglobal economic crisis, Vietnamese Government has applied a larger number ofmeasures, policies in order to recover its economy from crisis for socio-economicstabilization

According to report of the Transparency International, Vietnam is ranked amongcountries with serious corruption In 2011, in spite of its certain reforms, Vietnam stillgained slow scores and was ranked at the bottom of the scale In 2012, the big loss andbankruptcy of thousand billions Vietnamese dong caused by some state-ownedeconomic groups have put more pressure on the already poor economy Freezing realestate and bad debts of credit organizations have made the economy go to the dogs

In 2012, inflation and trade unbalance reduces pressure on the Vietnamese dong.However, according to economists, price increase in some basic goods and serviceshave influence on inflation Moreover, in comparison with other countries in the region,the credit growth rate to high GDP level in previous years have caused manyconsequences to the economy In September, the market investigation news of BIDVrestated by domestic newspapers and e-papers revealed that foreign currency reserves

of Vietnam reached 22-23 billion USD, equivalent to 11,5 weeks of import – higher theupdated figures released by ADB

Stepping into 2013, Vietnam’s growth is estimated to be higher (5.6%) but 9.3% ofinflation, much higher than the target of 8% set by the Government, according toANZ’s forecast

In terms of foreign currency reserve: the figure of 2.4 months of import provided byADB in April 2012 has been higher At present, according to ADB, Vietnam’s foreigncurrency reserve in Quarter II/2012 is 7 billion USD equivalent to 2 months of import,

an increase of 3.5 billion USD compared to the figures released by the InternationalMonetary Fund (IMF) in the middle 2011 Otherwise, according to Government’sreport at the end of April, its foreign currency reserve was sufficient for paying 9 weeks

of import

Vietnam has stabilized it micra-economy However, its weak production and businessactivities and slow credit growth cause big obstacles to the economy The bank’sexperts also appreciate Vietnam’s export with recent changes in mechanism.Accordingly, FDI capital is strongly directed to hi-tech industries

In the context of decreasing FDI to Vietnam, report of the Ministry of Planning andInvestment reveals that in the first 5 months of 2012 total registered FDI to Vietnam,including new registration (4.12 billion USD) and increase (1.2 billions USD) was31.8% compared to the same period last year It should remembered that in the sameperiod last year, FDI to Vietnam declined 49% compared to the year of 2010

So in three consecutive years, FDI to Vietnam has decreased However, in a discussionwith the Investment Journal, Minister of Planning and Investment Bui Quang Vinhaffirmed that FDI decrease to Vietnam was under registered capital meanwhiledisbursed capital still remained 11 billion USD/year At the end of this year, it isremarked for 25 years of the first Law on Foreign Investment in Vietnam According tostatistics revealed by the Ministry of Planning and Investment, since 2009, FDI toVietnam has decreased to 23 billion USD equally 30% of the previous year It tends todecline in the years to come In the first months of this year, FDI to Vietnam has justreached 10.5 billion USD including new and increased capital, a decrease of nearly25% compared to the same period last year

It is impossible to attract FDI when investment environment has no improvement One

of the fundamental principle in investment is that enterprise comes a place that isprofitable Growth quality and market confidence of Vietnamese economy are bigissues Such economy is burdening negative consequences accumulated from theprevious years It should be studied to release appropriate measures

II Analyzing financial criteria of the economy

1 Inflation

In the past years, Vietnam’s financial depth has considerably developed Recently, both ratio

of money supply/GDP and ratio of deposit/GDP have strongly increased Meanwhile the ratio

of money in circulation to total deposit has decreased from 28% in 2006 to approximately17.5% in 2010 This shows that impacts of monetary factors on productions have beenstronger Therefore, policies of the State Bank of Vietnam will be more “sensitive”

