"Overseas Investment Is Inevitable Trend": Vietnamese Economist

 

This trend is inevitable. This trend comes from two reasons. First, domestic enterprises have developed in size and business scope; therefore, they want to expand business to other countries. Or in other words, domestic enterprises have grown into a size that the domestic market failed to meet their growth capacities; thus, they must extend abroad. Second, with the phenomenon of globalisation, enterprises should operate in the global environment. All countries expand their markets and one of the market penetration methods is to invest in those markets.

 

 

This ideology is illogical and unsuitable for business activities. Or in other words, enterprises want to develop in their own countries, they must invest abroad when they reach certain sizes. Successful overseas investment will pull up domestic business. At that time, enterprises are able to mobilise domestic sources. In other words, overseas investment develops one time; domestic business will develop to two or three times. Domestic business is the roots. Without market expansion, export of products or import of materials, enterprises certainly cannot broaden. 

 

For me, we must thoroughly understand overseas investment. We cannot simply think that overseas investment means the loss of capital. Bringing capital abroad is to create more conditions for enterprises to develop in the domestic market and then bring more capital homeland. In short, overseas investment is aimed to develop the domestic business. There is no worry about this trend because this is a healthy phenomenon.

 

In general, our legal system is prone to control rather than create conditions although we have reformed a lot. As a result, before this phenomenon, they will think of how to control. After that, they will gradually loosen control. This is a common way of thinking when we make the law. The new thing must be controlled tightly first.

 

There is no effect. The more the capital market is opened, the more capital source is rotated. For instance, the United States is the largest overseas investor but it also attracts a lot of investment capital. Capital inflows and outflows will generate profits. The US is a large economy with various forms of business activities. Each economy has its own strong points and wants to exploit strong points of the others while others also want to tap strong points of that country. Hence, they see moneymaking chances and set up relationship with each other.

 

This is the responsibility of the managers in the role of the capital owners. The capital owners must manage their capital. In cases of capital loss, it can occur domestically as well as abroad. If we fear of the loss of capital, we shouldn’t sit idle. Concerned parties should change their ways of thinking and methodologies. Preventing State-owned enterprises from investing abroad means hindering the healthy development of enterprises at home. Certainly, economic units will not become economic groups if they are hesitant about overseas investment. The expression, “A man is master in his own house” is as old as hills and holds true today.