Tool needed to drive outbound investment

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“A lack of information as well as a specific supervision mechanism towards outbound investment projects, particularly state-backed ones, has made appraising the business efficiency of these projects extremely difficult,” said a senior outbound investment expert from the Ministry of Planning and Investment (MPI).

He said the lack of such a mechanism heightened the risks of outbound investments.

However, investment authorities’ proposals to apply state bidding regulations into procurement, consultancy and construction activities of state-backed outbound investment projects as regulated in the newly amended version of the Decree 78/2006/ND-CP providing guidance of Vietnam’s outbound investments were not welcomed by project investors.

Some investors said they might get stuck with dissimilar regulations of Vietnam and the host countries Besides, it would not be easy to persuade their joint venture partners to follow Vietnam’s bidding regulations.

However, a compiling board member said that it was crucial to keep closer eyes on state-backed outbound investments to ensure efficiency.

“To achieve this goal, the Decree 78 draft is added with a new chapter covering state-backed outbound investments which regulates that these investment projects must closely abide by relevant state laws on state capital management, investment and trading,” said the MPI official.

By the end of 2009 Vietnam reported $7.73 billion worth of total investment capital into 465 outbound investment projects. In 2010 alone, the country saw 107 projects valued at $2.962 billion going abroad to invest and nine projects asked for supplemental capital of a total $87.1 million.

The MPI’s Foreign Investment Agency (FIA) licenced nearly $1 billion worth of outbound investment in early 2011. Most of the capital came from two hydro-power projects in Cambodia and Laos, by the EVN Joint Stock Company and Hoang Anh Gia Lai Group respectively.

The FIA in February said it would possibly licence another hydropower project bond to go abroad of a big state-backed corporation.

Five major state groups PetroVietnam, Vietnam National Coal-Mineral Industries Group, Vietnam Rubber Industry Group, military-run Viettel Telecom Group and Song Da Corporation transferred $1.24 billion abroad, equal to 69 per cent of total capital of Vietnam’s outbound investment projects.

These projects, however, have generated low profits. According to FIA figures merely $31.6 million in profits was remitted back to Vietnam thus far and this all came from PetroVietnam projects.