VietNamNet Bridge - The Ministry of Planning and Investment has asked Vietnamese investors with projects in other countries to submit reports on their implementation or business performance by April 15.

The move aims to check the efficiency of overseas investment projects as well as transfer of capital abroad for investment by State groups and enterprises, according to Minister Vo Hong Phuc.

"There are some problems with overseas investment projects, so we are checking them, especially those invested by State groups," he said.

According to the ministry's Foreign Investment Agency (FIA), the rate of return on overseas investments has been very poor, although the investment volume has risen steadily over the last few years, raising concerns about the efficiency of overseas investment.

By the end of February, Vietnamese firms had invested in 575 projects in 55 countries and territories with total registered capital of US$23.7 billion.

There were 16 projects in the first two months of the year, but the total registered investment capital was more than $1.26 billion, only about $300 million lower than the capital amount of foreign direct investment in Viet Nam in the same period.

The average investment in a project in the first two months was around $79 million, while the average investment of an FDI project in the same period was only $14.6 million, FIA said.

But profits repatriated to Viet Nam were very modest, a return of just 0.46 per cent, the agency said, adding that there is a "trade surplus" in investment, which is not a good sign for the country's economy.

This creates an imbalance between cash inflows and outflows from overseas projects and puts more pressure on the national balance of payment.

Local firms had invested a total of more than $1.8 billion in agricultural, forestry and fisheries projects in other countries, while these sectors in the homeland were always short of capital, experts have said.

If these sectors received such a big investment, their competitiveness as well as exports would be improved considerably.

Reviewing more than 20 years of investment abroad, the ministry said the country had no comprehensive mechanism to oversee overseas investment, which were mostly funded by the Government.

A lack of oversight might lead to inefficient use or even loss of that capital, it said.

Investment abroad has increased, but with a small economy, high trade deficit, an unstable international balance of payment and a low foreign currency reserve, overseas investment activities must be closely checked to regulate cash inflows and outflows and ensure macro-economic balance.

Source: VNS