Vk Econ Impact On Vn 2010630 For Release

2010 The Impact of Overseas Vietnamese Investment on Vietnam Thanh “Tino” N. Dinh, MBA Candidate Class of 2010 Darden Graduate Business School, Special Research Elective under supervision of Professor Peter Rodriguez, 3/3/2010

Tino Dinh | dinht10@alum.darden.edu Contents Page Executive Summary 3 I. The Study A. Introduction 7 B. Intent 7 C. Scope of Study 7 D. Methodology 8 II. Data and Analysis A. Sources of Overseas Vietnamese Investment 10 B. Remittances 11 C. Recorded Investment Projects and Viet Kieu-led Enterprises 13 D. Characteristics of Viet Kieu-led Enterprises 16 E. Asset Management 19 F. Intellectual Capital 20 G. Assessment 24 H. Trends for Overseas Vietnamese Investment 25 III. Recommendations A. Significant Business Opportunities 27 Policy Recommendations B. Protecting Rights: Systemic Legal Reform 29 C. Diaspora Emerging: Building Institutional Capacity and Market Platforms 31 D. Building Trust: A Path Towards Reconciliation 32 E. Conclusion 34 Knowledge Gaps 36 References 37 2|Page Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Tables 1. Methodology and Sources for Estimating OV Investment (Pg. 9) 2. Notable Viet Kieu-led Financial Management Firms and MNC Operations in Vietnam (Pg 20) 3. Ash Institute Assessment of Vietnam Higher Education. Measures of intellectual productivity (Pg 22) 4. Vietnamese students attending US Schools (Pg. 23) 5. Summary of Major Components of OV Investment (Pg. 24) 6. Evolution of Major Components of OV Investment: Scale vs. Returns (Pg. 25) 7. Summary of OV Investment Obstacles, Business Opportunities, and Policy Recommendations (Pg. 34) 8. Exhibits 1. GDP Growth and Major Historical Events of the Socialist Republic of Vietnam, 1975-2008 2. 2008 Estimated Worldwide Overseas Vietnamese Remittances 3. Remittance Compared to Other Forms of Foreign Investment in 2008 4. 2008 Foreign Sources of Capital as Percentage of GDP 5. Total 1988-2008 FDI by Source 6. 2008 Licensed Foreign Direct Investment Projects by Province 7. 2008 Foreign Direct investment Projects Licensed by Kind of Activity 8. Major SRV Branches of Government and functions of relevant economic policymaking institutions 9. Vietnamese Laws Pertinent to OV Investment About the Study This research project was conducted from August 2009 to March 2010. The information cutoff date for this report is March 3, 2010. I alone accept full responsibility for any errors, omissions, mistakes, or shortcomings. The views expressed in this report are based on my judgment and my synthesis of the work of other scholars and hence do not necessarily reflect the opinion of the University of Virginia, its faculty, or my academic advisor, Professor Peter Rodriguez, Associate Dean for International Affairs. About the Author Thanh “Tino” Dinh was born in the United States to Vietnamese refugees who fled the country in 1975. He served for eight years as a US Air Force officer, specializing in Asian politico-military affairs and was stationed in Texas, South Korea, Hawaii, Iraq, and Washington DC. Following military service, Tino works as a management consultant to the US federal government. He has a B.S. in Asian Studies and minor in Mandarin from the US Air Force Academy and an MBA from the University of Virginia’s Darden Graduate School of Business. You may contact him with any comments, questions, or feedback at: Dinht10@alum.darden.edu Or via LinkedIn 3|Page Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Executive Summary Since 1975, the 3.75 million-strong Vietnamese diaspora have made significant contributions (roughly $9.6 billion+) to the economy of the Socialist Republic of Vietnam ($90 billion GDP in 2009). This is significant because Vietnam is now one of the world’s fastest growing economies, averaging 7-9% GDP growth since 1990. However, the overseas Vietnamese community, the government of Vietnam, and other major economic actors in Vietnam have been unable to create a comprehensive portrait of overseas Vietnamese investment in Vietnam. All make the assumptions that: overseas Vietnamese investment is an important source of foreign capital inflow, that actual investment greatly exceeds any officially recorded value, and that it is in Vietnam’s best interest to cultivate this investment. This is also the premise of this study. However, this project hypothesizes that the potential impact of overseas Vietnamese investment in actual US dollar terms is much larger than the actual impact due to a variety of structural barriers. The Study This study is an attempt to comprehensively assess the impact that overseas Vietnamese (OV) investors and entrepreneurs have on Vietnam’s economy. However, the value of the study lies in its approach as an analytical framework, rather than definitive set of answers. Accordingly, it draws upon a number of sources to characterize the amount and nature of OV investment in Vietnam, including economic statistics sourced from the Vietnamese government, multi-lateral institutions, and the US government. This project uses published scholarly studies and research reports to address various specific issues and anecdotal reporting such as media and expert interviews to fill any gaps or make projections. Data and Analysis Overseas Vietnamese investment manifests itself in different forms. Remittance channels provide an informal corridor for large amounts of cash meant primarily for consumption, but increasingly as a means of capital or credit for small family businesses. As a proxy for other forms of OV investment , remittance payments suggests that OV investments are very difficult to track and may in fact be much larger than recorded amounts indicate. OV ventures and investment funds show some promise, but also suffer the most risk. These ventures exhibit several common characteristics: concentration in the South, towards SME, and towards low value-added, cash-based business models like real estate and processing and distribution of non-durable goods. Even more significant, OV serve as influential gatekeepers to other sources of foreign investment funds and projects. Finally, the enormous potential of OV intellectual capital stands apart as the means through which OV can have the largest impact on Vietnam’s economy. Taken together, aggregate OV investment is on par with the largest foreign investors in Vietnam. However, this investment tends to be diffused throughout the economy, rather than concentrated in high-visibility development projects. OV investment tends to be more embedded within the overall economy. The investment components can be summarized as follows: 4|Page Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Summary of Major Components of OV Investment Component Sub-components Estimated Significance (destination) Amount to Date Remittance (for Investment in family- $3.9 billion Serves as key distribution investment) run businesses channel for OV capital Recorded investment Real estate, start-ups, $ 2 billion Potential of OV-led ventures and projects and ventures joint ventures projects is not being maximized Asset management Portfolio funds, start- $2.5 billion OVs serve as influential ups, real-estate, IT, gatekeepers for foreign mfg or infrastructure investments, projects Intellectual capital R+D/IP, scientific Undetermined Greatest potential for value- expertise, mgt know- creation, innovation exists in gap how, educational b/w OV supply and local demand institutions for intellectual capital Total $8.45 billion + Quantitatively, would make OV the 7th largest foreign investor (Ex. 7). Larger socio-economic impact unquantifiable. Larger demographic and social forces such as cultural adaptation, migration patterns as well Vietnam’s economic growth and the development of its own internal capabilities will reduce the overall significance of OV investment. However, OV intellectual capital still has the greatest potential to transform Vietnam’s economy, since Vietnam’s educational institutions and capacity to innovate still greatly lag its economic reforms. Recommendations Apathy, risks (legal, financial, and community sanctions), and mistrust between Vietnam and the OV community inhibit OV investment. These root causes manifest themselves in the form of structural barriers such as governance problems and market inefficiencies. However, such challenges present unique opportunities for innovation and value-creation. Commercial entities and public or community institutions that can successfully address these root causes could help accelerate both Vietnam’s development and reconciliation between Vietnam and its diaspora. This study provides some policy recommendations. It is incumbent upon Vietnam to clarify its stance towards OV investors and embark upon systemic, rights-based legal reform to attract OV investment. For its part, the OV community has thus far proven incapable of developing institutions or companies capable of mobilizing and allocating OV capital efficiently and transparently across the diaspora. The OV community must develop these capabilities in order to protect its interests and maintain its relevance. Most importantly, leaders and influencers in Hanoi and the OV community must embark upon a genuine confidence-building process to create a virtuous cycle whereby economic development and reconciliation efforts are mutually re- enforcing. 