Money and credit supply to private sector compared to GDP of Vietnam remains aquite high position in comparison to other countries in the region The ratio of credit inbank system to GDP of the economy also dramatically increased and reached 123.01%just behind Hongkong (167%) and China (145%) in 2009 However, capital source forthe economy mainly depends on bank system This is presented by the great deviationbetween the credit ratio from banks/GDP higher than 123% while capitalized ratio ofthe stock exchange /GDP in 2010 was approximately 35% Therefore, it can be seenthat in Vietnam the bank system plays a very special role in the economy compared to

other countries in the region

Extended monetary policy and credit growth for a long time but ineffectiveinvestment and credit flow to property markets caused fast inflation rate to returnparticularly in the end of 2010 and to rocket in the early of 2011 Credit growth rate atthis time can be considered an inflation indicator of the economy Besides, at the sametime, prices of some goods and exchange rate are also adjusted strongly Electricityand water fees increase while petroleum price is more flexibly adjusted in accordancewith fluctuations in the world Increase in exchange rate caused higher price in inputimport, which caused expense pressure leading to inflation in the early months of

2011 Particularly in April 2012, CPI raised 3.5% compared to the preceding monthand inflation reached the highest rate in the same period since 1995

Monthly inflation rate from 2009 to 2012

Source: General Statistics Office.

In the context of high inflation, monetary policy was consistent in accordance with theResolution No 11 as mentioned previously aiming to closure by limiting credit growth rate ofthe entire bank system below 12% and growth rate of total payment means below 16%.Policy interest rates equivalently increased Basic interest rate increased to 9% fromNovember 2010 Interest rate for refund and overnight loan increased to 11% in February

2012, 12% in March, 13% in April and 14% in May While re-discount interest rate alsoincreased from 7% to 12% in March and 13% in May At the same time the compulsory rate

of reserve to foreign currency deposit also increased by 1% in June 2011 Besides, for thepurpose of appropriate interest rate to production and business, the ceiling interest rate of 14%for cash mobilization in the economy was determined by the State Bank of Vietnam.However, in the impacts to commercial industries, it can be seen that in fact the ceilinginterest rate for mobilization had kept actual interest rate last year at low rate, even negative.This created less motivation for people to deposit their money into the banks, reducingdeposit In other words, it created an additional channel for tightening monetary policy apartfrom other actions for tightening monetary policy

Since September 2011, tightening monetary measures was effective Credit of thewhole year grew at suddenly low level compared to previous years, reaching about 11-13%, lower than the limited level of 15% Besides, CPI (monthly) decreased aftermany consecutive month of fast increase However, inflation of the whole year of 2011was still high of 18.13% while that in other countries in the region was one-digit rate.This proves that in spite of many external causes such as the increase of goods price in

the world market affecting many countries, the subjective cause underlies in policiesparticularly the loosening monetary policy in the past years

2. Interest rate – Banking

- High rate of lending/mobilization (LDR According to statistics of IMF, LDR of

Vietnam declined from 117% in January 2011 to 109% in October 2011 However, thisrate was still equal to that of 2009 and 2010 If it took into account the amount ofcredit that credit organizations found ways to avoid ceiling credit rate (20%) and non-production ceiling credit rate (16%) through other forms such as investment incorporate bonds, investment trustee and other receivables, this rate might be muchhigher Moreover, the unbalance between credit and mobilization mainly occurred insome weak commercial joint stock banks This was the major reason making banks inthis group compete their mobilization interest rate at any cost

- Strong fluctuations in input – output cash flow of credit organizations Due to unbalance

between lending/mobilization, some credit organizations in weak group must implementtheir fiercely competitive measures to attract capital by using interest rate to attractdeposit This led to considerably increase of withdrawal of deposit prior to its term in thewhole industry, particularly in the half end of 2011 To December 31, 2011, such figureraised twice higher than the same period in 2010

Fluctuations of deposit withdrawn prior to its term (billion VND)

Source: National Financial Supervisory Commission.

Credit organizations mainly lent short-term loans instead of long-term loans Lendingamount increased twice higher but just 13% of average loan increase The narrowinglending term enable credit organizations to be more flexible in controlling creditgrowth limit below 20% at the year end The continuous increase of amount of depositwithdrawn prior to its term and other short-term amounts put credit organizations inintense situation of liquidity due to continuous balance of term between lending andmobilization

Many credit organizations are dependent on inter-bank market (TT2), whichconsiderably increases interest rates at some points of time According to statisticsreleased by the National Financial Supervisory Commission, the mobilization ratio ofTT2/total asset increased from 16% in 2010 to 21.3% in 2011 For some creditorganizations, this rate accounted for 50% of total asset, mobilization of TT2 increased

up to 56% compared to the same period in 2010 The mobilization ratio of TT2/total

asset presented strong increase in commercial joint stock banks and joint venture banksand foreign banks

