Foreign investors ask for more space in Vietnam's economy

Foreign investors said they have many reasons to favor Vietnam over most other Asian markets, but the government needs to relinquish additional control to them.

A consensus was reached during the Vietnam Investment Forum in Ho Chi Minh City on Thursday that Vietnam is an ideal destination for investors with all the space of an emerging market.

Thomas Hugger, general director of Hong Kong-based Asia Frontier Capital, said Vietnam’s business environment is improving, its political life is stable, and its economy will grow even stronger thanks to free trade agreements like the upcoming Trans-Pacific Partnership Agreement that also involves the US, Canada, Australia and Japan.

Hugger said one attraction of the Vietnamese market is the recent crash of its stock market, which has been losing value since 2008.

It developed along the lines of markets in many of the emerging economies in which AFC has participated, and a market hitting bottom always attracts a lot of outside investors, Hugger said at the forum held by local Dau Tu (Investment) newspaper, HVS Vietnam Securities Company and AFC.

Of the roughly 1.3 million trading accounts engaged in Vietnam’s stock market, 17,000 are foreign.

Swiss investor Marc Faber, chairman of Indochina Capital and an AFC shareholder who led the forum, said he’s sure about the long-term growth of Vietnam’s stock market and its many listed businesses, but the government needs to take bold steps to limit its control and open up the economy to private hands.

The publisher of the monthly Gloom Boom & Doom Report and author of Amazon’s bestseller Tomorrow’s Gold: Asia’s Age of Discovery said Vietnam government should expand foreign ownership of local businesses.

Don Lam, a Vietnamese Canadian and general director of VinaCapital, also called for the further privatization of Vietnam’s economy to attract further participation from foreigners.

Lam also said the government’s failure to act will prove a major frustration for foreign investors.
“The privatization of large companies like Vietnam Airlines, Vietnam National Textile and Garment Group, or Vietnam Railways will bring very interesting opportunities for private investment,” he said.

Vietnam maintains a 49 percent cap on foreign ownership of all business sectors including securities companies; that cap is just 30 percent for banks. Malaysian Maybank Kim Eng is the sole fully foreign-owned securities firm in the country.

Lam said that his company has received many investment invitations in Vietnam as the assets are considered under-valued compared to other emerging markets.

He said foreign investors are most concerned about the structure of the banking system and how bad debts will be addressed.

Besides, Vietnam has been merging weak banks, absorbing bad debt into its central bank and increasing foreign reserves, all the reasons for foreign investors to expect a happy outcome.

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