5|Page Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu The following table summarizes the barriers to OV investments and suggests business innovation or policy changes which could mitigate or eliminate these barriers. Summary of OV Investment Obstacles, Business Opportunities, and Policy Recommendations Root Barrier to Business Policy Recommendation Cause Investment Opportunity Apathy Cultural Acculturation distance Services Risk Legal Risk Information and - Hanoi: Clarify legal status and rights of OV Risk Protection - OVC: Establish internationally recognized, Services independent forum for OV-owned businesses operating in Vietnam to represent collective interests Systemic Information and - Hanoi: rights-based legal reform; consistent corruption Risk Protection enforcement Services - Hanoi, OVC: Independent, critical media Bureaucracy - Information - Hanoi: Streamline, consolidate, and automate and Risk administrative process across agencies for Protection receiving business permits and licenses (e- Services government) - Market Platforms Financial risk; - Market market Platforms inefficiencies - Financial Services Lack of OV - Market - OVC: Coordinating or cooperative mechanism for Community Platforms promotion of economic development in OV Capacity and - Financial community and Vietnam across public, Markets Services commercial, and civil society spheres - Establish independent research institute for OV- centered economic, social science research Principles Mistrust - Educational - Hanoi, OVC: Reconciliation process institutions and services 6|Page Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu The Study THE STUDY  WHAT IS THE SIGNIFICANCE OF Introduction THIS STUDY? Throughout the post-war period in 1975 and continuing  WHO ARE OVERSEAS even today, overseas Vietnamese refugees and officially VIETNAMESE (OV)? sponsored guest laborers have continued to remit increasing  HOW IS OVERSEAS VIETNAMESE amounts of cash to their families in Vietnam, thus playing a INVESTMENT DEFINED? significant role in the country’s economic development. Prior to  WHAT IS THE OBJECTIVE OF THIS Doi Moi, remittances served as a lifeline for many Vietnamese STUDY? suffering from dire poverty1. Vietnam struggled economically and began to question the Soviet model of economics. Vietnam began market-oriented reforms under its Doi Moi program in 1986, seeking to emulate Deng Xiaopeng’s economic reform policies for China. From the mid 1990s to the present, Vietnam’s GDP growth has accelerated to 7-9%, second only to China2. Key diplomatic and economic milestones have helped accelerate Vietnam’s Terminology: This study uses the terms integration into the global economy. See Exhibit 1 for a overseas Vietnamese OV, OV community, chronology of key economic events. Viet Kieu, Little Saigon, and Vietnamese diaspora interchangeably to refer to the Since at least the mid-1990s, anecdotal evidence population of people who self-identify indicates an increasing amount of overseas Vietnamese have themselves ethnically, culturally, or retuned to do business in Vietnam. 3 Indeed, Vietnam has begun politically as Vietnamese and who reside to actively court OV investment since 1990, particularly in terms outside of the Socialist Republic of of knowledge transfer activities like TOKTEN4and various Vietnam. government-facilitated OV organizations.5 6 Accordingly, Vietnam Vietnam, SRV, and Hanoi refer to the has officially recognized the importance of OV investment. Article government of the Socialist Republic of 25 of the 1992 SRV Constitution 7explicitly encourages OV Vietnam. investment, while Vietnam’s Five Year Socio-Economic Plan for Anglicized spellings are used for 2006-2010 calls for overseas Vietnamese to contribute to convenience (i.e. ‘Vietnam’ instead of Vietnam’s human resource development.8 ‘Việt-Nam’) 1 Based on author’s family experiences of sending remittances to relatives since 1975. 2 Source: World Bank statistics. 3 Variety of media reports from Economist, OC County Register, San Jose Mercury News, LA Times, New York Times as early as late 1990s and with increasing frequency from 2005-2010. Also, establishment of social networking groups on LinkedIn and Facebook documenting activities and membership. 4 Transfer of Knowledge Through Expatriate Nationals (TOKTEN) was a joint program between the Vietnamese government, UN Volunteer Program, and UN Development Program to use expatriate Vietnamese to help build capacity from 1990-2002. 5 Overseas Vietnamese Business Association 6 Overseas Vietnamese Club for Science and Technology 7 1992 Constitution of the Socialist Republic of Vietnam, Chapter Two: Economic System. Embassy of Vietnam-USA 8 SRV Ministry of Planning and Investment. “The Five Year Socio-Economic Development Plan: 2006-2010”. March 2009. (Sections on remittance: Pg. 67, human capital: Pg. 87). 7|Page Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu On November 22-24, 2009, the Vietnamese government sponsored its first Overseas Vietnamese Conference, drawing 1,000 Viet Kieu business persons, entrepreneurs, and investors.9 Academic experts from Vietnamese government, OV community, and international organizations all agree that OV investment on Vietnam’s economy is significant and growing. However, the scale and nature of overseas Vietnamese investment and its degree of influence on Vietnam’s overall economic development remain unclear, as OV investment remains an opaque phenomenon for a variety of reasons. Intent Thus, there is wide acknowledgement of the importance of OV investment, yet a large gap in understanding the scale, characteristics, and effect of this type of investment. Through this study, I take a practitioner’s approach towards attempting to address these gaps. Furthermore, I hypothesize that the full potential OV investment has not yet been fully realized. Thus, the purpose of this study is to: 1) measure and assess overseas Vietnamese economic investment into Vietnam, 2) determine the impact that this investment has on Vietnam’s overall economy relative to other sources of foreign investment, 3) identify barriers to OV investment, and 4) suggest ways that entrepreneurs, policymakers, and community leaders in Hanoi and amongst the overseas community can overcome these barriers to create economic opportunity for Vietnamese people domestically and worldwide. Rather than seeking to be the definitive source for a dynamic topic, I hope that this study will instead by a starting point for an open, honest, ongoing and civil discussion of mutual interest and benefit for all stakeholders concerned. In particular, I hope that this study will inject some unique synthesis and data into a lively dialogue between policymakers, investors, entrepreneurs, and economic development professionals interested in Vietnam’s blossoming economy. Most important, I strongly desire that this study will contribute towards sincere, transparent, and conciliatory dialogue between the overseas Vietnamese community around the world and the government of the Socialist Republic of Vietnam. It is my personal belief that without a genuine spirit of reconciliation, the enormous potential of overseas Vietnamese to contribute to Vietnam will never be completely realized. All of these stakeholders share an interest in enhancing economic development and creating business opportunity in Vietnam. Scope of Study This study is purposefully focused on recorded investment projects and remittances from those Vietnamese who fled to the West due to political persecution, investment types and sources whose economic significance and measurability make for a more useful study. This study is intended to be the beginning of ongoing dialogue and applied research on the burgeoning and dynamic economic relationship between Vietnam and overseas Vietnamese. Readers should assess its quality on its relevance, rigor, and whether or not its conclusions are actionable. There may be broader implications for other emerging markets looking to garner investment from their 9 “Plan before PM would provide incentives to Viet-Kieu talent”. Lookatvietnam.com. November 25, 2009. 