Improving investment efficiency is more important than increasing investment capital

Investment capital is a material factor that directly determines GDP growth rate. The amount of capital is expressed in many aspects, through comparison, such as the growth rate compared to the same period last year, the ratio of investment capital/GDP. According to economic type, investment capital comes from the state economic sector, non-state sector and foreign direct investment. According to source, investment capital comes from own sources, from mobilization on the stock market, and from bank loans.

Statistics for the first 6 months of the year from the General Statistics Office show that the amount of investment capital in the first 6 months of 2016 is not small. The growth rate compared to the same period last year is quite high, higher than the same period 3 years ago (up 11.7% compared to 9.3% and 9%, respectively). Although the ratio of investment capital/GDP is still lower than the average for the period 2001 - 2010 (over 39%), it is higher than the same period and the previous year (32.9% compared to 31.1% and 32.6%, respectively).

Amount of investment capital is very important, but investment efficiency is even more important

In terms of structure, capital from the state sector increased at a lower rate, but accounted for a very high proportion (37.1%), but from the state budget, the increase was higher (11.9% compared to 11.7%). According to the source, the equity capital ratio is better, when newly established businesses have a higher amount of registered capital, and the amount of additional capital is also greater. However, the proportion of equity capital still only accounts for about 1/3, and there are even many businesses that "catch the enemy bare-handed".

In August 2016, VN-Index increased by 13.3% compared to the end of the previous year. This is a fairly high increase, contributing to the supply of medium and long-term capital. Besides, credit growth also reached a high level (8.54%, of which VND credit increased by 12.28%).

In fact, the amount of investment capital is very important, but more important is the investment efficiency.

The amount of investment capital is not everything, due to its limitation (especially equity capital), due to the side effects of increasing investment capital. In fact, in 2013, the investment capital/GDP ratio was lower than in 2012 (30.5% compared to 31.1%), but GDP growth was higher (5.42% compared to 5.25%). In 2015, the investment capital/GDP ratio was lower than in 2011 (32.6% compared to 33.3%), but the GDP growth rate was higher (6.68% compared to 6.24%). In the first 6 months of 2016, the ratio of investment capital/GDP was higher (32.9% compared to 31.1%), but the GDP growth rate was slower than the same period last year (5.52% compared to 6.32%). Forecast for the whole year 2016, GDP will increase by 6.5%, the ratio of investment capital/GDP is 33%.

That proves that the amount of investment capital is very important, but investment efficiency is even more important. Furthermore, investment efficiency also has a dual impact. The dual impact of investment efficiency is shown first of all: to increase 1% of GDP, less than the ratio of investment capital/GDP is needed - that is, saving investment capital or the same ratio of investment capital/GDP will create a higher percentage of GDP growth. Effective investment also improves growth quality, does not cause macroeconomic instability (increasing accumulation from within the economy, reducing budget deficit, reducing public debt, foreign debt, government debt, controlling inflation, minimizing bad debt...).

Investment efficiency is calculated by many indicators, including the coefficient between the ratio of investment capital/GDP compared to the GDP growth rate. This coefficient in 2015 fell below the 5 times mark for the first time in many years, but in 6 months of this year it rose to nearly 6 times. Notably, the proportion of investment capital of the state sector is still very high (37.1%), only slightly lower than that of non-state capital (37.3%), while the investment efficiency of the state sector is the lowest, only more than half of the non-state sector.