Vietnam´s FDI reaches a new record in the first 4 months

[Viet]

VNA FRIDAY, APRIL 26, 2019


Vietnam attracted a record FDI level of 14.59 billion USD in the first four months of the year. (Photo: cafef.vn)


Hanoi (VNA) - Foreign direct investment (FDI) in Vietnam witnessed a significant yearly increase of 81 percent to 14.59 billion USD in the first four months of the year, according to the Foreign Investment Agency (FIA) under Ministry of Planning and Investment.

The result is the highest in the past four years.

https://en.vietnamplus.vn/fourmonth-fdi-reaches-record-level-in-four-years/151733.vnp

 

[Viet]

good progress but Fdi is still too low, transfer of technology too litte.
at this pace we will reach the level of Japan in 100 years.

 

[UKBengali]

good progress but Fdi is still too low, transfer of technology too litte.
at this pace we will reach the level of Japan in 100 years.

You sure that this is too low?

Sometimes attracting FDI for the sake of FDI is a bad thing.

You only want FDI when you do not have the tech or cannot develop it yourself. Otherwise Vietnam will end up being controlled by foreigners who keep all the tech and the profits.

Look at countries like China, per capita they had a fraction of the FDI that Vietnam is getting and look at where they are now in terms of GDP per capita and tech.

Even look at BD, it has FDI around 3 billion dollars per year and is still growing at 8% a year. BD domestic companies dominate the 170 million home market in areas like pharmaceuticals and electronics and are starting to branch out to export markets. BD is being very careful where it allows in FDI as it wants to develop core-tech in-house and not outsource to foreign companies.

 

[Viet]

You sure that this is too low?

Sometimes attracting FDI for the sake of FDI is a bad thing.

You only want FDI when you do not have the tech or cannot develop it yourself. Otherwise Vietnam will end up being controlled by foreigners who keep all the tech and the profits.

Look at countries like China, per capita they had a fraction of the FDI that Vietnam is getting and look at where they are now in terms of GDP per capita and tech.

Even look at BD, it has FDI around 3 billion dollars per year and is still growing at 8% a year. BD domestic companies dominate the 170 million home market in areas like pharmaceuticals and electronics and are starting to branch out to export markets. BD is being very careful where it allows in FDI as it wants to develop core-tech in-house and not outsource to foreign companies.

The chinese are smarter they force foreign companies to either make joint ventures or hand over the technology.

BD grows faster than VN, probably due to higher consumption growth?

 

[UKBengali]

The chinese are smarter they force foreign companies to either make joint ventures or hand over the technology.

BD grows faster than VN, probably due to higher consumption growth?

BD has 3 major reasons that it is growing at 8% per year now:

1. Strong performance of exports - 10% a year growth
2. Huge investments in infrastructure
3. GDP per capita PPP has reached that magic 5K and so consumption is rocketing


I suppose BD has a little advantage over Vietnam in that it has 170 million home market as opposed to 100 million in Vietnam.

 

[Viet]

BD has 3 major reasons that it is growing at 8% per year now:

1. Strong performance of exports - 10% a year growth
2. Huge investments in infrastructure
3. GDP per capita PPP has reached that magic 5K and so consumption is rocketing


I suppose BD has a little advantage over Vietnam in that it has 170 million home market as opposed to 100 million in Vietnam.

yes maybe the reason

1. VN export grows just 4 percent this year. A big disappointment.

2. Weakness in infrastructure investment because of debt ceiling.

3. People spend less save more because nobody knows when a big war in the SC Sea is coming.

 

[UKBengali]

yes maybe the reason

1. VN export grows just 4 percent this year. A big disappointment.

2. Weakness in infrastructure investment because of debt ceiling.

3. People spend less save more because nobody knows when a big war in the SC Sea is coming.

BD has only 30% debt to GDP ratio - by far the lowest in S Asia.

Government will allow this to rise to maximum of 40% in 10 years as it needs to borrow 10s of billions of US dollars for major infrastructure projects.

 

[Viet]

BD has only 30% debt to GDP ratio - by far the lowest in S Asia.

Government will allow this to rise to maximum of 40% in 10 years as it needs to borrow 10s of billions of US dollars for major infrastructure projects.

Everything under 50 percent is safe. Actually you can go to 65 percent, that is the debt ceiling for Vietnam. We do it because is internationally recognized as safe debt level.

 

[UKBengali]

Everything under 50 percent is safe. Actually you can go to 65 percent, that is the debt ceiling for Vietnam. We do it because is internationally recognized as safe debt level.

Well it is a bit more complex than this.

BD government revenue as percentage of GDP is only 10% and the government is not making much progress on this.
Vietnam BD government revenue as percentage of GDP is 23-24%

So you see that the Vietnamese can afford to take out more debt as the government has more revenue to pay it back. Only advantage that BD government has over Vietnam is that it spends less on defence - 1.5% as opposed to 2.5% in Vietnam.

Overall I think that BD should not go over 40% of debt to GDP unless it can raise the tax revenue substantially.

 

[Viet]

Well it is a bit more complex than this.

BD government revenue as percentage of GDP is only 10% and the government is not making much progress on this.
Vietnam BD government revenue as percentage of GDP is 23-24%

So you see that the Vietnamese can afford to take out more debt as the government has more revenue to pay it back. Only advantage that BD government has over Vietnam is that it spends less on defence - 1.5% as opposed to 2.5% in Vietnam.

Overall I think that BD should not go over 40% of debt to GDP unless it can raise the tax revenue substantially.

10 pct is low. There is room for the government to increase revenue. Usually it is 20 pct or so.

