VinaCapital does not own VinaMilk…

…Or any of the other companies that start with the shortened American prefix for Vietnam. They do have approximately 1.8 billion USD worth of shares though. In 2003, the large multi-asset management firm opened in 2003 in Ho Chi Minh City, the mecca of economic expansion. The firm has several shares on the stock exchange, including VinaWealth Opportunity Fund (VOF), VinaCapital L.P., and Vietnam Infrastructure Limited. These companies invest in anywhere from infrastructure to technology to real estate. These areas are all profitable because of the rampant development in Vietnam. The country has an 5-6% annual growth rate and new roads, airports and transportation systems are being built daily.

The foreign investor process in Vietnam is very indirect and often earns skepticism from both the government and the people. For example, VinaCapital owns VOF, which might own a smaller share that owns a smaller local share, and that local share owns some foreign shares. This tactic is used to make it very hard to trace the funds which could eventually be taxed or banned in Vietnam. There are very heavy restrictions preventing foreign investors to own private industries, but not listed large companies. Lifting restrictions would be a plausible way to generate revenue because state-owned enterprises receive 60% of the country’s money, but only produce 30% of its GDP.

Finding local investors proves to be a challenge in Vietnam. Nearly all of the country uses solely cash and the Vietnamese don’t have bank accounts. Some people still actually use gold instead of the dong. VinaCapital has took the initiative to educate the public on concepts of savings and retirement plans, but the nation has a very traditional short-term mindset. With traditional Asian culture, it is nearly impossible to create economic stability off of a tax-based economy. Eventually, VinaCapital hopes transition the nation to a place where 401Ks exist so that the Vietnamese youth aren’t taking care of the elderly, but that is also a question of cultural shift. VinaCapital also strives to give back through the funding of the VinaCapital Foundation, which ” addresses children’s social, economic, and environmental issues.” Other than the process of funding, VinaCapital Foundation is completely separate from VinaCapital.

After witnessing a presentation about mutual funds, liquidity, and the investment process, I am convinced that I know much less than I thought I did about investments and increasing the quality of business. Outsourcing offshore manufacturing and other concepts seem to be as foreign as many of the things in this country and I cannot say that I agree completely with these concepts, but I truly respect VinaCapital for their passion to populate the Vietnamese investment industry.

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