Transaction amount in inter-bank market focused on short terms, particularly overnighttransaction or transaction in a week, counting for 80% of total transaction value Anoticeable event in the TT2 was that from September to the end of 2011, the liquidity

of this market was delayed Transactions in market occurred mainly between bankswith strong liquidity Weak commercial joint stock banks could not get anymore loansfrom banks with good liquidity as they could not pay their own old debts According tothe National Financial Supervisory Commission, overdue debts in TT2 presented anincrease of 94.2% billion VND in December 31, 2011 compared to 2010 To be able toget loans in inter-bank market, credit organizations had to have mortgage assets Thiswas the first time in history of Vietnamese credit system, some commercial joint stockbanks put requirements of mortgage assets to others if they wanted to get loans Thesignificant reason of this phenomenon was that weak commercial joint stock bankscould not mobilize capitals in the market in the event strict penalty to excess of ceilinginterest rate was applied by the State Bank of Vietnam Another important reason wasthat bad debts grew at the year end, which caused such banks not to be able to getbacks their money for liquidity

Interest rate in VDN in inter-bank market in 2011

Source: Development Department, Military Bank.

3 Foreign exchange rate

In general, adjustments in exchange rate of Vietnam during the last time can be shorted

as the follows: strong dumping at crisis of the economy, great pressure from marketand great deviation between official exchange rate and market exchange rate; anchor

of exchange rate at the stability of the economy upon the closure between officialinterest rate and interest rate in free market During the period from 2001 to 1008,Vietnam’s exchange rate policy was quite strict

The slight increase of actual inter-bank exchange rate in the end of 2011 compared to 2010 wasviewed as a success of the Government in its monetary policy for the past years The main root forthe stability of exchange rate was the great deviation between mobilization interest rate of VND andUSD That mobilization interest rate of VND was about 16-19% in fact during almost the yearwhile that of USD was about 2-3% indicated a dramatic decrease in the attraction of keepingforeign currency

Exchange rate of USD/VND, 2005-2011 (monthly)

Source: The State Bank of Vietnam

To see fluctuations of exchange rate in the past year, it is necessary to count for theroot of exchange rate instability in recent years Vietnam’s exchange rate hadconsiderably fluctuated since 2007 in which foreign capital rushed into Vietnamcausing pressure on Vietnamese dong However, such period was quite short Highinflation rate in the early months of 2008 and micra-instability plus the worldeconomic crisis in the middle of year all caused indirect capital flow to Vietnam toconverse Meanwhile long and strong increase in trade deficit (excluding 3 first

months of 2009) as well as in the demand of keeping gold and foreign currency asreserves under economic instability led to the strong growth of foreign currency forexport and goods Those factors all put Vietnamese dong under big pressure of pricedevaluation As a result, the State Bank of Vietnam had to extend exchange ratemargin from 0.75% in 2007 to 5% in March 2009 after four adjustments After thatVietnamese dong continued to experience its devaluation of 5.4% in November 2009and margin narrowing down to 3%.

Nevertheless, pressure on devaluation of Vietnamese dong was still very big, whichpartly was caused by people’s fear of Vietnamese dong devaluation leading to reserve

of gold and foreign currency apart from those reasons stated above This wasreflected in the size of item Errors and Mistakes in payment balance of 2009 with adramatically increase to higher than 9 billion USD compared to 1 billion USD of

2008 In February 2010, Vietnamese dong underwent the next devaluation with theexchange rate of 28,544 VND/USD Beside such devaluation were administrativemeasures like closing gold floors, stopping gold transaction in foreign accounts ofcredit organizations as well as other modification in interest rate in the context ofpotential increase of inflation Thanks to such policies, foreign currency marketcontemporarily enjoyed its stability until the middle of 2010 with many positive signs

of indirect and direct investment and foreign currency of Vietnamese overseas In thatfavorable condition, the State Bank of Vietnam actively carried out somemodifications while exchange rate was quite stable in August 2010

However, exchange rate pressure returned when inflation, pressure on foreign