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© 2013 Reciprocus
W
ASEAN Investment
Flash
Vietnam
February 2013
© 2013 Reciprocus
Chairman’s Message
Dear Readers,
Following our geographic expansion with new
offices in the United States and Europe, we are
seeing interest from SMEs who are seeking our
assistance to execute expansion plans globally.
We’re pleased that this interest is not limited to a
specific industry or a specific part of the value
chain, but rather is across the board. In line with
this, we have received mandates in several
countries including Singapore, Germany, India and
the United States and in industries such as
chemical, manufacturing, direct marketing and real
estate. We are finding our research efforts in these
markets both highly educational for our firm as
well as helpful in our scouting efforts. As Southeast
Asia continues to be our home market, this Flash is
keeping our firm up-to-date on recent
developments in the region and we hope it has the
same effect with our readers, keeping you
informed and connected to the ASEAN pulse as
well. Happy reading.
Letter from the Editor
Following a meteoric 20 year rise as one of Southeast
Asia’s fastest developing nations, recent economic
turbulence in Vietnam has cast doubt over whether this
nation’s sharp growth trajectory of previous decades will
resume going forward. Challenges continued to mount
as Vietnam’s economic growth rates declined to 13 year
lows of 5.2% in 2012, a far cry from the annual 10%+
rates which Goldman Sachs and
PriceWaterhouseCoopers predicted not long ago would
likely last until 2025. The government struggles to curb
inflation which has accelerated to 7% in recent months
following a series of five central bank interest rate cuts
last year. Toxic debts are swelling following a decade of
bank liberalization efforts which has resulted in a fragile
financial system mired with a bad debt ratio of 10
percent among commercial banks.
Symptomatic of these weaknesses, foreign direct
investment for 2012 dipped 4.9% y/y, however early
indications of a strong 2013 rebound are emerging with
FDI up 74% in January, 2013 from the same time last
year. Moreover, Vietnam continues to serve as a
favorable low cost manufacturing alternative to China,
with government incentives such as preferential tax
rates and foreigner-friendly investment policies
attracting new productions of exported goods,
agricultural farming and processing projects, and
investments involving advanced technology.
Nevertheless, the recent economic turbulence has
deterred many investors who are now opting to pursue
projects in neighboring countries, with Cambodia and
Thailand proving themselves as serious contenders for
the spot of the Indochina Peninsula’s most attractive
manufacturing hub. Among Sinaporean garment and
textile manufactuers, we see increased interest in
Cambodia, while other manfuacturers (e.g. furniture)
remain interested in Vietnam. The significant decline of
manufacturing activity in 2012 caused by weak Eurozone
and China demand may now be reversing, with HSBC’s
Manufacturing PMI indicating marginal growth in
January 2013 at 50.1, up from 49.3 in December 2012.
While integration into the global economy and an
incomplete transition into a market economy has
brought a number of complex and challenging obstacles,
we consider the country stable for the time being. We
recommend investors remain cognizant of the fact that
Vietnam’s economy is highly dependent on foreign
demand of exports and therefore highly vulnerable to
global macroeconomic trends, while remaining cautious
and vigiliant for indications as to whether Vietnam will
resume its originally trajectory to ASEAN superstardom
or if recent economic malaise will continue to drag on.
Robert MacPherson Vice President and Editor
Reciprocus International Pte Ltd
Editor and Vice President
Reciprocus International Pte
David Emery Founder and Chairman
Reciprocus International Pte Ltd
World Economic Forum ranks Vietnam’s
competitiveness 65th out of 142 countries
in 2011-2012
© 2013 Reciprocus
Table of Contents
Introduction
Country Profile 1
Highlights of the FY 2013 Budget 2
World Rankings 2
Investing in Vietnam
FDI Inflows into Vietnam 3
Factors Driving Investment in Vietnam 4
Financial Markets in Vietnam
Origin & Development 6
Institutional Framework and Supervisory Authorities 7
Banking Sector in Vietnam 7
Vietnam’s Bank Credit Institutions 8
Private Equity in Vietnam
Private Equity Market 10
Outlook 12
SWOT Analysis of the PE Industry 13
Appendix
14
Disclaimer: This report is an aggregation of available information gathered from extensive research done on the net. While Reciprocus endeavors to ensure accuracy of information, we do not accept any responsibility for the consequences of any actions taken on the basis of the information provided and any loss or damage to any person resulting from it.
