Professor cautions Vietnam’s booming real estate market
  • | | December 01, 2010 09:35 PM

Real estate projects are being carried out rampantly across Vietnam, which could lead to an imbalance in the country’s investment structure.

Prof. Michael Porter
Vietnam does not have special competitive advantages

The statement was given by the father of competitive strategy, Michael Porter, at a workshop in Hanoi in November 30 to launch the Vietnam Competitiveness Report 2010.

He said much capital is poured in the Vietnamese property sector instead of being injected to production areas. The professor added that, “Vietnam has attracted a huge registered amount of foreign direct investment, but only a modest amount of this has been disbursed.”

Meanwhile, the investment for such major infrastructure works as roads, airports, ports and power projects proves inefficient.

The national economic growth has become more dependent on investment increases. Meanwhile, many of local state economic firms operate ineffectively, hurting the nation’s investment efficiency and quality.

Statistics showed that Vietnam’s investment capital accounted for over 40% of the national GDP between 2006 and 2010, much higher than many newly industrialised countries. However, investment efficiency of many projects in Vietnam remains limited.

The professor pointed out that administrative procedures are still complicated and discourage foreign investors. Porter emphasised that Vietnam does not have special competitive advantages, particularly when corruption remains a pressing issue in the nation.

Additionally, the country is facing pressures related to exchange rate, high inflation rate as well as the financial market’s overheating of development. This shows problems in the national monetary policies, Porter elaborated.

He said the country needs to set up a central agency in charge of monitoring and reporting the fiscal situation of government agencies and state-owned enterprises, and economic development.

The Vietnam Competitiveness Report 2010 is the first national report which provides data, analysis and specific recommendations to help policymakers map future policy directions. It was jointly carried out by the Central Institute for Economic Management (CIEM) and the Singapore-based Asian Competitiveness Institute (ACI) and led by Professor Michael Porter.

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