Performance of foreign investment funds in Vietnam is mostly glum with many showing disappointment with this emerging market. Of the six funds devoted to Vietnam that were set up since 1991 just a few years after Vietnam announced its open door policy, just two are still optimistic of their prospects in Vietnam.
France’s Lazard Fund has returned what money was left to investors and the US fund Templeton returned half of its US$110 million capital to investors and turned to other countries in the region. Two other firms, Vietnam Management Fund and Beta Fund, are winding down investments leaving just two survivors: Dragon Capital and Vietnam Frontier. But recent lay-offs of employees at Frontier may signal that the fund is reconsidering its position despite recent press announcements that is looking at putting money into the stock market.
No investments fund has yet retrieved its investment capital successfully, according to a report issued by the Mekong Project Development Facility, MPDF.
Many blamed inconsistent legal regulations that stymied corporate investment and the miniscule size of the securities market. Compounding the problem is that Vietnam does not have clear-cut regulations governing the operations of investment funds.
Even so, following the call by the government for more indirect foreign investment, the State Securities Commission (SSC) is now optimistic that the time is ripe for investment funds to join the bourse and is actively encouraging them to do so. Tran Cao Nguyen, head of the market promotion division under the SSC said that he has asked the government to ease rules on participation by foreign investment funds in the securities market. What Nguyen means is that the SSC should have the right to approve investment fund shareholdings in local companies without the prior approval of the prime minister, as is the case at present. New and easier draft regulations are now being drawn up to deal with foreign investment in local firms and should be available sometime this year.
Only Dragon has posted the best results with a reported US$45 million sunk into 20 joint stock companies in Vietnam. Dragon’s director Dominic Scriven said, however, that the funds that have pulled out of Vietnam have not gone forever and would return should opportunities present themselves in the future. A possible newcomer, Saigon Investment Fund based in the US, has announced that it plans to enter Vietnam in the near future as they see promising growth prospects in the country’s economy.