© 2013 Reciprocus 1
Country Profile
Map
Located in South East Asia, bordering the
Gulf of Thailand, Gulf of Tonkin and South
China Sea, as well as China, Laos, and
Cambodia
Figure: 1
About Vietnam
Languages
Vietnamese (official), English (increasingly
favoured as a second language), French,
Chinese, and Khmer, mountain area
languages (Mon-Khmer and Malayo-
Polynesian)
Capital City
Hanoi (Ha Noi)
Major Cities – Population
Ho Chi Minh City 5.976 million; HANOI
(capital) 2.668 million; Haiphong 1.941
million; Da Nang 807,000 (2009 census)
Religions
Buddhist 9.3%, Catholic 6.7%, Hoa Hao
1.5%, Cao Dai 1.1%, Protestant 0.5%,
Muslim 0.1%, none 80.8% (1999 census)
Administrative Divisions
58 provinces (tinh, singular and plural)
and 5 municipalities (thanh pho, singular
and plural) provinces
Flag
Figure: 2
Red field with a large yellow five-pointed
star in the centre; red symbolizes
revolution and blood while the five-
pointed star represents the five elements
of the populace - peasants, workers,
intellectuals, traders, and soldiers - that
unites to build socialism
Figure: 3
Currency
Vietnamese Dong (VND)
VIETNAM
© 2013 Reciprocus 2
Population
Age Structure
0-14 years: 24.9% (male 11,924,283/
female 10,824,773)
15-64 years: 69.6% (male 31,824,777/
female 31,887,228)
65 years and over: 5.5% (male 1,940,755/
female 3,117,473)
Economy
Figure: 4
Main Industries
Food Processing, Garments, Shoes,
Machine-building, Mining, Coal, Steel;
Cement, Chemical Fertilizer, Glass, Tyres,
Oil, Mobile Phones
FY 2013 Budget Estimates
Budget revenues are projected at
an estimated US$ 38.8 billion while
spending would be approximately
US$ 46.5 billion
New construction and projects will
be limited next year in order to
save money to pay for completed
projects or those slated to
complete within 2013
The minimum wage will be
adjusted up by VND 100,000 to
VND 1.15 million by July 01 next
year
World Rankings
ADB, APEC, ARF, ASEAN, CICA, CP, EAS,
FAO, G-77, IAEA, IBRD, ICAO, ICRM, IDA,
IFAD, IFC, IFRCS, ILO, IMF, IMO, IMSO,
Interpol, IOC, IOM, IPU, ISO, ITSO, ITU,
MIGA, NAM, OIF, OPCW, UN, UNCTAD,
UNESCO, UNIDO, UNWTO, UPU, WCO,
WFTU, WHO, WIPO, WMO, WTO
Ease of Doing Business in 2012 (World
Bank)
98 out of 183 countries
Competitiveness in 2011-2012 (World
Economic Forum)
65 out of 142 countries
Enabling Trade Index 2012 (World
Economic Forum)
Rank 68
Government Effectiveness Indicator 2011
(World Bank)
Percentile rank 45.02
Control of Corruption 2011 (World Bank)
Percentile rank 44.55
Transparency International’s 2011
Corruption Perception Index
112 out of 182 countries
© 2013 Reciprocus 3
FDI Inflows into Vietnam
Figure: 5
Vietnam has emerged as one of the
most attractive destinations for
foreign investments in the region
The Government of Vietnam is seeking
to attract increased investments
across various sectors. However, a
number of sectors which the
Government especially encourages
investments in are as follows:
o The production of exported goods
o Raising, farming and processing
agricultural, forestry and aquatic
products
o Investments involving advanced
technology
o Environmental protection
o Research and development
o Labour intensive industries The
efficient use of raw materials and
natural resources
o Major infrastructure and
production capacity projects
Investment Policy/ Investment Incentives
The 2005 Investment Law and 2005
Enterprise Law provides the legal and