 

[UKBengali]

10 pct is low. There is room for the government to increase revenue. Usually it is 20 pct or so.

I know but the government has been trying for years and only increased from 8.5% to 10%.

Problem is that people earn so little that government cannot really tax them - an average garment worker earns maybe 10,000 Taka(120 dollars a month) and they cannot really be taxed as they earn so little to start with.
Consumption is only now starting to take off(GDP per capita PPP has hit 5K now) and so VAT can be collected from items like fridges and TVs that people buy but this will take some time before substantial revenue can be collected from this area.

There are other areas like inefficient tax collection and outright corruption that is hitting tax collection but that will also take some time to tackle.

 

[Aung Zaya]

. VN export grows just 4 percent this year. A big disappointment.

Vietnam is doing good in economy. check the statistics of BD and VN.

BD's export growth is 10% but its total export for 2018 is just 36 billion. meanwhile , VN's growth is just 4% which is a bit disappointing ( for u ), but VN's export amount is massive 244 billion for 2018. and it's also cover for other areas as well. so u should glad VN is developing so fast and can catch up other asia gaints in a few decades.

 

[UKBengali]

Vietnam is doing good in economy. check the statistics of BD and VN.

BD's export growth is 10% but its total export for 2018 is just 36 billion. meanwhile , VN's growth is just 4% which is a bit disappointing ( for u ), but VN's export amount is massive 244 billion for 2018. and it's also cover for other areas as well. so u should glad VN is developing so fast and can catch up other asia gaints in a few decades.

And how much of these exports are from foreign companies? Remember they keep the tech and the profits.

Nearly all BD exports are by BD companies and so the money is kept within the country. Foreign companies are slowly being allowed into the country in areas like electronics(Samsung) when local Walton can compete with them - allow them too early and they destroy the local competition.

Like I already explained, FDI for the sake of FDI is not good. Korea, Taiwan and China had much lower FDI per capita than Vietnam as they wanted their own companies to develop.

Vietnam is not much more developed than BD(7K per capita PPP compared to 5K for BD) but it is growing it's per capita 2% lower. At this rate BD would catch up with Vietnam circa 2030. Vietnam is doing ok but I think it needs to reduce it's reliance on FDI as that would stop it from ever going above middle income level.

@Viet : Please look at below on Taiwan:-


As you can see in the 1980s, FDI into Taiwan was almost nothing and even now is much below Vietnam. For Singapore, large FDI is good as they are a small country that does not need to develop it's own large tech powerhouses but for 100 million population Vietnam, FDI needs to be brought in on a much lower scale and in specific areas.

 

[Viet]

Vietnam is doing good in economy. check the statistics of BD and VN.

BD's export growth is 10% but its total export for 2018 is just 36 billion. meanwhile , VN's growth is just 4% which is a bit disappointing ( for u ), but VN's export amount is massive 244 billion for 2018. and it's also cover for other areas as well. so u should glad VN is developing so fast and can catch up other asia gaints in a few decades.

Vietnam needs high export growth rate until domestic consumption takes over the role. If not, our economy will stay stagnant which in turn will threaten our national security, our survival.

And how much of these exports are from foreign companies? Remember they keep the tech and the profits.

Nearly all BD exports are by BD companies and so the money is kept within the country. Foreign companies are slowly being allowed into the country in areas like electronics(Samsung) when local Walton can compete with them - allow them too early and they destroy the local competition.

Like I already explained, FDI for the sake of FDI is not good. Korea, Taiwan and China had much lower FDI per capita than Vietnam as they wanted their own companies to develop.

Vietnam is not much more developed than BD(7K per capita PPP compared to 5K for BD) but it is growing it's per capita 2% lower. At this rate BD would catch up with Vietnam circa 2030. Vietnam is doing ok but I think it needs to reduce it's reliance on FDI as that would stop it from ever going above middle income level.

@Viet : Please look at below on Taiwan:-


As you can see in the 1980s, FDI into Taiwan was almost nothing and even now is much below Vietnam. For Singapore, large FDI is good as they are a small country that does not need to develop it's own large tech powerhouses but for 100 million population Vietnam, FDI needs to be brought in on a much lower scale and in specific areas.



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Ok I can agree with you, at least in some points. we have to decide somehow. Fdi alone will lead sooner or later to a dead end. Still, exports growth are driven by foreign companies as Samsung and the likes. Viet companies are still too weak.I hope that will change but it won’t happen overnight.

VN is in better position than BD though.

 

[Mista]

BD has only 30% debt to GDP ratio - by far the lowest in S Asia.

Government will allow this to rise to maximum of 40% in 10 years as it needs to borrow 10s of billions of US dollars for major infrastructure projects.

Everything under 50 percent is safe. Actually you can go to 65 percent, that is the debt ceiling for Vietnam. We do it because is internationally recognized as safe debt level.

Better to be prudent. Structural deficits are difficult to reverse once you embark on it, especially in democracies.

Singapore was prudent during our boom years and we accumulated hundreds of billions of fiscal surplus.

the International Monetary Fund (IMF) had in April 2012 restated Singapore’s fiscal data in the IMF’s World Economic Outlook (WEO) database. The restatement increased the figure for the cumulative government surplus for the period 1990-2011 from $271bn as reported in the WEO database in September 2011 to $429bn in April 2012.

Today we have an estimated of SGD1trillion in reserves and instead of paying interest for debts, we are generating a recurrent income of more than USD25 billion annually from net investment returns. That's like USD5K per capita. Our constitution allows the government to spend up to only half of it though.