Bloomberg News

Vietnam Nine-Month Pledged FDI Down 28% as Risks Dim Outlook

October 03, 2011

(Updates with analyst’s comment in fourth paragraph.)

Oct. 3 (Bloomberg) -- Pledged foreign direct investment into Vietnam fell 28 percent in the nine months through September from a year earlier, the government said, as domestic risks dim the nation’s economic outlook.

Committed investment fell to $9.9 billion in January through September from the same period in 2010, the Foreign Investment Agency of the Ministry of Planning and Investment said in a statement on its website. Disbursed foreign direct investment rose 2 percent to $8.2 billion in the same period, it said.

Vietnam has struggled to contain Asia’s fastest inflation and stabilize the national currency while supporting economic expansion as the global recovery falters. Growth in the $104 billion economy slowed in the first three quarters of 2011, and the government said last month it will further restrain increases in lending to try to curb price gains.

“This year’s inflation and foreign-exchange issues put a lot of pressure on the cost structure of any company operating here,” said Attila Vajda, the head of institutional clients at ACB Securities Co. in Ho Chi Minh City. “This is being worsened by the numerous amount of strikes, so people are waiting to see a more stable and predictable cost structure.”

Vietnam gave licenses to 675 new projects with a combined registered capital of $8.23 billion in January through Sept. 20, while 178 existing projects boosted registered capital by $1.66 billion, according to the statement, which was released last week.

Consumer prices in the Southeast Asian nation climbed 22.42 percent in September from a year earlier, easing from a 23.02 percent pace in August. September’s level remains the fastest in a basket of 17 Asian economies tracked by Bloomberg.

Gross domestic product rose 5.76 percent in the first three quarters of 2011, less than the 6.54 percent gain in the same period in 2010.

The State Bank of Vietnam raised interest rates earlier this year, before reducing its repurchase rate in July. It devalued the dong for the fourth time in 15 months in February.

--Nguyen Kieu Giang. Editors: Sunil Jagtiani, K. Oanh Ha

To contact Bloomberg News staff for this story: Nguyen Kieu Giang in Hanoi at giang1@bloomberg.net

To contact the editor responsible for this story: K. Oanh Ha at oha3@bloomberg.net


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