VietNamNet Bridge – The funds for investment and economic development are approaching critical levels, analysts say.

 

 

 

The state’s capital in 2014 for national investment and development projects decreased by 13 percent compared with 2013, accounting for 13 percent of total society’s investment capital in the year.

Meanwhile, capital from state-owned enterprises (SOEs) made up 8 percent of total society’s investment capital. 

Ho believes that one should not expect more capital from the economic sector as most SOEs have been making investment at a moderate level and many of them are bogged down in bad debts.

Some sources said 70 percent of total bad debts have been incurred by SOEs.

The Hanoi National Economics University predicted that capital from the state’s economic sector would decrease by 10 percent this year after increasing by 11.3 percent last year.

The foreign direct investment (FDI) provided 16.6 percent of total investment capital in 2014. 

However, analysts have voiced their concern about the heavily reliance on the source. They have repeatedly said at official conferences and workshops that Vietnam needs to rely on its inner strength instead of foreign investment.

Reports showed that foreign-invested enterprises make up 68 percent of total export revenue and 70 percent of total industrial value, but the added value and locally made value are still very low, 15-20 percent and 10-15 percent, respectively.

This has led to the increase in the gap between GDP (gross domestic product) and the gross national income (GNI) in Vietnam.

Meanwhile, Vietnam has received less than expected from FDI. 

An analyst cited a Ministry of Planning and Investment report as saying that only 5 percent of foreign-invested enterprises use high technologies in their production in Vietnam, while 70 percent use mid-tier technologies. 

Only 30 percent of Vietnamese enterprises have received positive technological impacts from the foreign economic sector, which is not what Vietnam has targeted in its industrialization and modernization process.

The ODA (official development assistance), an important source of capital for Vietnam over many years, has also hit a critical point as it will continue to decrease gradually in year by year.

As such, Ho said, the private economic sector and the public remain the only resources for capital in coming years.

Experts estimated that 400-1,000 tons of gold, worth $16-40 billion, are being kept by Vietnamese families. They said that if the government can apply reasonable policies, it would be able to mobilize huge capital for development.

TBKTSG