political framework for investment
and business conditions in Vietnam
The 2005 Investment Law
encompasses investors regardless of
foreign or domestic status in order to
attract investment activities and
mobilise capital
Investors are entitled to preferential
tax rates; the duration of entitlement
to such rates and the duration of
exemption from and reduction of tax
is in accordance with the prevailing tax
laws
If an investor suffers losses after
completion of tax finalization with the
tax office, the party shall be permitted
to carry losses forward to the
following year
Business projects with high economic
efficiency and investment projects in
incentivized sectors and geographical
areas shall be subject to accelerated
depreciation of fixed assets
INVESTING IN VIETNAM
© 2013 Reciprocus 4
Factors Driving Investment in Vietnam
Strong Macroeconomic Fundamentals
One of Asia’s fastest growing
economies
GDP growth has been relatively
stable while other ASEAN
countries experienced negative
growth during the Asian financial
crisis
The nation officially became the
WTO's 150th member in 2007
Political stability
Vietnam’s growth has been
relatively balanced, with the
industrial and services sectors each
accounting for most of the annual
output
Vietnam’s growth has been driven
by a young, expanding workforce
Contained inflation while still
encouraging economic growth
Figure: 6
Figure: 7
Figure: 8
Figure: 9
Figure: 10
© 2013 Reciprocus 5
Strong Investment Climate
A.T. Kearney 2011 Global Services
Location Index™ (GSLI)
Vietnam ranked #8 in the world in the
2011 index
FDI Highlights – 2012
Vietnam has 14,364 valid foreign FDI
projects with a total registered capital
of US$ 212.84 billion so far
Japan has become the biggest investor
in Vietnam with 1,800 projects worth
US$ 28.99 billion followed by Taiwan
with US$ 26.39 billion, South Korea
with US$ 24.65 billion and Singapore
with US$ 24.64 billion
The processing and manufacturing
sector remains the most attractive to
foreign investors with 8,061 projects
capitalized at US$ 105.2 billion,
followed by real estate, hospitality and
catering
FDI is one of the key sources of foreign
exchange for Vietnam, apart from
exports, remittances and Official
Development Assistance (ODA)
The country is actively working to
minimize the number of unsuccessful
projects across the board, while
focussing more on industry,
construction, high technology, and
renewable energy. However, local
experts have warned that this will not
be without significant challenges
Exports in Vietnam:
Figure: 11
Vietnam's Major Export Sectors
Arts & Crafts, Cashew, Coffee, Electronics
& Computer Components, Footwear &
Leather Products, Fishery Products, Fruits
& Vegetables, Pepper, Plastics & Plastic
Products, Rice, Rubber, Software
Processing Service, Textiles & Garments,
Tourism, Wires, Cables & Conductors,
Wooden Products
Figure: 12
Manufactured goods dominate
Vietnam’s exports
The country positions itself as a
low-cost alternative to China’s
manufacturing dominance
Oil exports continue to be an
important source of foreign
income
© 2013 Reciprocus 6
Source: SBV
Origin and Development:
First major transition towards the
development of the equity
markets in Vietnam is traced back
to 1990 when the Law on
Companies and Private Enterprises
was passed
Vietnam launched its privatization
(equitization) program in 1992.
