ADB forecasts further inflows of foreign capital into Vietnam

August 10, 2011 | 15:21

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Newly-emerging economies in Asia will continue to attract foreign investment after the crisis in the securities market thanks to high economic growth.

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This was affirmed by Iwan Azis, head of the Asian Development Bank’s Office of Regional Economic Integration in a report “Asia Capital Markets Monitor”.

If anything distinguishes the region from the rest of the world it is its strong macro-fundamentals, said Azis.

The economist said the current crisis in the global financial market will not stop the flow of investments in the medium term to the 11 emerging Asian economies including China, Hong Kong, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

According to the ADB’s report, along with the strict control of the financial market and foreign exchange reserves, the Asian region now has had surplus reserves and liquidity after the Asian financial crisis in 1997. Therefore, there will be many financial tools to attract investors.

The ADB report also showed that the region’s economies grew a composite 9.2 per cent in 2010, and were forecast to grow 7.7 per cent in 2011 and 7.6 per cent in 2012.

With its tightened controls on its financial markets and boosted national foreign exchange reserves since the Asian financial crisis of 1997, the region now enjoys excess savings and liquidity, said the ADB report.

However, ADB forecast that the region’s exports to traditional markets such as the US and Europe will decrease and said policy makers in emerging Asia needed to develop their tools to deal with volatile capital flows which can lead to "boom and bust cycles."

To cope with instability in the US and euro zone, ADB also emphasised the need to take drastic measures to win investor trust and reduce strong fluctuations.

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