8|Page Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu diaspora populations. There are many topics related to OV investment that are not included in this brief study, but are quite relevant to the overall objectives of identifying business opportunities and spurring economic development in Vietnam. See Knowledge Gaps at the end of the paper. Methodology and Sources This study is limited primarily to publicly available statistics and information. Besides informal surveys, this study does not use original field surveys and data collection efforts. To the extent possible, this study attempts to use existing, primary sources of empirical data drawn from a combination of official, published data from various SRV government ministries, multi- lateral institutions10 (World Bank, International Monetary Fund, the Asian Development Bank, and the United Nations), and from commercial reports. This study also integrates pre-existing studies on relevant sub-topics and draws upon interviews, correspondence, or published testimonies from recognized international experts on Vietnam’s economy as well as those with business experience in Vietnam. As will be discussed in the body of the paper, identifying verifiable empirical measurements of Viet Kieu-based investments has been the underlying challenge of this entire study. There is no centralized, internationally-recognized statistical authority on the Vietnamese diaspora and its “economy”. This study operates on the fundamental assumption that projections of total OV investment can be reasonably estimated using government-recorded remittances and investments as a baseline. Anecdotal sources, such as media reports or estimates by those with acknowledged academic expertise or practical first-hand experience in Vietnam are used to fill in any gaps, provide operating assumptions, and inform reasonable estimates. As stated by the Intent section, the study—especially its data components—are intended to be a starting point for future research and discussion of a topic that is inherently difficult to measure. Any projections or calculations err towards conservatism. 10 Most multi-lateral institutional sources of data are based on SRV-provided data 9|Page Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Table 1. Methodology and Sources for Estimating OV Investment Anecdoctal Vietnam Multi-lateral US Scholarly Reports Government Sources Government Studies, (media, Sources (WB/IMF, Sources Research interviews, (GSO) UN, ADB) (Census) Reports surveys) Overseas Vietnamese Investment (Size, Characteristics, Effect) 10 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Analyzing Overseas Vietnamese Investment DATA AND ANALYSIS Sources of OV Investment  WHERE DOES OV INVESTMENT The first challenge in assessing OV investment is COME FROM? determining where it comes from, on a national level if not a  HOW LARGE IS AGGREGATE OV household level. To answer this question, one must have INVESTMENT? accurate census statistics for the total ethnic Vietnamese  WHAT IS THE SIGNIFICANCE OF population outside of Vietnam, an intricate problem set in its OV INVESTMENT IN THE own right. OVERALL VIETNAMESE ECONOMY? Available studies based on immigration statistics and  WHERE DOES OV INVESTMENT historical research show that an overwhelming majority of GO AND WHAT IS IT USED FOR? Vietnam’s 1.5 million political refugees have re-settled in the  WHAT IS THE NET EFFECT OF OV United States, most notably in Orange County and San Jose, INVESTMENT ON VIETNAM’S California and in Houston, Texas.11 Orange County, California ECONOMIC DEVELOPMENT? has the highest concentration of Vietnamese outside of  WHAT ARE THE FUTURE TRENDS Vietnam (more than 150,000)12 who have created a unique OF OV INVESTMENT? ethnic enclave officially recognized as “Little Saigon”. Vietnamese government sources estimate the worldwide income of overseas Vietnamese communities to be $50-$60 billion, of which more than one-half is earned by the Vietnamese-American community.13 The National Vietnamese-American Chamber of Commerce estimates that Vietnamese-owned businesses in the United States generated $25 billion in cash receipts, based on projections from US Census Bureau data.14 However, the same data also indicates that Vietnamese-Americans as a whole are a relatively socio-economically disadvantaged group whose small business revenues lag other ethnic Asian-owned firms in the United States.15 Significant numbers of refugees received asylum in other OECD countries, especially Canada, Australia, France, Germany, and other EU nations. Another group of approximately 210,000 migrant laborers were Vietnamese officially sponsored by the government to work or study in sister Eastern Bloc states such as the Soviet states, Poland, then-Czechoslovakia, and East Germany. These migrants eventually chose to remain in Eastern Europe16. A fourth wave of migrants includes officially sponsored non-skilled, temporary expatriate laborers or cross-border workers sent to Cambodia, Taiwan, South Korea, Malaysia and UAE, as well as foreign brides who have married husbands in Taiwan and South 11 Migration Policy Institute. “State Proportion of Vietnamese-Born Population in the United States”. US Census Bureau/American Community Survey 2006. 12 Based on projections from 2000 US Census data. 13 “Capital from Viet Kieu poised to flow to Vietnam”. Vietnam Economic Times. August 27, 2009. 14 Interview with Katie Dang, Executive Director of National Vietnamese-American Chamber of Commerce. January 29, 2009. Estimate based on projection of 16% annual growth from US Census Bureau 2002 Survey of Small Business 15 US Census Bureau. “2002 Survey of Business Owners: Asian-Owned Firms”. Revised August 29, 2006. 16 Sidel, Mark. “Vietnamese-American Diaspora Philanthropy to Vietnam. Prepared for The Philanthropic Initiative, Inc. and The Global Equity Initiative, Harvard University. Supported by the Hewlett Foundation. May 2007. 11 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Korea. Of course, there is an untracked population of Vietnamese victims of human trafficking and illegal migrants for whom this study does not apply. As Exhibit 2 shows, Vietnamese-Americans form the bulk of OV population worldwide and tend to dominate the political and cultural dynamics for the rest of the global OV community, including the majority of OV economic wealth worldwide. This diaspora population of approximately 3.75 million Vietnamese, especially refugees who have permanently settled in OECD countries has generated a large class of people who have the wealth and/or the desire to invest in Vietnam.17 There are numerous drivers for OV investment in Vietnam. Some are motivated by family obligations, whether imposed or by a desire to assist family members to become self-sufficient. Others are driven by a sense of patriotism or ethnic and cultural affinity. Some are opportunists who see an undervalued market. Many OV are inclined to assist in humanitarian or charitable activities such as microfinance ventures. Regardless of motivation, Viet Kieu participation in Vietnam’s economic growth is significant and growing as the following analysis will argue. Remittances Remittance provides a useful proxy for determining the potential aggregate capital flow between the Vietnamese diaspora and Vietnam. The scale of remittance is the most visible indicator of the Vietnamese diaspora’s effect on Vietnam’s economy. Exhibit 2 approximates the geographic distribution of overseas Vietnamese and the respective amounts of remittance produced in 2008. This total estimate is based on Vietnam’s officially recorded remittance total of $7.2 billion for 200818 as well as a conservatively estimated $1 billion in cash physically carried by the 509,627 Viet Kieu who traveled to Vietnam to visit relatives that year.19 Within the larger context of the overall Vietnamese economy, Exhibits 3 and 4 respectively show the significance of remittance compared to other foreign sources of financial capital and sources of capital as percentage of GDP. Economist Lan Pham of the University of Minnesota has conducted an extensive study of overseas Vietnamese remittances, concluding that remittances from the West (especially the United States, Australia, and Canada) are three to four times larger than other sources and tend to flow to wealthier, urban households, especially in HCM City and Ca Mau province on the southern tip of the Vietnam. Furthermore, Pham notes that these remittances will filter down towards rural households and outwards towards the center of the country.20 Anthropologist Ivan Small of Cornell notes that there is a rising trend of remittances coming from export workers in Malaysia, Taiwan, and South Korea and going towards poorer, rural households.21 Key policy decisions, reflecting a loosening of restrictions in foreign capital inflow, included a repeal of a 5-percent tax in 1997 and the repeal of a law allowing 17 The return of the boat people. (2008, April). The Economist, 387(8577), 9. Retrieved February 5, 2010, from ABI/INFORM Global. (Document ID: 1469393961). 18 Source: World Bank Estimates Based on IMF BoP Statistics Yearbook 2008 19 Source: Vietnam National Administration of Tourism figures for the purpose of “visiting relatives” 20 Pham, L.. Access to credit, remittances, and household welfare: The case of Viet Nam. Ph.D. dissertation, University of Minnesota, United States -- Minnesota. Retrieved February 10, 2010, from Dissertations & Theses: Full Text.(Publication No. AAT 3324437). Pgs. 49-59. 21 Phone conversation with Ivan Small, PhD candidate, Cornell University, Department of Anthropology. February 10, 2010. 