MPI Minister: It’s necessary to control outward investments

16:41' 29/04/2008 (GMT+7)
VietNamNet Bridge – Minister of Planning and Investment Vo Hong Phuc emphasized that it is necessary to supervise enterprises’ investments, especially the investments in non-forte business fields of economic groups and general corporations.
He said:
In the market economy, banks are considered the ‘filter’ of enterprises, which means that banks can examine the health of enterprises by analyzing the feasibility of enterprises’ projects. Therefore, if economic groups and corporations establish banks themselves, the banks will not be able to do the function of a filter well.
Many economic groups and general corporations have stated that their outward investments remain very low, which is far from reaching the ceiling level of 30% of total investments. Vinashin, for example, said that its outward investments just account for 4.5% of total investments. What would you say about that?
Minister of Planning and Investment Vo Hong Phuc
The figures of outward investments must be compared with the total capital the economic groups and corporations have invested. The total capital includes the chartered capital, state budget-sourced capital and groups’ loans. The Ministry of Planning and Investment (MPI) has proposed that the National Assembly pay special attention to the supervision over the outward investments by economic groups and corporations.
I think the investments from the state budget are not worth worrying about as much as the investments from economic groups and corporations. While the investment from the state budget is being supervised by local people’s councils, there is no proper mechanism to supervise the investments from groups and corporations.
The leader of the Electric company of Vietnam (EVN) said that EVN has to make outward investments in order to get money for re-investment and offset the loss it is incurring with electricity because it cannot raise the electricity sale prices. What is your comment about that?
I don’t agree with the argument. Investments in power plants prove to be very attractive. Big corporations like PetroVietnam, Lilama, Vinashin, Vinacomin all are rushing to make investments in power plants. EVN still can get profit with power plants if it can find the suitable way to cut expenses and run plants effectively.
EVN’s argument about the need to make outward investment to get profit for re-investment proves to be unconvincing. They will not obtain what they plan when the stock market, banking and real estate markets are facing difficulties.
I think that EVN should reconsider their business development strategy, goals and main tasks rather than seeking business opportunities outside. Vietnam has been facing the electricity shortage in the last four consecutive years.
The Government has been trying to reduce budget funded investments in an effort to curb inflation. What is the viewpoint of MPI in this case?
We have suggested the principles and the criteria based on which relevant ministries can consider weeding out some projects from the list of the construction works for 2008. We have to be determined in canceling the projects which are not really necessary, but we still have to keep implementing the projects which serve the public interests of the localities. For example, in Hanoi, the projects of the transport system, Nhat Tan Bridge, or the road from Nhat Tan bridge to Noi Bai International Airport should be followed, while the project on building museums should be canceled.
It is expected that local authorities will submit the lists of the projects subject to delaying or canceling.
If we aim to keep the interest rate at 12.4% (the same as 2007’s), what percent of public investments does Vietnam needs to cut?
Public investment includes the investments from state budget and state owned enterprises, which regularly accounts for 45% of total investments. However, the public investment will be at some 40% of total investments this year. I cannot say for sure what percent of public investment we have to cut to curb the inflation rate at 12.4%. It is necessary to apply all the eight measures set by the Government at the same time to curb inflation. Reducing public investment is just a measure to help reduce inflation.