Look before You Leap

A lot of business opportunities are missed and investment is overcautious in some sectors, Dr Luu Bich Ho, former Director of the Development Strategy Institute (DSI) under the Ministry of Planning and Investment, shared with the Vietnam Business Forum. Anh Phuong reports.

Where should investors put their money to have the highest profitability in 2017?
In 2017, potential targets for investment flows are still real estate, securities, finance, agriculture, tourism service and others. These sectors always catch investment trends, particularly in an emerging economy and with an enabling government, as in Vietnam.

What do you think about business opportunities in the real estate industry in 2017?
Many specialists and I believe that the real estate market will return to true value in 2017 where there is no bubble or fever because speculative profiteering investments are likely to decline. Projects will be also segmented strongly, with advantage belonging to those with strong financial capacity and new products.

Social housing and low-cost housing (priced about VND1 billion each unit of housing) may be good options for investors because these are affordable for the majority, particularly middle families.

The development room for commercial and upscale housing segments is still broad, but it depends largely on State support policies. I think that the high-class housing will still have a strong pull, but it will be widely segmented into super-luxury, luxury and high-class.

As known, finance fosters the real estate market. From January 2017, new policies will narrow bank credit flows into the property market. Commercial banks almost run out short-term credit for property loans. This should be taken into consideration before investors want to invest in lucrative property industry in 2017.

Finance leverages not only the real estate sector but also other industries. And, the financial market is also an effective investment channel next year. What do you think about this?
In my opinion, the concept of financial market is quite broad as it covers stock market, forex market, currency market, gold, US dollars and banks, and all these links form an aggregate financial demand that pumps funds into the economy.

However, if we look into particular fields, we can see that gold market was the most volatile. Vietnamese people are very keen on gold as a type of savings. However, in the current context, this investment should be reconsidered because the precious metal was forecast to be more volatile in the coming time. The slump in global bullion prices also entailed the decrease in domestic gold price last year.

Like many other experts, I believe that the stock market will still be a good investment channel in 2017. But, day-trading investment must be performed with caution since foreign funds reportedly out-flowed considerably. Therefore, although this is still an attractive investment channel, it is not a playground for all. This means that players must be knowledgeable and professional.

The safest plan is still putting money at banks because interest rate seems to be kept stable when the Government pledges to support business development in a stable-growing economy where macroeconomic indicators are valorised and inflation is controlled. For that reason, the stability of cash flows and banking liquidity is always considered a top priority. Secondary investors can feel completely assured of depositing at banks for regular interest.

The Government has increasingly reiterated the sustainable agricultural development towards the end of the year. Do you think this will be a fast-growing sector in 2017?
Not only now, but for a long time, the Government has always seen the importance of agriculture in the national economy. But, we must know that agricultural investment and development particularly need huge capital and a long payback period with high risks (due to natural disasters and weather conditions), while international competition is also very stiff.

But I think that despite facing challenges, if we choose the right narrow field in a very broad agricultural sector, we can still make better-than-expected successes. For example, the successes of “duck king” or “organic vegetable king”, as dubbed by local media, are the clearest examples of right picks in agricultural sector - a potential investment option in the future.