12 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu withdrawals only in local currency. Before these decisions, remittances tended to flow largely through informal channels to evade taxation and control. Also, the state’s desire to keep track of and attract remittances resulted in a growth of foreign and local wire transfer services.22 As a result, recorded remittances have increased sharply over the last decade. Actual remittances are likely much larger than recorded values. Even the Vietnamese government is unable to track all informal forms of remittances, which are used to avoid the high costs of transfer services23. Whatever the amount, remittances have undoubtedly played a large role in reducing poverty, fueling domestic consumption, and boosting household savings. Many Vietnamese prefer remittances because they trust this informal channel more than formal banking and transfer services, which are rapidly growing but still immature.24 In contrast to the sharp drop in FDI in 2008-09 (see Exhibit 3), the decline of remittance payments was more muted. The decline in remittances can be explained by adverse economic conditions affecting Vietnamese immigrants in industrialized nations. However, the relative stability of remittances in comparison to other foreign sources of capital flow into Vietnam can best be explained by enduring family obligations. An overheating economy, concerns over fiscal or monetary policy, and other macro-economic or business climate issues that can scare away foreign portfolio investors25 are less likely to deter family members from sending money home to Vietnam. For now, overseas remittances serve as a more stable source of revenue and remain a critical component of buoying household income.26 David Dapice of Harvard’s Ash Institute opines that remittance serves to shore up inadequate capacity in government-funded social services.27 Remittance is often sent to relatives to take care of aging relatives, pay for health care, pay for education, purchase large items such as motorbikes or household appliances, or provide subsistence income.28 Remittances do have some negative effects, including inflationary pressure on the dong, already overheated from other forms of FDI and a recently de-valued by the State Bank in November of 200929 and perhaps even discouraging some recipients from seeking employment.30 For the long term, remittance is dependent upon migration patterns and sociological trends. In the West, as OV become more assimilated within the culture of their host countries, they will feel less compelled to remit money to distant relatives on a recurring basis. Also, as 22 Pham, L. Ibid. Pg. 41-42. 23 Flanigan, James. “Little Saigon Exports Its Propserity”. New York Times. January 19, 2006. 24 Truong, T., Small, I., and Vuong, D. “Vietnam: Practices and Patterns of Diaspora Giving”. Diasporic Giving: An Agent of Change in Asia-Pacific Communities Conference. Conference paper. Hanoi: May 21-23, 2008. Pg. 256. Accessed via Google on February 11, 2009 25 Balfour, Frederick. “Vietnam is Hot. Don’t Get Burned”. Businessweek.com. April 18, 2005. 26 Phone conversation with Ivan Small, PhD candidate, Cornell University, Department of Anthropology. February 10, 2010. 27 David Dapice, Economist for the Vietnam Program at the Ash Institute for Democratic Governance and Innovation (Harvard JFK School of Government). Email exchange. January 26, 2009. 28 Author’s personal family experience, 1975-2003. 29 Johnston, Tim. “Vietnamese confidence fades on bubble fears”. FT.com. January 4, 2010. 30 Amojelar, Darwin. “Remittances may cause inflation”. Manilatimes.net. December 17, 2009. Citing ADB Working Paper, “Remittances in Asia: Implications for the Fight against Poverty and the Pursuit of Economic Growth”. 13 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Vietnam’s domestic economy grows, local households will no longer be as dependent on remittances as a source of income. However, remittances are also a significant channel for investment. Widespread anecdotal evidence indicates that a significant portion of remittances go toward helping family members start or run businesses, launching ventures in partnership with family, launching ventures using family members’ names purely as legal proxies, or to purchase real estate (for residence, as speculative investments, or both).31 Remittance serves as a significant source of credit for urban recipients. What government officials, academics, and investors cannot determine thus far is what actual proportion of remittance goes towards investing in businesses. Pham of Minnesota notes that existing empirical surveys cannot currently determine how of much of remittances go towards investment versus consumption or savings since remittances and other revenue streams are “fungible”. 32 The amount of investment-related remittances can only be guessed at. For example, an arbitrarily conservative estimate of 10% of the estimated total $7.94 billion in 2009 is $794 million. Furthermore, this amount is diffused throughout the Vietnamese economy across a large number of households in small increments of $500-$1000 dollars per household—a source of investment capital effecting areas well beyond the reach of formal banks and FDI. The challenge of identifying business opportunities and crafting policies to attract investment (to be discussed in Recommendations) is most daunting for this critical investment channel. Key take-aways from examining the flow of overseas Vietnamese remittances are: 1) Remittances offer a more steadfast flow of revenue than either FDI or ODA and may be even be the largest current source of foreign capital inflow. 2) Remittances are an important source of investment capital and credit for a large number of families, though exactly how much no one knows for sure. 3) The patterns of remittance flow (itself a function of migration patterns) may serve as a proxy for how Viet Kieu-sourced investment capital flows, now and in the future. 4) Remittance as an informal channel for disseminating cash and capital, is the preferred to more formal channels because of the public’s lack of trust in Vietnam’s still-evolving financial services sector. Policies regulating this sector will determine whether remittances will compete with or help grow the commercial banking in Vietnam. Recorded Investment Projects and Viet Kieu-led Enterprises Apart from investment through remittances, Viet Kieu have embarked upon an increasing number of officially licensed investment projects. Vietnamese officials, in announcing their understanding of the significance of Viet Kieu economic contributions, cite that OV have invested a cumulative $2 billion across 3000 projects by 2008.33 Unfortunately, Vietnamese government sources 31 From author’s personal family experience, 2005. 32 Lan Pham, University of Minnesota, Department of Applied Economics. E-mail correspondence on February 10, 2010. 33 “Overseas Vietnamese Business Association Set-up”. Vietnam Foreign Press Center. August 11, 2009. 14 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu contacted for this study including the Government Statistics Office, the MPI Foreign Investment Agency, OVBA, and the Vietnamese Chamber of Commerce and Industry were unable to provide a detailed breakdown of these projects by time, location, sector, country of origin, and success rate. The Ministry of Foreign Affairs assesses that a two-thirds of the 3000 OV-led projects to date are “effective”.34 Exhibit 5 compares OV investment against other nations’ FDI from 1988 to 2008, showing that OV as a whole are the 16th largest foreign investors in Vietnam. In addition to investments in discrete projects, Viet Kieu entrepreneurs have created numerous enterprises, especially small to medium enterprises and start-up firms, in Vietnam. These ventures include both wholly-owned firms and joint ventures with local Vietnamese firms and interests. Success stories frequently cited by the media include the 70-shop and growing Highlands Coffee retail chain founded by David Thai in 1998 35 36, the gaming and animation studio Glass Egg Digital Media founded by Phil Tran in 199537, and a bevy of firms founded by experienced Vietnamese-Americans entrepreneurs from Silicon Valley38. The managing general partner of venture capital firm IDG Ventures-Vietnam (see Table 2 below) is Dr. Henry Nguyen, an Ivy League-educated medical doctor with a Kellog MBA who also happens to be married to Prime Minister Nguyen Tan Dung’s daughter.39 These examples should not be surprising, as overseas Vietnamese (whether political refugees or economic migrants) are a self- selecting group in terms of risk-tolerance. In the United States, ethnic Vietnamese are more likely than other Americans to own their own businesses.40 Yet for every success story, there are failures—mundane and spectacular—that serve as a stark warning to overseas Vietnamese aspiring to start their own ventures in Vietnam. Three powerful anecdotes stand out for the overseas Vietnamese community. In 2003, Vietnamese-French Nguyen Gia Thieu’s $40 million business Dong Nam Telecom Services was targeted for a state crackdown on charges of tax evasion by local rivals with strong Party connections.41 In 1998, Vietnamese-Dutch Trinh Van Binh served 18 months in prison and had his $20-30 million worth of investments and assets confiscated, despite allegations that were later proven false. 