MOEA Warns Taiwan Firms in Vietnam Due to Devaluing Dong

Taipei, June 16, 2008 (CENS)--Due to the sharp depreciation of Vietnamese dong, Taiwan firms in that nation are warned to be cautious, said P.C. Chiu, director of the Industrial Development and Investment Center of the Ministry of Economic Affairs.

The MOEA worries that the sharp depreciation of the Vietnamese currency might drive Taiwan firms to shut down as the devaluation could spark an Asian financial crisis like that in 1997.

C.Y. Chen, director of the Taipei Economic and Cultural Office in Ho Chi Minh City, said the Vietnamese government recently chose to raise interest rates and devalue its currency to check its overheated economy, which has sparked serious inflation. The Vietnamese consumer price index grew over 20% in May. Chen said, however, he believes Vietnamese economy would soon get back to the normal track.

MOEA statistics show that Taiwan is Vietnam's second-largest foreign investor, only behind South Korea, with the number of Taiwan firms in Vietnam totaling 1,800 and overall investments reaching US$10.3 billion.

The MOEA's Bureau of Foreign Trade said over the past several years, Vietnam has undergone excessive economic growth due to an overwhelming inflow of speculative funds into the financial and real-estate markets, with such speculative money blowing up a bubble in that nation.

Taiwanese Firms' Investments in Vietnam
Year	No. of Projects	Value (US$100 million)
1959-2002	903	86.5
2003	190	5.9
2004	171	5.6
2005	187	5.7
2006	125	2.4
2007	226	1.7
Total	1,802	107.8
Source: Industrial Development and Investment Center under the Ministry of Economic Affairs