VietNamNet Bridge – The confidence of investors in Vietnam’s economy has strengthened further lately owing to macroeconomic stability the country has achieved, said the National Financial Supervision Committee.

In a report sent to the Government’s monthly meeting ending last Saturday, Sep 28, in Hanoi, the committee highlighted the upsurge of foreign direct investment (FDI) to manifest the business community’s confidence in the local economy.

The strong FDI inflow is attributed to good macro indicators, including the well-checked inflation and a stable foreign exchange rate, the committee’s chairman Vu Viet Ngoan noted in the report.

“Such are encouraging signals showing that efforts to stabilize the macro economy over the past time have paid off,” Ngoan said.

The registered FDI in the January-September period grew 36.1% year on year to US$15 billion, with fresh funds rising 34.9% to US$9.29 billion and additional capital injected into operational projects leaping 37.9% on year to US$5.71 billion.

On the international arena, Vietnam’s competitiveness index has risen by five places from 75 to 70, while the country’s macroeconomic environment index has surged 19 notches to 87 from the previous 106.

Ngoan therefore proposed the Government to stay steadfast in maintaining macro stability to further improve the business environment and consolidate investors’ confidence.

In its report, the financial committee also mentioned achievements despite the numerous problems the economy is facing.

The country’s gross domestic product (GDP) has been growing faster over the past three quarters, hitting 5.54% in the third quarter against the April-June number, taking the growth rate in this year to date to 5.14% compared to 5.1% in the year-ago period.

High inflation is not a major concern now, as the price index in the long term is predicted around 7% per annum. As a consequence, the interest rate has been lowered, making the capital cost more affordable for enterprises.

The inter-bank rate, for example, has hovered around 3-4% in much of the past nine months, while the lending rate for the market is around 10%.

Capital mobilization as of September 18, according to the central State Bank of Vietnam, grew 11.74% on year, with deposits growing 11.63% in Vietnam dong and 12.43% in foreign currencies. Meanwhile, total outstanding loans in the banking system inched up only 5.83%.

The foreign exchange rate since early this year has also been stable at around VND21,000 to the dollar, except for some hiccups driven by psychological and seasonal factors, according to the report.

However, the National Financial Supervision Committee also stressed huge challenges regarding the State Budget.

It is difficult to balance the State budget this year due to dwindling budget revenues, thus choking off investments from the State coffer.

The accumulated State budget revenue as of September 19 totaled VND509.7 trillion, equivalent to only 62.5% of the target, according to the committee.

Source: SGT