1997, Vietnamese-Australian Nguyen Tan Truc and his investment firm Peregrine Capital enjoyed strong Party connections, but were similarly targeted after his Party patrons lost out in an internal power struggle in Hanoi.42 Detailed, publicly available statistics on the actual failure rate of officially-licensed Viet Kieu businesses, especially compared to that of local 34 Banh, Hai. “Bringing them back”. VnEconomy News. December 8, 2009 35 Highlands Coffee corporate website. “About Us/History”. 36 Rian Maelzar. “The Highlands Coffee Company is Percolating”. Nightly Business Report Transcript. October 4, 2007. 37 Glass Egg Digital Media corporate website/Who We Are 38 Boudreau, John. “ ’Little San Jose’: Vietnamese take Silicon Valley tech culture to Vietnam”. San Jose Mercury News. May 18, 2008. Accessed via “Le Viet-Nam aujourd hui” blog on February 10, 2010: 39 “A Marriage Made in Vietnam”. “Little Saigon Inside” blog. January 29, 2009. 40 U.S. Census Burueau. “American Community Survey 2007: Selected Population Profile in the United States, Vietnamese Alone or in any population”; 8.5% for Vietnamese, 6.7% national average 41 Wain, Barry. “Falling to earth”. Far Eastern Economic Review. May 15, 2003. Pg. 46-48. Accessed via ABI/INFORM Global on February 5, 2010. 42 Do, Trinh. “When Is the Right Time for Vietnamese Americans to Invest in Vietnam?” Nha Magazine. December 10, 2005. Accessed via New American Media on February 5, 2010 15 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu businesses, are unavailable to corroborate how representative these anecdotes are. However, even if one accepts the Government’s assertion that two-thirds of Viet Kieu businesses succeed, the larger OV community still remains acutely sensitive to the failures. Hanoi appears to be aware of both the potential and concerns of OV investors. Accordingly, the government has passed a series of laws since 1992 specifying the legal status and economic rights of Overseas Vietnamese, as shown in Exhibit 8. Vietnam’s larger governance reform and anti- Successful Viet Kieu Entrepreneurs all corruption efforts have largely had a positive effect in have: attracting FDI and positive reviews from multi-lateral institutions like ADB.43 However, it is too early to 1. Trustworthy local partners empirically determine the effect that these OV- 2. Language and cultural fluency specific policies have had on Viet Kieu investment to 3. Humility and eagerness to learn date. Though welcome, formal statutes and decrees 4. Appropriate prices to date often suffer from poor implementation and 5. An exit strategy or back-up plan capricious enforcement44 45. The lack of administrative coordination across government agencies provides a formidable barrier to any foreign business venture, including Viet Kieu-led ventures. Not waiting for legal reform, a movement inside and outside Vietnam has grown to formalize OV entrepreneurial and business networks, in order to share knowledge and pool resources amidst a shifting business and policy environment. The Ministry of Foreign Affairs established the State Commission on Overseas Vietnamese46 which oversees the pseudo-governmental Overseas Vietnamese Business Association47, to represent and promote overseas Vietnamese business interests in Vietnam. The San Jose-based Vietnamese-American Entrepreneur Association (VAEA)48 was created to promote normalized ties between OV entrepreneurs and Vietnam. However, any business organization affiliated or friendly with Hanoi is viewed with suspicion and even hostility from the mainstream Vietnamese-American community, which controls the bulk of OV economic resources. A group which may be more representational of OV business interests internationally and within Vietnam is the Vietnamese Strategic Ventures Network (VSVN, formerly the Vietnamese Silicon Valley Network), founded by California-based Vietnamese-American technology entrepreneurs. VSVN boasts a worldwide network if more than 1500 business and technology professionals from around the world 43 Asian Development Bank. “Part II.D: ADB’s Assessment of the Government’s Development Strategy”. Country Strategy and Program Update 2007-2010: Viet-Nam, Socialist Republic of. September 2006 44 Do, Trinh, Ibid. 45 Don Danh, co-founder of VSVN and SVP of Emerging Markets at East-West Bank of California. Phone conversation on February 22, 2010. 46 “Structure of the Vietnamese Foreign Ministry”. Ministry of Foreign Affairs website in English 47 Overseas Vietnamese Business Club 48 Vietnamese-American Entrepreneurs Association website 16 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu interested in cultivating technology industry-related business relationships between the diaspora and Vietnam.49 The risk appetite of potential and current Viet Kieu entrepreneurs and investors is not driven by solely economic, nor even legal considerations. They are concerned about politically-motivated attacks from both Hanoi and Little Saigon. In Vietnam, Hanoi has repeatedly demonstrated its intolerance of “peaceful evolution”, i.e. democratic reform or public questioning of its authority. Accordingly, the Government remains quite suspicious of grassroots organizations outside of its purview, whether for civil society or commercial purposes. In Orange County, California’s Little Saigon, the heart of the global OV community, there is a similar form of ideological intolerance. Despite the increasing personal and commercial contacts between Vietnam and its diaspora, the OV community is viscerally opposed to any activity perceived to legitimize the rule of the Communist Party of Vietnam. Ironically many Viet Kieu businesses are caught in the middle, alternately accused of being “hostile forces and spies” by Hanoi or “Communist traitors” by anti-Communist activists. 50 Characteristics of Viet Kieu-led Enterprises Though anecdotal, the individual stories of OV entrepreneurs in Vietnam all share remarkably consistent themes. Pending a wider data collection and survey effort of Viet Kieu businesses in the future, case studies of prominent Viet Kieu ventures that have both succeeded and failed offer telling lessons about the exaggerated risk profile that a frontier market like Vietnam. Professor Ming-Jer Chen of the Darden School of Business authored a seminal work on how Chinese cultural practices and the Confucian worldview are manifest in modern Chinese (mainland and diaspora) business practices in “Inside Chinese Business”51. Though no such authoritative work exists for the much less established Vietnamese diaspora, Vietnamese businesses (domestic and diaspora) clearly exhibit very similar characteristics. Common characteristics of Viet-Kieu led ventures which echo many Chinese business practices include: concentration in geography, size, and sector, and a preference for simple, cash-based business models. However, OV businesses also reflect the unique historical and political circumstances which led to the creation of the diaspora post-1975. And unlike overseas Chinese entrepreneurs who enjoy the benefit of ‘launching pads’ such as Taiwan, Hong Kong, and Singapore into mainland China, OV ventures have no such structural advantages. Thus, the risk profile is even more extreme for overseas Vietnamese returnees, who are met with heightened expectations (or suspicion) from the Vietnamese public and heightened scrutiny from Hanoi. Common characteristics for OV-led businesses are as follows:  Concentration in the South (see Exhibit 6) Mirroring the pattern with remittances, most OV-led business ventures prefer to establish themselves in HCM City and surrounding provinces. This is most certainly the case with OV from 49 Vietnam Strategic Ventures Network website 50 Boudreau, John. Ibid. 51 Chen, Ming-Jer. Inside Chinese Business. Boston: Harvard Business School Press, 2001. 17 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu OECD countries, almost all of whom are former South Vietnamese refugees with extensive family connections in the south. The geographic concentration reflects the fact that most Viet Kieu, especially from the West, have family origins in the South (the territory of the former Republic of Vietnam). Thus, it is not surprising that their Vietnam-directed investment activity disproportionately benefits the greater Ho Chi Minh City area. As a result, HCM City (formerly Saigon) remains the commercial engine of Vietnam. However, many former South Vietnamese citizens were previously internally-displaced persons with family roots in northern and central Vietnam. Hence, some OV investments and businesses establish themselves in these regions. Also, successful OV from Eastern Europe (a smaller cohort, see Exhibit 2) are largely from the north and have concentrated their investments around Hanoi and the heavily-populated Red River Delta. Large scale tourism development projects on the central Coast have attracted foreign investment capital, which may have future spillover effects in attracting OV investment in ancillary industries (real estate, services).  