Over the past years, Vietnamese enterprises have promoted overseas investment in order to extend their markets and business opportunities. With total registered capital of US$ 15.5 billion, investment abroad is showing positive signals.
Accelerating overseas investment capital
According to the Overseas Investment Department, under the Ministry of Planning and Investment, US$ 2.65 billion was registered for investment abroad in the first four months in 2013. Thus, up to the end of the first quarter of this year, domestic enterprises have 742 investment projects abroad with total registered capital of up to US$ 15.5 billion.
Among them, there are 99 projects in mining worth US$ 4.6 billion (making up 13.3 per cent in the number of projects and 46 per cent in the total overseas investment capital), 80 projects in the agro-forestry-fishery field worth nearly US$ 1.9 billion, and electricity production with US$ 1.8 billion.
At present, Vietnamese companies are operating their business in 59 countries and territories worldwide. Among them, Laos attracted the most investments with 227 projects valued at US$ 4.2 billion (accounting for 30.6 per cent in the number of projects and 27.1 per cent in the total overseas investment capital), followed by Cambodia with 129 projects worth US$ 2.7 billion, Russia (US$ 2.3 billion) and Venezuela (US$ 1.8 billion).
Particularly, about US$ 3.8 billion was disbursed for these projects, including US$ 2.9 billion in oil and gas exploration and exploitation, US$ 500 million in rubber plantations, US$ 400 million in hydropower plants and US$ 249 million in telecommunications industry. Of which, around US$ 691 million is for the Lao market, while the figure in Cambodia is US$ 621 million.
Extended markets bringing considerable results
The Foreign Investment Department recently reported that Vietnamese businesses spent a large amount of their total overseas investment capital for purchasing machines and equipment at home to serve their projects abroad. This significantly contributed to increasing Vietnam’s export values to international markets.
Along with this tendency, some large-scale enterprises are pocketing positive achievements in foreign investment projects. Mr. Phung Dinh Thuc, Chairman of the Board of Directors of the Vietnam National Oil and Gas Group (PVN) said that the Group has invested in 14 nations in the world with the added reserve of more than 170 million tons of oil equivalent overseas. At present, there were seven mines overseas, included four mines in Russia, two in Malaysia and one in Venezuela.
Last year was the first time PVN exceeded 11 million tons of crude oil exploited overseas with profits of about US$ 160 million. Its revenue in 2013 is expected to reach about US$ 800 million.
Senior Colonel Le Dang Dung, Deputy Director General of the military-run telecom group Viettel, said that the unit expanded its business to 7 countries in 3 continents with total population of 110 million people. Viettel gained a turnover of over US$ 600 million from these markets. In recent years, the company has continued to transfer its profit from overseas markets back to the home country.
In 2011, Viettel sent home US$ 40 million and the figure rose to US$ 76 million last year. In markets where Viettel has operated over two years, the depreciation has completed and it could only pocket full profits. “Investment broad helps Viettel extend markets, get the highest sales, hone its employees’ professionalism as well as promote its brand name”, added Senior Colonel Dung.
In addition, Viettel is taking advantage of the global financial crisis to buy international companies at low prices. Viettel’s Deputy Director General admitted that each telecom investment project abroad costs the unit at least US$ 1 billion. However, thanks to its dynamic operation, Viettel could lessen maximum deposit rates.
For his part, Chairman of Hoang Anh Gia Lai Group Doan Nguyen Duc confirmed that without investing in Laos, Cambodia and Myanmar not long ago, he would have sit idle at present because the national economy is experiencing serious difficulties and challenges, especially the frozen domestic real estate market.
Bettering policies and relevant laws
Economic experts considered the international market a boundless ocean which is so attractive that investors are unable to stay away. It is the main reason that businesses vie together to look for their fortune abroad, considering it an integral part of the economic integration.
Dr. Nguyen Minh Phong, an economic expert, said the big overseas investment capital of Vietnamese firms over the past time came as a surprise to him. Recently, a radio station in Russia assessed Vietnam as one of leading foreign investors in the country’s market.
Phong said, “As the integration’s regulations, every economy has capital flows coming in and out the country. Some people worry that increasing investment abroad means loss of hard currencies. Nevertheless, if they effectively run their business in international markets, they will return their profits home.”
However, incomplete legal corridors and unclear support mechanisms and policies still make it hard for economic experts and local investors to decide their overseas investment.
According to Assoc. Prof. Dr. Dang Van Thanh, former Deputy Director of the Finance and Budget Committee of the National Assembly, Vietnam should issue a separate law on overseas investment, clarifying businesses’ responsibilities of paying taxes as well as partly providing priority and information assistance for local firms.
Sharing Thanh’s views on this issue, Dr. Nguyen Minh Phong also pointed out that coordination among Vietnamese companies remains weak while operating abroad. Besides, they are easily involved in other problems like money laundering and bogus companies. Moreover, managers should review the domestic investment environment. For instance, businesses have to invest in overseas projects because the domestic investment environment is not favourable for them to develop their business.
In addition, experts believed that Vietnamese companies should be provided with updated information, legal procedures and consolidate their relationships, because the international market is quite unfamiliar to them. On the other hand, Commercial Counsellors of the Vietnamese Embassies to foreign nations should take responsibility for providing information on markets in these countries to Vietnamese companies, while they should promote their coordination with each other. Furthermore, local banks should opened branches in foreign nations in order to create convenient conditions for Vietnamese businesses’ money transfer.
Besides, Vietnam also should ink more bilateral agreements with other countries to maintain a firm legal framework for two-way investment, taxes and ensure security for their business activities.
Translated by Van Hieu