Outbound investment slowly leaving its mark

The military-run telecom group Viettel was among leaders committing fresh outbound investment ventures within the year. In early 2010 Viettel announced it had completed buying 60 per cent of stock of Haiti telecommunications company (Natcom) and winning a $29 million bid package to trade in the mobile phone market together with an investor group in Mozambique with an estimated investment of around $400 million.

After successfully launching of its first mobile phone networks abroad, Metfone in Cambodia and Unitel in Laos, these fresh ventures were expected to help Viettel grow its presence and amplify its influences in potential African market.

Besides Viettel, other big names in the local business community such as PetroVietnam, Song Da Group and Vietnam Rubber Industry Group stretched their arms to foreign markets.

To ensure success, Vietnamese companies had adopted a peculiar tactic to penetrate foreign markets under which they would capitalise on the growing prestige Vietnamese companies have in these markets.

However, success in image promotion is yet to immediately bring high profit figures.

In Viettel’s case, the group revealed it began to post profits in 2010 after four years setting a foothold in the Cambodian and Laos markets.

PetroVietnam has invested in 28 projects mainly involving in oil and gas exploration and extraction in foreign countries with a total registered capital of around $2.3 billion of which over $1 billion was transferred abroad. However, it only saw $38.9 million in profit, equal to 3.6 per cent of total investment capital.

Vietnam has invested in 558 projects with a total registered capital of around $8.4 billion in foreign countries in the past 20 years, according to the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency (FIA).

According to the MPI, the profit rate of outbound investment projects was low, averaging 0.46 per cent of total investment capital for the period 1989-2010.

The figure was based on reports from 300 outbound investment projects sent to the MPI by mid 2010.

FIA head Do Nhat Hoang said Vietnamese companies would be engaged in projects with registered capital of approximately $1.5-2 billion on outbound investments in 2011 and $700-900 million worth in disbursed capital.

Hoang, however, noted that to raise investment efficiency post-licencing inspection was crucial to balance inward and outward capital flows and ensure macro-economic stability.