INVESTMENT DECISION

Investment Decision Making in Private Sector of Vietnam, Comparison with UK Companies

Investment Decision Making in Private Sector of Vietnam, Comparison with UK Companies

Aim and Objectives of the Study

The basic aim of this research is to compare the importance of investment decision making in private sector of Vietnam with UK companies. Thus, the objectives of this research primarily concerned with the logic of investment decision making. Throughout the 1980s and the 1990s thus far, there has been concern in the UK that the level of capital investment in manufacturing industry has not responded well to the economic recovery. There has been concern that, in the long term, economic recovery may well be jeopardised by companies arriving at capacity buffers. This study reviews how Vietnam companies have approached decision making over this period and the factors that Vietnam as well as UK private companies sees as important in influencing manufacturing investment.

In the study I consider four main areas, starting with the influence of interest rates on capital investment decisions. I then examine other factors which may be relevant, including the system of corporate governance. I then go on to examine the financial appraisal techniques employed by Vietnamese companies, including the cost of capital used in such analyses, to see if these can explain the level of investment. Finally, I look at the particular problems involved when investing in advanced manufacturing technology.

Literature Review

Investment involves the commitment of a capital sum for benefits to be received in the future in the form of an income flow or capital gain or a combination of both. In economic terms, investment utilises capital for maximum possible return. The optimal allocation of asset classes forms an integral part of the investment decision-making process. Property, as an eligible class within a multi-asset portfolio, is now accepted by pension funds and other institutional investors as an important instrument for diversification and as a hedge against inflation. Indeed, attention increasingly is focusing on the need for the assessment of the investment performance of property assets. In particular, large investors in property recognize the necessity for historic performance and an assessment of future performance of property portfolios in formulating investment strategy decisions.

Since the 1970s there has been an unprecedented growth in investment in real property. This is based on the belief that property within a multi-asset portfolio will provide security of capital and income in an uncertain economic environment and also produce relatively attractive returns. The investment process should therefore consist of an operational framework to harness the potential for an orderly collection of property investment assets. However, potential problems involve selecting a collection of individual investments or bundles of investments which, taken together, can produce desirable characteristics with respect to risk and expected return. This is further complicated by the need to decide on the appropriate level of capital commitments taking into account the degree of exposure to risk, and on the timing of the acquisition of the investment. To be effective the management of the property portfolio should have ...