Equitization is a process of
transforming a State Owned
Enterprise (SOE) into a joint-stock
company. However, the
Government also states that
equitization is not always complete
privatization as the Government
holds control through investment
management in some large SOEs,
especially industries such as
electricity and oil & gas. In the first
four months of 2012, four SOEs
were equitized. Refer Figure: 13
In 1996, State Securities
Commission (SSC) was established
as a regulatory authority of the
securities market
The capital markets became
operational in July 2000 when Ho
Chi Minh Centre (HoSTC) was
established and started operations
with only 7 securities companies
licenced in December 2000
Hanoi Stock Trading Centre (HOSE)
was established in 2005
Crucial step of setting up of a legal
framework was marked in 2006
and the Law on Securities and Law
on Enterprises came into force in
2006
In 2011, there were more than 500
companies on the two stock
exchanges
In terms of the bond market, the
total value reached 15% of GDP
These developments are a result of
the systematic implementation of
legal framework improvements
However, only 16% of the total
companies are listed companies
(equitized) whereas 81% are
unlisted companies (mainly SOEs)
Refer Figure: 14 below
Bond Markets:
Vietnam’s bond market can be
classified as corporate bonds,
treasury bonds and bills,
municipal bonds, State Bank of
Vietnam bills and Government
guaranteed bonds
Of the above listed categories,
treasury bonds and bills,
Government guaranteed bonds
and municipal bonds are called
Government bonds and are
FINANCIAL MARKETS IN VIETNAM
© 2013 Reciprocus 7
regulated by Decree No.
141/2003/ND-CP
These Government bonds
constitute a majority of Vietnam’s
total outstanding bond market.
These bonds are issued by the
Vietnam Development Bank
(VDB), the Vietnam Bank for Social
Policies (VBSP) and few are
assigned to SOEs to mobilize
funds into other Government
investment projects
By the end of 2011, 50% of the
bonds were either VDB, SOE or
other Government bonds, 41%
were Government treasury bonds
while the remaining 9% were
corporate bonds (Refer Figure:
15)
Vietnamese corporate bond
market has evinced an
encouraging growth trend after
2007 (Refer Figure: 16)
Institutional Framework and Supervisory
Authorities: (Refer Figure: 17)
1. State Securities Commission (SSC):
The SSC is the regulatory authority for
the securities market, securities
companies and the stock exchanges in
Vietnam. The Law on Securities guides
the legal framework for the security
exchanges and companies
2. Insurance Market: The Insurance
Supervision Department under the
Ministry of Finance (MoF) is the
supervising authority for the nation’s
insurance market. The insurance
sector abides to MoF’s Decision
288/2009
3. Bond Market: The Banks and Financial
Institutions Department under the
MoF is the supervisory authority for
the bond market in Vietnam. The
overall operations, guidelines, rules
and regulations are governed by
MoF’s Decision 2456/2009
4. Banks and Other Credit Institutions:
The State Bank of Vietnam (SBV) is the
supervisory authority for banks and
other credit institutions
5. Overall, the National Financial
Supervisory Commission supervises
the financial markets
The State Securities Commission (SSC)
Under the MoF, SSC is in charge with
functions of exercising the state
regulatory functions of the securities
markets which include direct supervision
of securities market activities,
management of public services in
securities markets in compliance with the
applicable laws.
The SSC has an independent legal status,
its seal is imprinted with the national
badge and its account is at the State
Treasury as stipulated by applicable laws.
Various duties and powers are vested with
the SSC.
Banking Sector in Vietnam:
State Bank of Vietnam (SBV)
The Vietnam National Bank was founded
as the nation’s central bank and was
performing various roles assigned by the
Communist Party of Vietnam and the
Government during 1951 to 1954. During
1975 to 1985 (the post war period),
© 2013 Reciprocus 8
Vietnam built the new banking system
under the new Government. Through a
series of reforms, the entire banking
system experienced several
transformations. The real development
and reforms post 1986 are:
From 1986 - 1990:
- Separation of the state
management function from the
monetary and other commercial
credit functions
- Setting up new and improved
banking mechanisms
- In May 1990, the Ordinance on the
State Bank of Vietnam and
ordinance on banking, credit co-
operatives and finance companies,
were enacted, thereby officially
changing the operational
mechanism of the banking system
of Vietnam from one-tier to two
1993: Normalizing credit relations
with international monetary
organizations (IMF, WB, ADB)
1995: Resolution on removing
sales tax on banking activities was
passed by the National Assembly;
the bank for the Poor was founded
1997: The Law on the State Bank
of Vietnam and the Law on Credit
Institutions were passed by the
10th National Assembly of the
Socialist Republic of Vietnam and
became effective in 1998
1999: The Deposit Insurance of
Vietnam was established
2000: Financial and organizational
restructuring of state-owned
commercial banks and joint-stock
commercial banks
2002: The VND denominated
lending rate of credit institutions
was liberalized, marking the last
step to complete liberalization of
the credit market's interest rates
2003: Comprehensive operational
restructuring of commercial banks
in line with international standards
2010: The 12th National Assembly
passed the Law on the State Bank
of Vietnam (SBV) and the Law on
Credit Institutions at its seventh
session in Hanoi on June 16, 2010.