Mostly Small Businesses OV-led firms tend to be small to medium enterprises52. One reason is that that overseas Vietnamese as a group control less assets relative to other large foreign investors, given that the bulk of the diaspora has only existed since 1975. Also, both Vietnam and the overseas Vietnamese community lack OV-tailored institutional or formal coordination mechanisms for identifying business partners, eliciting funds from third party investors, or sharing resources. The growth of OV-focused business organizations may close this gap. Finally, most Viet Kieu businesses (besides stars like Highlands Coffee or Glass Egg Digital Media) generally prefer to keep a low profile to purposefully avoid public or regulatory scrutiny or escalate competition from rivals53, as past high-profile failures of overly-ambitious Viet Kieu entrepreneurs have taught them. For Vietnamese-American-led businesses, there is also some pressure to avoid provoking community censure or sanctions from Little Saigon.  Real Estate, Manufacturing, and IT (see Exhibit 7) Real estate development projects appear to be the overwhelming preference for OV investors. In this case, Viet Kieu (and other foreign) speculation on real estate has driven Vietnam’s urban housing market and has led Vietnamese policymakers towards adopting pro-investment laws that permit overseas Vietnamese ownership of residential property (see Exhibit 9). IT services, especially business process outsourcing (BPO) and lower-end coding functions are a distant, but fast growing second most popular choice for OV-led ventures. The tech sector shows the most promise as significant foreign investment from the likes of Intel and Microsoft54 and the proliferation of knowledge illuminate a path up the value chain. The third most popular type of 52 Phone interview with Dat Trinh (Darden ‘00), CFO of Levlad, LLC on December 7, 2009. 53 Trinh, Dat. Ibid. 54 Microsoft press announcement. “Microsoft and Government of Vietnam partner to accelerate toward a vibrant Vietnamese ICT economy”. May 21, 2007. 18 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu venture is for light manufacturing and supply, including apparel, furniture, and machine parts. Ancillary supply-chain businesses include food processing55, distribution, and export-import businesses.56 These industry preferences reflect the pattern of economic development across the ASEAN economies, which have been disproportionately been driven by overseas Chinese-run business conglomerates. As Joe Studwell articulates in “Asian Godfathers”, Southeast Asian and Hong Kong business tycoons have concentrated their efforts on maintaining opaque, local monopolies on services and extracting rent from real estate and natural resources, whereas Northeast Asian (Japan, Korea, Taiwan) firms have been able to create “branded, technology-developing export companies” that are publicly traded and compete on a global scale. Studwell argues that the hard work and high savings of low-wage workers in the manufacturing sector have buoyed ASEAN economies, despite the vagrantly self-serving policies and corruption of the economic elite in collusion with the political elite.57 Chen may argue differently, that low-key, cash-based business models reflect Sino-centric cultural and competitive preferences. Vietnam (and perhaps China) appears to be at a crossroads, assessing the ASEAN path of fast, easy money against the harder, Northeast Asian path of developing innovative, value-added exports.  Cash Is King The size and sector concentration reflects some key preferences of Viet Kieu businesses: a) to expatriate revenue quickly, b) a preference for tangible, easily-understood investments, c) a preference for cash transactions to avoid taxes, regulatory scrutiny, and unfavorable foreign exchange rates which serves as a secondary form of taxation. 58 A characteristic of many overseas Vietnamese-owned businesses, especially in the United States is for simple, cashed-based business models that offer a tangible, discrete product or service. This holds true for Vietnamese-American businesses, large or small, successful or unsuccessful. This preference for cash stems from a cultural distrust for third-party financial services providers and tax authorities and was re-enforced by a traumatic refugee experience in which people were able to re-build their lives with literally the clothes on their backs (and the gold and jewelry sewn into the lining of their clothing as they fled Vietnam). Thus, for most OV ventures in Vietnam and abroad, “cash is king”. These characteristics (geography, scale, sector, business model) stem from certain core assumptions held by OV businesses, shaped by a combination of experience and belief systems. 1) OV entrepreneurs and investors fundamentally do not trust Vietnam’s legal system to protect their legal rights from the State, nor their economic rights from competitors, partners, or even 55 Gittelsohn, John. “Real estate developer Frank Jao and silent partners have put $10 million into projects in his former homeland, suggesting a sea change in political climate.” Orange County Register. September 30, 2006. Accessed via “VietQ” blog on February 9, 2010 56 Trinh, Dat. Ibid. 57 Studwell, Joe. Asian Godfathers: Money and Power in Hong Kong and South-East Asia. London: Profile Books, 2007. Pg. 110-111. 58 Trinh, Dat. Ibid. 19 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu customers who would defraud them. OV businesses, like their local counterparts, adapt their business models accordingly. 2) In the absence of law, OV entrepreneurs and investors do not know whom to trust. Overseas Vietnamese, not yet in Vietnam, do not have enough information to make informed decisions on the very risky prospect of starting or investing in a business in Vietnam. All they have is hearsay from family and friends, uncritical state media, and anecdotal business media reports. OV entrepreneurs and investors trust only personal connections, which incur social obligations. Though one could argue that this is traditional Vietnamese, and indeed Asian business culture. 3) If it is true that most OV businesses intentionally limit themselves in scope and industry to avoid scrutiny, they negate the value proposition of OV investment. Small, cash-based businesses and “rentier”-driven industries such as real estate, low value-added operations such as food processing and apparel manufacturing, do not contribute to the world-class innovation that Vietnam needs to compete in the long-term. Asset Management Overseas Vietnamese function not only as a source of capital, but as influential intermediaries directing the flow of foreign investment towards Vietnam and within the country. This is the true economic strength of the OV diaspora. Portfolio investing, including asset management companies, financial advisory services, and private equity/venture capital (PE/VC) firms have grown tremendously in Vietnam, servicing a wide range of companies from SME and start-ups (including the OV-led ventures mentioned previously) to large scale resorts and industrial parks. Investors in the funds managed by these firms include non-OV institutional investors and private individuals. The cohort of OV investors who are wealthy, interested in investing in Vietnam, and financially sophisticated is likely very small, given the socio-economic demographics of worldwide OV. Vietnamese business culture, whether in Vietnam or overseas, is still very much based on personal relationships and trust. This culture tends to favor the remittance or direct venture investment channels mentioned previously. However, this may change with a growth in the number of Vietnam-focused financial instruments catering to the growing numbers of wealthy Vietnamese worldwide59. Already, many overseas Vietnamese and even more foreign-educated Vietnamese finance professionals lead these entities in facilitating major deals and developing investment strategies. In a similar fashion, OV executives in major multi-national corporations steer major corporate investments towards Vietnam or direct operations within Vietnam, as was the case with Tran Trong Phuc60, a Vietnamese-American engineer and executive with Intel, who influenced the decision for the technology giant to locate a $1 billion manufacturing facility outside Saigon in 2006, with production slated for Q3 of 201061. Indeed, Don Danh, co-founder of VSVN, believes that many OV executives raise the prospects of Vietnam as a 59 Various media reports suggest wealthiest Vietnamese (domestic or overseas) are Vietnamese-American hotelier Tran Dinh Truong ($1 billon+ in assets) and internet entrepreneur Tran Dung ($1.8 billion IPO in 2000). Richest Vietnamese may be Truong Gia Binh, chairman and CEO of FPT, an ICT firm ($143 million from stocks). 60 De Ramos, Abe. “Vietnam technology: don’t miss Saigon”. CFO Asia. July 21, 2006. 61 LePedus, Mark. “Vietnam sees delays in IC manufacturing push”. EETimes.com. August 21, 2009. Acccessed via EIU Global Technology Forum on March 3, 2010. 