VietNamNet Bridge - There is a growing trend among domestic enterprises to invest in foreign markets but returns remain low, causing authorities to review the situation.

The Ministry of Planning and Investment revealed that there were 19 registered projects worth US$1.26 billion in the first three months of this year. Of that, $200 million had been disbursed.

Ministry statistics also indicated each project abroad that Viet Nam invested in cost an average $66 million, much higher than the average $14.6 million for foreign investment projects in Viet Nam.

"The number of projects invested abroad will continue to rise," the ministry's overseas investment department head Do Nhat Hoang said.

However, Hoang said the boom in overseas investment has raised some concerns among local authorities and economists, even though it was a natural trend of world economic integration.

He said the rate of Viet Nam's investment outflows had been increasing each year but return on equity was low at 2.02 per cent in the period of 1989-2010.

The country had 575 projects in 55 foreign nations and territories since 1989 with a total registered capital of $10 billion.

Laos, Cambodia, the US and Russia had been major markets for Vietnamese businesses. Laos was the biggest market with 187 projects.

"Only 300 out of 500 projects have reportedly returned $35 million of profits to Viet Nam," Hoang said.

The five agencies with the highest amount of overseas investment were the National Oil and Gas Group, Viet Nam Coal and Minerals Corporation, Rubber Corporation, military-run telecommunications firm Viettel and Da River Construction Corporation. They have brought $1.35 billion to foreign countries.

The department said most were long-term projects related to petroleum, minerals exploitation, rubber and power plants.

Economist Le Dang Doanh said the situation was contributing to a short-term capital shortage in Viet Nam.

"It could also put more pressure on the international balance of payments," Doanh said.

He added that some sectors, which had been considered the country's strength, including agro-forestry and fisheries, had lacked capital for investment.

However, another economist said overseas investment should be a vital trend of businesses, particularly at the time when the domestic market was experiencing difficulties.

She said the activity would benefit both the investors and the countries which received the investment.

Lao Embassy economic and commercial counsellor to Viet Nam Anoumone Kittirath said Viet Nam had been a strategic partner of Laos with an increasing amount of investment.

"Investment of Vietnamese businesses into Laos has been positive and it has significantly contributed to Laos's economic development as well as strengthening the friendship between the two countries," she said.

Viet Nam had taken the lead in Laos, mostly in sectors of agriculture, processing industry, hydropower plants, minerals and services.

By the end of last year Vietnamese enterprises registered 248 projects in Laos with a total investment of $3.1 billion, of which 158 projects were wholly Vietnamese-invested projects.

"In general, Vietnamese investors has shown strong determination in their businesses in Laos as they have capital and experience," she said.

Most Vietnamese projects had been effective and had created jobs for local people.

Deputy general director of telecommunication corporation Viettel Nguyen Manh Hung said overseas investment activities would decide the group's development.

"This is a strategy to turn Viettel into a multinational company, creating a big market for us to invest in producing made-by-Viettel products," Hung said.

He said the group expected to invest $8-10 billion in foreign countries.

"The investment would help expand market share of telecommunication enterprises, contributing to making Viet Nam an information and communication powerhouse by 2020," Hung said.

The group planned to expand its market with the construction of 4,000 base transceiver stations and promote investment in potential markets, including in Asia, Africa and Latin American regions.

"It is expected that the group would have a turnover of $5 billion by 2015 and $15 billion by 2020 with a market of 1 billion people," he said.

However, he said, they had met difficulties as there were differences between Vietnamese and foreign laws.

"The important thing is that a supplementary draft on overseas investment activities, which stipulates regulations on using State capital, should ensure supervision of governmental agencies in managing capital while facilitating businesses in their operation," he said.

Hoang said the ministry was taking steps to better manage overseas-invested projects with a special supervision mechanism on the projects.

Source: VNS