Private equity funds from Asia, as well as the rest of the world, are showing a keen interest in Vietnamese startup companies as the country’s long-term growth prospects improve, according to the Grant Thornton Global Private Equity Report.
The report referenced a survey of private equity fund managers and institutional investors where 72% of respondents said they have a positive outlook on the Vietnamese economy – the highest number in two years.
Likewise, 84% of those surveyed said that they plan to increase their asset allocation to Vietnam. Among the most popular sectors for private equity investment are real estate, education, and retail.
Transparency in business activities was given as the most important factor when choosing to invest in Vietnamese startups, with 21% selecting this category. Corporate governance was a close second, with 20% of respondents choosing it.
Renewed optimism by private equity investors come as Vietnam shows an increasing trend of liberalization with regards to its economy. Just this October, the government announced that foreign business and individuals can own freehold property in Vietnam.
“It is a very helpful move,“ said Alan Pham, chief economist of VinaCapital Group, about the new law. It projects an image of an opening of the economy to foreign capital, and it might help the bad debt problem.”
Despite improvements in the country’s legal framework and steps toward a more open economy, analysts say that Vietnam still faces many issues. Poor infrastructure, rising consumer debt, a weak currency, corruption, and inefficiency in many parts of government make doing business in Vietnam complicated.
The ASEAN Business Survey, done every year by the American Chamber of Commerce (AmCham) in Singapore, says that the most popular destinations in Southeast Asia for business expansion are Indonesia, Vietnam, and Myanmar.