VietNamNet Bridge – No one knows for sure how much money foreign investors have injected in Vietnam: State management authorities and international institutions give quite different figures about the foreign portfolio investment in the country.

$1bil, $1.9bil, or $4bil?

Director of the Monetary Policy Department under the State Bank of Vietnam (SBV) Nguyen Ngoc Bao said in his presentation at a workshop on Vietnam’s stock market held in Hanoi on May 8 that foreign portfolio investment in Vietnam had reached $4bil by February 2007, and the figure was expected to increase by $1.5bil in the next six months. Now, foreign investors are estimated to hold 20-25% of market capitalisation value.

However, Mr Bao later said that the total foreign portfolio investment capital in Vietnam was estimated at $1.9bil, and that if foreign investors sold shares on a large scale, the capital to be withdrawn from Vietnam would be much higher than the injected capital.

During the tea break, reporters tried to ask Nguyen Dai Lai, Deputy Director of the Banking Development Strategy Department under SBV, about the figures. However, Mr Lai declined to comment about the figures, saying that it was necessary to make a thorough study about this, while saying that experts now estimated the figures just based on their feelings. Meanwhile, Mr Lai himself stated at a recently held workshop on financial liberalisation that foreign portfolio investment in Vietnam was worth $1bil.

Several days ago, the World Bank released a report which said that $4bil worth of investment had been injected in Vietnam. After that, the Central Institute for Economic Management (CIEM) released its own survey, stating that foreign portfolio investment did not exceed $1bil.

In fact, the Ministry of Finance made an announcement about foreign portfolio investment in mid 2006. At that time, there were 19 operational foreign investment funds in Vietnam which had brought nearly $2bil to Vietnam. This was considered the first official figure about foreign portfolio investment in Vietnam.

According to the State Securities Commission (SSC), the total capital value on the stock market has reached $14bil, of which, foreign investors hold 25-30% of the listed stocks, valued at $3.5-4.2bil.

According to Nguyen Thi Kim Thanh, Deputy Director of the Monetary Policy Department under SBV, foreign portfolio investment is reflected in the payment balance: $189mil in the first quarter of 2006, $283mil in the second quarter, $202mil in the third quarter, and $626mil in the fourth quarter – or $1.3bil in 2006.

The fact that State management authorities do not know for sure the statistics about foreign portfolio investment flow into Vietnam remains a pressing matter.

How to control foreign portfolio investment?

Vu Dinh Ang, an expert from the Finance Research Institute, said: “How can we control the capital inflow and outflow if SBV does not even know for sure how much money foreign investors have injected in Vietnam?”

He stressed that management authorities needed to know where the foreign capital flow came from, how much capital had been injected and who stood behind the capital flow. Information about portfolio investment capital volume, numbers of transaction accounts opened by foreign investors should be made public.

Accurate statistics play a very important role in the development of the stock market as they can facilitate the development of suitable policies ensuring the healthy operation of the market and help investors make suitable decisions.

(Source: VietNamNet, VNE)

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