The two laws became effective
from January 1, 2011
Vietnam's Bank Credit Institutions:
The State Bank of Vietnam is the
regulatory authority overlooking
Vietnam’s bank credit institutions. These
institutions can be broadly classified as
follows:
State-Owned Credit Institutions: The
banking sector in Vietnam is largely
dominated by state owned credit
institutions or banks. According to
official data available for 2008, the
banking sector in Vietnam was
dominated by state-owned banks,
accounting for 70% of total assets in
the banking system and 70% of total
bank loans
Joint-Stock Commercial Banks:
According to official data available for
2008, these banks serve mainly small
and medium enterprises, accounting
for about 15% of total credit and 20%
of the total chartered capital in the
banking system
© 2013 Reciprocus 9
Foreign Banks’ (FB) Branches and
Representative Offices: According to
the latest data available, there are
about 50 foreign banks’ branches in
Vietnam and 49 representative offices
of foreign banks
Joint-Venture Banks in Vietnam: The
Vietnam-Russia Joint Venture Bank is
the largest joint venture bank with a
chartered capital of US$ 168.5 million,
closely followed by INDOVINA Bank
Ltd. with a chartered capital of US$
165 million
Wholly Owned Foreign Banks: HSBC,
Standard Chartered and ANZ are the
most popular foreign banks in Vietnam
Finance & Leasing Companies:
Vietnam has a network of 18 finance
companies and 12 leasing companies
A brief synopsis of Vietnam’s Bank
Credit Institutions is described in
Figure: 18
Capital Mobilization and Credit Growth in
2010:
During 2010, capital mobilization by
joint stock commercial banks, finance
and leasing companies experienced a
strong growth while foreign banks,
state owned commercial banks and
joint venture banks witnessed modest
growth
Statistics suggest an increase of credit
growth during the first 4 months of
2011 from that period a year ago
At the end of 2010, total credit of the
banking system increased over 31% y-
o-y, lower than the near 38% y-o-y
growth in 2009
All credit institution groups witnessed
high credit growth. Joint stock
commercial banks reached the highest
level with 44.12% followed by state-
owned commercial banks with
27.85%, joint-venture banks and
foreign banks' branches at 24.47% and
finance & leasing companies at over
20% growth
With respect to economic industries,
credit structure saw a big change in
2010 compared to the previous year.
There was an increase in the
proportions of industry and services
and reduction in the share of
agriculture in the nation's GDP
Credit to agriculture development,
which includes farming, forestry and
fisheries accounted for 9% of total
credit while, industry-construction
took over 39%
Banking sector scenario in Vietnam is
dominated by 5 large State Owned
Commercial Banks (SOCBs). Large-
sized joint-stock banks: assets over
VND 60 trillion; Medium-sized: assets
over VND 50 trillion; Small-sized:
assets over VND 20 trillion (Refer
Figure: 19)
SBV carries out all its functions through
various departments. Detailed
organization structure (departments
under SBV) and their specified roles are
described in Figure: 20
© 2013 Reciprocus 10
PRIVATE EQUITY IN VIETNAM Introduction
Vietnam’s economy has grown rapidly
since the 1980s with the country opening
up its economy. Today foreign investors
consistently rank it as one of the most
attractive investment destinations in Asia.
Rapid economic growth, attractive capital
markets and evolving political and
regulatory frameworks are some of the
factors which have contributed immensely
in attracting global institutional investors
to this promising frontier market.