20 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu sourcing destination or new market with their strategic planners not only to seek financial return, but out of a sense of patriotic duty to assist in the country’s development..62 Thus, these OV financiers and executives serve as the gatekeepers of foreign capital, serving as yet another means by which OV direct the flow of investment funds into Vietnam from abroad—in this case, actual FDI. Table 2. Notable Viet Kieu-led Financial Management Firms and MNC Operations in Vietnam Fund or Firm Type/Industry Total Portfolio OV managers Assets in Holdings Vietnam VinaCapital Asset mgt $2 billion Mixed-real 2/7 of mgt team, including CEO and Group63 estate, SME, co-founder Don Lam (Canada) infrastructure, PE/VC Intel Computer $1 billion Chip mfg plant; VN/Laos/Cambodia Country Corporation hardware mfg Manager Than Trong Phuc (USA) Mekong Family of $300 Mixed—mfg, 4/21 on invest mgt staff ; all mid- Capital64 65 private equity million chemicals, IT level and junior funds Vietnam Jointly managed $250 Unknown Chief Economist, Pham Chi Thanh Capital hedge fund million (USA) Partners, LLC66 IDG Ventures Venture capital $100 Technology 4/13 members of mgt team, Vietnam67 fund million including Managing Partner Henry Nguyen (USA) Intellectual Capital Ernest Bower, of the Center for Strategic and International Studies’ Southeast Asia Program, notes that Vietnam needs Viet Kieu not only for their financial capital, but more importantly for their innovation and brainpower. 68 Perhaps the most precious form of investment that overseas Vietnamese can offer Vietnam is intellectual capital, in the form of contributing their knowledge and expertise. Though most of the Vietnamese diaspora was born from the tragedy of war, the wonderful irony is that the war spread Vietnamese people around the world, allowing a great many to become honed in the 62 Don Danh. Phone conversation on February 22, 2010. 63 VinaCapital Group corporate profile: 64 Mekong Capital corporate website 65 Blinch, Jenny. “Mekong Capital in fundraising for Fund III”. Pei Asia: the magazine and website for private equity in Asia, Australia, and the Middle East. September 25, 2009. A 66 Vietnam Capital Partners, LLC corporate website 67 IDG Ventures Vietnam is part of IDG Ventures, a global network of VC funds totaling $3.6 billion (corporate site) 68 Ernest Bower. Phone conversation on February 22, 2010. Earnest Bower is the lead Vietnam expert at CSIS, a partner at Brooks Bowers Asia, and the former chairman of the US-ASEAN Business Council. 21 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu world’s most prestigious educational, commercial, and public institutions. This population, now entering a third generation of students receiving Western education, has the potential to provide tremendous and immediate value to Vietnam’s economy and society. Indeed, many of the brightest minds in the Vietnamese diaspora have gravitated towards the sciences and engineering, rather than business.69 The actual numbers of potential contributors are small. For example, US Census statistics from 2007 indicate that Vietnamese-Americans’ educational attainment rates and income levels lag national averages: 7.8% of the 1,050,886 Vietnamese-Americans age 25 and up have graduate degrees, compared with 10.1% of the general US population.70 The numbers narrow further still by filtering for motivation, sufficient language capability, and skills relevant to the appropriate Vietnamese market demand. Still, 81, 969 graduate-educated Vietnamese-Americans provide a powerful pool from which Vietnam can draw human capital. More importantly, these statistics do not reflect the tremendous academic and professional accomplishments of ethnic Vietnamese in the United States and beyond. Accomplished OV scientists and innovators are living reminders that Vietnamese people, when placed in the right environment, can accomplish great things. This promising supply of talent has the potential of having an outsize effect on Vietnam’s rather severe educational deficit. Vietnam’s intellectual capital deficit, even compared to its ASEAN neighbors, cannot be understated, according to a study by Harvard’s Ash Institute. The study argues that fundamental governance and management issues rather than resource constraints plague Vietnam’s education system. The level of Vietnam’s educational modernization has not kept pace with its rapid economic rise. Professor Hoang Tuy, a distinguished mathematician and one of Vietnam’s most revered scientists authored a scathing criticism of Vietnamese academia, declaring it unable to produce the type of minds Vietnam needs to compete in the global economy. Hoang argues that Vietnamese academia has failed to attract foreign-educated intellectuals and scholars from abroad because it relies on patriotic appeals, rather than offering meaningful incentives such as academic freedom, promotion, or competitive salaries. Even former Prime Minister Pham Van Khai has publicly acknowledged Vietnam’s educational and scientific shortcomings. This stands in stark contrast to the perception that many Western firms have of a young, motivated, and educated workforce. The Ash Institute study presents the following comparison of Vietnam’s academic output relative to other APEC nations:71 69 Examples of accomplished overseas Vietnamese too numerous to list. In sciences and academia alone, includes Rhodes Scholars, tenured professors, numerous world-renowned researchers and engineers, including NASA astronaut Eugene Trinh. 70 U.S. Census Burueau. “American Community Survey 2007: Selected Population Profile in the United States, Vietnamese Alone or in any population”. 71 Valley, Thomas J. and Wilkinson, Ben. “Vietnamese Higher Education: Crisis and Response”. Harvard Kennedy- Ash Institute. November 2008. 22 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Table 3. Ash Institute Assessment of Vietnam Higher Education. Measures of intellectual productivity Vietnam is in dire need of OV intellectual capital. Even more than specific intellectual property (IP) and the talent of world-class experts, Hanoi strongly desires the internal capability to produce its own globally competitive IP. Vietnam needs OV expertise to help them “catch fish” in the short-term and to learn “how to catch fish” in the long-term. To these ends, Hanoi has placed special emphasis on acquiring OV scientific and technical talent. This type of capacity is the objective of official professional exchanges like TOKTEN, foundation-funded advisory projects, and educational exchanges like the Vietnam Education Fund72 or Fulbright scholarships. The HCM City Committee for Overseas Vietnamese established the 130-member Overseas Science and Technology Club to facilitate scientific exchange between Vietnamese and Viet Kieu scientists.73 Yet Hanoi’s patriotic appeals have had a limited effect on its own foreign-trained academics, much less on OV scholars. Vietnam should look to how nations like Israel, China, India, Taiwan, and South Korea have managed to cultivate diaspora talent. Beyond scientific knowledge, Vietnam needs management know-how. This is especially the case in Vietnam’s rapidly-evolving banking and telecommunications industries.74 Chris Harvey, General Director of VietnamWorks.com75, notes that Vietnam suffers from a “talent deficit” of middle management expertise. This deficit is a function of Vietnam’s young, post-unification demographics76 , 72 Vietnam Education Fund, an education exchange funded by US Congress 73 Huong, Cat. “Overseas tech club established”. Youth Union of Ministry of Science and Technology. January 4, 2006. 74 Bowers, Ernest. Ibid. 75 Email exchange with Mr. Harvey in November 2008. 76 “Important Take-Aways from MBA Asia Trip 2008”. Santa Clara Univeristy-Leavey School of Business. Accessed via Google February. 2, 2010. 23 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu an education system not aligned to the needs of a market economy77, and an infusion of foreign capital that currently exceeds local management capacity. Expatriate Western managers have filled some of these needs. The number of Western-educated Vietnamese post-graduates is climbing steadily as the Institute for International Education reports: Table 4. Vietnamese students attending US Schools78 10000 9000 8000 7000 6000 Undergraduate 5000 Graduate 4000 Other 3000 2000 1000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 Yet it will take a patient and sustained effort of Western-trained managers working side by side with their local Vietnamese counterparts over the next several years to fully impart, develop, and adapt leading international management practices and technical methodologies within the Vietnamese context. Many overseas Vietnamese, whether formally or informally, offer a unique channel for building local management capabilities. Some key points regarding Viet Kieu as the gatekeepers for financial capital and the source for intellectual capital: 1) The true economic influence of the Vietnamese diaspora rests not with sourcing investments (through remittances, projects, or ventures), but with their role as influential gatekeepers for other sources of foreign investment, whether PE/VC fund, tourist resort, or manufacturing facility. 2) The single greatest asset of the Vietnamese diaspora is its intellectual capital. Though small in quantity, the quality of scientific and technical expertise could offer transformative value to Vietnam’s modernization. 77 Marklein, Mary Beth. “Vietnam, other nations look to US-style community colleges”. USAToday/Education. September 9, 2009. 