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Vietnam grows more attractive to foreign investors

(SGT-HCMC) Foreign investors, speaking at an investment conference in HCMC yesterday, said Vietnam was becoming a more attractive destination for business with big amounts of foreign capital forecast to flow into the country.

Bradley Lalonde, general director of BIDV-Vietnam Partners Investment Management Joint Venture Company (BVIM), told the two-day conference: “Growing at an impressive average rate of 7.1% a year since 1999 to become one of the fastest in the Asian region, yet accelerating to 8.2% in 2006, the Vietnamese economy shows no signs of slowing.”

Strong economic fundamentals, huge investment inflows, favorable demographics, social and political stability, and the Government’s firm commitment to reform, including an ambitious program for equitization of State-owned enterprises bode well for sustained future growth, he said.

The fund manager now runs a US$94.7-million domestic fund called Vietnam Investment Fund I which closed in March. Half of the fund has been invested in 14 companies across nine industries and another US$15 million is waiting for disbursement.

The company also plans to raise another fund from international investors with a size of up to US$300 million and the first closing is expected in the fourth quarter of this year.

PXP Vietnam Asset Management that manages three funds investing in equities in the country will probably raise more capital to reach the targeted maximum size. Its Vietnam Lotus Fund is expected to have a maximum size of US$200 million while the fund manager has mobilized only US$46.89 million by April 30.

The US$46-million Vietnam Emerging Equity Fund has capitalized US$46 million and the third fund called PXP Vietnam Fund has reached its target size of US$34.7 million.

Asked why foreign investors were eyeing Vietnam as an attractive investment destination, Andy Ho, head of investment of VinaCapital Group, told the Daily that the most important factor for attracting foreigners was political stability.

When you spend huge amounts of money on a factory here, like the US$1-billion chip assembly and testing plant of Intel, you will certainly stay here for a long time, he said, adding that was why political stability was important.

The second element is that Vietnam’s economy size is still small, about US$70 billion in gross domestic product (GDP), compared to other regional countries like Malaysia, the Philippines and Indonesia, Ho said.

When investing in a small economy, foreign investors want to capitalize on that economy’s growth, he said.

He noted that real estate, banking, and infrastructure were the most attractive sectors in Vietnam at the moment. He also believes that many foreign investors are eyeing Vietnam for mid- or long-term investment, at least three to five years.

VinaCapital now manages four funds investing in Vietnam with total assets of about US$1.8 billion.

Henry Nguyen, managing general partner of IDG Ventures Vietnam, said Asia including Vietnam with fast economic growth was on target.

Foreign investors in the conference were also interested in the upcoming equitization of big State-owned corporations like Vietcombank and Vietnam Airlines.