ADB Economist: It Would Take about a Decade to Reduce the Dependence on Foreign Capital

ADB Economist: It Would Take about a Decade to Reduce the Dependence on Foreign Capital

This was a statement by Aaron Batten, National Economist of Representative Agency of the Asian Development Bank (ADB) in Vietnam at a press updating on Asian Economic development status on September26.  Mr. Aaron Batten said that the growth of Vietnam's economy had been heavily dependent on foreign capital sources and remittances. The happening fact shows that foreign direct investment (FDI) and export-oriented manufacturing sectors have led Vietnam 's economic growth. The question now is whether Viet Nam Economy shifts to target growth on domestic consumption and economic activities in the country.

"Such changes will not happen overnight. Vietnam has just opened its door for the massive inflow of FDI in recent decades. So, it will happen in some decades before this dependency decreases. I think Vietnam is in the midst of this cycle. Over a decade or less, Vietnam will reduce its dependence on foreign capital sources, "said Aaron Batten. Meanwhile, the majority of Vietnamese enterprises are small and medium-sized enterprises, got difficulties in accessing capital.

ADB economist believes that the credit growth will achieve target of 22% in 2017 after the State Bank issued a loose monetary policy in July. This policy, however, also creates the risks associated with growth stimulus."The goal can be achieved but more important is the quality of the loan, not the amount. What sectors of the economy will be poured into when loans come out of the banks. If uncontrolled, money will flow into property bubbles and pose a risk to the economy, "commented Aaron Batten.

According to ADB's economist, investing in real estate is the most risky area of the financial sector. "But he thinks the State Bank is well aware of this. Therefore, they have imposed a series of restrictions, strict measures to be able to control the situation. For example, the risk rating of banks is much tighter in controlling for each loan, or field of implementation. The regulations of the State Bank has really tightened, "said Aaron Batten.

Source: Investment Newspaper

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