To maximize investments by developing a
stable investment environment, Vietnam
has been developing different measures
for investment guarantees through simple
and transparent procedures and
processes to ensure fairness among
investors.
Private Equity (PE) Market:
Capital has been scarce in Vietnam in the
recent past. Debt markets have been
largely inaccessible or unaffordable, and
an illiquid stock market has rendered
public equity markets as an unreliable
source of funding for Vietnamese
corporations. This has resulted in stronger
deal flow for alternatives, including
private equity.
The strong economic and market
fundamentals in Vietnam has led to an
increase in the number of private equity
firms with international capital to invest.
In Vietnam, there are a number of firms
applying the term "private equity", but it
sometimes includes investment activities
in e.g. real estate and the OTC market.
There are few fund managers in Vietnam
who focus on classical private equity, i.e. a
comprehensive plan for adding value,
legal agreements with investor
protection/rights and board
representation.
The country’s attractiveness among
investors emerged for private equity
players due to the privatization of state
owned enterprises (SOE).
With a view to encourage investments
especially in SOEs, in July 2011 the
Government announced a more flexible
regime for SOEs targeting strategic
investors. However, progress is slow and
many SOEs are resistant to changing
behaviour to drive efficiency.
Prominent PE players in the country:
Dragon Capital
VinaCapital
Mekong Capital
Horizon Capital
VI Group
IDG
Blackhorse
Vietnam Asset Management
Aureos
Fullerton Fund
Private equity investments have slowed
sharply since 2007, when 63 deals worth
US$ 840 million were completed
compared to 18 deals worth US$ 220
million completed in 2010. (Refer Figure:
21)
© 2013 Reciprocus 11
In 2010, PE activity was more focused on
the sell-side than on the buy-side as older
Vietnam-focused funds approached its
maturity stage and fund managers were
accordingly looking for exits. Amid this,
concerns increased over the Vietnamese
economy towards the end of 2010 as
inflation rose, the balance of trade gap
continued to widen which in turn
pressured the local currency.
Notable PE activity announced during
2010 includes:
Mekong Capital Ltd divested its
minority stake in Masan Food
Corporation, a Ho Chi Minh based
producer, wholesaler and retailer of
food products and a majority-owned
unit of Masan Group Corporation, to
an undisclosed acquirer for VND 368.6
billion (US$ 18.8 million)
Aureos South East Asian Fund of
United Kingdom, a unit of Aureos
Capital Ltd, agreed to acquire a 18.5%
stake in Tran Anh Digital World JSC, a
Hanoi-based wholesaler of computer
devices for VND 80.8 billion (US$ 4.2
million) in cash, in a privately
negotiated transaction
Mekong Capital Ltd divested its
undisclosed minority stake in Maison
JSC, a Ho Chi Minh based fashion
retailer, to an undisclosed acquirer
Masan Group Corporation acquired a
70% interest in Nui Phao Mining Joint
Venture Co Ltd, a mining company,
from Tiberon Minerals Pte Ltd
(Tiberon) a majority-owned unit of
Dragon Capital Corporation. Terms of
the deal were not disclosed
The year 2011 proved to be fruitful for the
country with:
KKR’s spending of US$ 159 million on a
10% stake in Masan Consumer
Corporation which brought Vietnam
back on the private equity stage. KKR’s
acquisition in April 2011 is the
country’s largest-ever private equity
transaction and stands out as a major
achievement in the consumer sector.
With interests in food, banking and
mining, Masan raised more than US$
500 million. The investment deal had
stimulated the interests of
international PE firms looking out for
US$ 50 million-plus deals
making entrepreneurs aware of the PE
proposition
In the same year, eight Vietnam-
targeted funds were launched. The
largest was Saigon Asset
Management’s growth capital fund
targeting US$ 300 million
Sectors in focus:
PE firms are targeting sectors which will
benefit from the increasing levels of urban
wealth, including consumer goods, media,
education, healthcare and
pharmaceuticals.
Successful growth investments in the US$
5–15 million made over the last few years
are likely to generate deal flow for larger
PE firms as exits are sought. However,
© 2013 Reciprocus 12
price expectations remain a barrier to
deals, with vendors holding on to higher
valuations seen in the boom.
According to reports, Vietnam’s
investment scenario is about to get a
boost in its private equity industry, as
fund management companies seek to
establish open–ended funds that will
allow domestic investors to participate in
trading, increasing liquidity across all asset
classes. This type of setup which is often
seen in developed countries, will allow
local, typically retail investors, to purchase
shares in the fund directly.
At present, many Vietnam-based funds
targeting private equity deals are closed-
ended. For example PE firm VinaCapital,
has a private equity fund of about US$
780 million launched in 2003, but as the
vehicle’s shares are traded on London’s
Alternative Investment Market, local
Vietnamese are restricted from trading in
it.
Outlook
Successful PE investments in the country
require long-term commitments to
building relationships with entrepreneurs,
government and regulators to get into
potential deals early.
According to surveys, higher prices for
companies in North America and political
and regulatory risks in China are leading
private equity investors to consider this
emerging market of Southeast Asia.
Moreover, deal flow in the country will
come mainly from the emerging
entrepreneurial businesses needing
capital.
Regulatory reforms, combined with
economic growth and political stability,
underpins Vietnam’s development
potential. Vietnam is well positioned to
become the upcoming investment
destination amid increasing purchasing
power coupled with a budding population.
Increasingly deregulated financial markets
will create significant opportunities for
private equity firms. The domestic retail
sector in Vietnam has seen an increase in
private equity investments in recent
years. With limited infrastructure and a
fragmented retail business space, this
sector will continue to offer an attractive
mid to long term growth potential for
private equity investments.
In spite of these growth factors, Vietnam
continues to tackle a number of key issues
to ensure its competitiveness as an
investment destination in the region.
These issues include poor infrastructure,
corruption, unrealistic pricing
expectations, currency instability, a highly
regulated labor market, high taxation and
conservative home-ownership laws.
© 2013 Reciprocus 13
SWOT Analysis:
Strengths:
The Vietnamese economy performed
comparatively better in the first half of
2012 compared to the rest of Asia
Vietnam leads in the region with its
diversified economy, spearheaded by
consumer and industrial sectors
Standard & Poor’s has raised
Vietnam’s rating from negative to
stable on the back of Government
measures to tighten its finances, and
get inflation down to its lowest level in
three years at about 3%
Favourable investment policies
through the country’s new Law on
Investment and Law on Enterprises
Weaknesses
Lack of information available to
investors in Vietnam. This shortage of
information continues to hold back
investments in the country
Vietnam’s economy offers challenges
due to macroeconomic problems
including a depreciating currency,
inflation and fluctuations in property
prices
Opportunities
Sectors that investors should consider
when looking at Vietnam includes
FMCG, tourism and the construction
sectors
Threats
As with any emerging market,
investors exercise caution with
regards to investing in Vietnam,
particularly considering the ever
evolving political, social and economic
landscapes
© 2013 Reciprocus 14
APPENDIX
Origin and Development of Securities Market
Source: Spearhead Business Research/Reciprocus
Figure: 13
Source: Asian Bond Online
Figure: 16
Source: Spearhead Business Research/Reciprocus
Figure: 15
© 2013 Reciprocus 15
Supervising Authorities of the Financial Markets in Vietnam
Source: Spearhead Business Research/Reciprocus
Figure: 17
Source: Spearhead Business Research/Reciprocus
Figure: 18
Source: SBV
Figure: 19
© 2013 Reciprocus 16
Functions of State Bank of Vietnam (SBV)
Source: Spearhead Business Research/Reciprocus
Figure: 20
Figure: 21
For More Information Contact:
Robert MacPherson
Vice President
Reciprocus International Pte Ltd
10 Anson Road, #10-22, International Plaza, Singapore 079903
Mobile: +65 9171 5768 Tel: + 65-6225-9986 Fax: +65 6225 8223
Website: http://www.reciprocus.com/
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