78 Source: Institute for International Education. Provided courtesy of the Institute for Vietnamese Culture and Education. 24 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu 3) Besides scientific knowledge, OV have management know-how that could contribute towards Vietnam’s overall capacity to maximize and sustain returns on its FDI 4) Many Vietnamese worldwide voluntarily seek to contribute their know-how and expertise out of a sense of patriotism to Vietnam. However, Vietnam must be willing to take the measures necessary to modernize its educational system to attract and build upon the contributions of OV intellectuals and experts. Assessment Though it is problematic to aggregate remittance-sourced investments, investment projects, start-ups, portfolio investments, and alternative sources of funds in one lump sum, it is important to understand the net effect of total OV investments on the Vietnamese economy. A more holistic view will be more useful in deriving useful conclusions both for Vietnamese policymakers looking to attract OV investment and for potential OV investors and entrepreneurs looking for business opportunities. The major components of OV investments can be summarized as follows: Table 5. Summary of Major Components of OV Investment Component Sub-components Estimated Significance (destination) Amount to Date Remittance (for Investment in family- $3.9 billion79 Serves as key distribution investment) run businesses channel for OV capital Recorded investment Real estate, start-ups, $ 2 billion Potential of OV-led ventures and projects and ventures joint ventures projects is not being maximized Asset management Portfolio funds, start- $3.7 billion OVs serve as influential ups, real-estate, IT, gatekeepers for foreign mfg or infrastructure investments, projects Intellectual capital R+D/IP, scientific Undetermined80 Greatest potential for value- expertise, mgt know- creation, innovation exists in gap how, educational b/w OV supply and local demand institutions for intellectual capital Total $9.6 billion + Quantitatively, would make OV the 7th largest foreign investor (Ex. 7). Larger socio-economic impact unquantifiable. 79 For illustrative purposes, 10% of total recorded remittances from 2000-2009 ($39.5 billion) 80 Given more time and resources, a rough estimate could be determined by identifying all IP from overseas Vietnamese and calculating the profits that have resulted from commercializing patents, publications, etc. 25 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Trends for Overseas Vietnamese Investment To understand the evolution of the diaspora’s role in Vietnam’s economy, commercial and political decision-makers alike must take a truly long-term view of the investment profile of the various components of OV investment. Projecting these profiles over the next generation and beyond is based largely on presumptions about larger demographic trends rather than available data. Table 6. Evolution of Major Components of OV Investment: Scale vs. Returns Table 4 conceptually forecasts the long-term trends for various components of OV investments, juxtaposing scale versus relative rates of return. Thus, remittances provide a large source of investments, but such investments are spread across a large number of “mom and pop” businesses with low returns. Furthermore, remittances as a whole will decline as sources shift from affluent Vietnamese in the West towards cross-border workers and migrant laborers. OV-led ventures and projects may have a large potential in the short to mid-term, but may eventually be eclipsed by domestic and other foreign ventures. However, the power that Viet Kieu asset managers have as gatekeepers for foreign capital should be directly correlated with the rise in FDI. Finally, OV-sourced intellectual capital is presently small but has a very rich potential for long-term financial and social returns. 26 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu These generational shifts in OV investment reflect larger social, political, and economic forces:  Window of Influence Closing For OV investment and ventures, the window for competitive advantage vis-à-vis foreign and domestic enterprises, is closing. For the most part, the cohort of OV that may have the most capital and knowledge to contribute to Vietnam are those raised and educated in the West. This group is the most acculturated and assimilated, having the credentials and contacts to succeed in their respective home countries. Ironically, their assimilation means that they are less likely to have strong personal connections with local Vietnamese. Hence, they are less likely to pursue investment or business opportunities in Vietnam, nor have the language or cultural fluency to succeed even if they tried. As Don Danh of VSVN opines, local Vietnamese would rather do business with a foreigner than a Viet Kieu with whom there is little cultural familiarity and who may carry a hidden agenda (i.e. political “baggage”).81 In this sense, Viet Kieu will have diminishing influence in shaping Vietnam’s economic future.  Migration Patterns for Diaspora Shifting Modern and affordable means of travel and communication may offset the growing cultural rift between the diaspora and Vietnam. Also, migration pull factors such as immigration policies of recipient nations and push factors such the search for employment or educational opportunities, will have many unforeseeable effects on the growth of the diaspora population and the nature of their interaction with Vietnam.  Vietnam’s Capacity Improves As Vietnam accelerates its integration into the global economy, its financial sector will modernize. Third parties (international, domestic, or joint) such as formal banking and insurance services will offer a compelling alternative to informal sources of capital or credit like remittances. In terms of human capital, Vietnam’s educational reform will favor discreet scientific and technical skills over less tangible education in managerial skills, critical thinking, and the ability to innovate. These behavioral skills will gradually flow from foreign-educated Vietnamese, OV, and expatriates to local managers over time. Beyond this, fundamental shifts in the education system and cultural norms will be needed to produce “world class” leaders needed to lead and create multi-national companies originating from Vietnam. 81 Danh, Don. Ibid. 27 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Recommendations ASSESSMENT AND Anyone interested in doing business in Vietnam or RECOMMENDATIONS helping its economy grow should pay attention to the  WHAT ARE THE BARRIERS FOR significant, yet underappreciated role played by OV investment. OV INVESTMENT? OV investment, in terms of scale and scope, is an important  WHAT BUSINESS component of Vietnam’s overall economic modernization. In OPPORTUNITIES EXIST FOR OV the face of larger social and demographic forces, cultivating OV INVESTMENT AND OV investment poses interesting challenges and opportunities. It is ENTREPRENEURS? also vital to identify the root causes and resulting barriers  HOW CAN VIETNAM impeding OV investment and the social benefits that could ENCOURAGE MORE OV accompany it. Three root causes impede OV investment today: INVESTMENT? apathy, risk, and principles. Apathy arises from the cultural separation between more assimilated OV and Vietnam. Financial and legal risk stems from Vietnam’s current lack of transparent institutional frameworks and market mechanisms. Finally, the OV community has conflicting attitudes about doing business in Vietnam as a result of their anguished history. Commercial entities and public or community institutions that can successfully address these root causes could help accelerate both Vietnam’s development and reconciliation between Vietnam and its diaspora. Significant Business Opportunities The broad, long-term trends and root causes for impeding OV investment create interesting opportunities for entrepreneurs and investors interested in profiting from or influencing the economic integration of Vietnam and its diaspora going forward. If investors and entrepreneurs, international and domestic, seek to maximize short-term (1-5 years) returns, then it is logical to continue the current investment patterns in value-extracting projects: real estate speculation, commodities processing and distribution, and light manufacturing of non- durable goods. Beyond this short term, Vietnam’s labor cost advantage will eventually be eroded and foreign investors will likely seek arbitrage further down the poor nation development ladder. In this sense, Vietnam faces the very real risk of being cursed by its blessings in natural resources as many sub- Saharan African and Middle Eastern nations have. However, if investing parties are interested in enduring, long-term returns that can last for generations, they should look to value-creating enterprises that will help to modernize Vietnam’s national capabilities and hence create new investment opportunities for the future. The following opportunities suggest ways for enterprises (OV, foreign, or local) to unlock the vast potential of Vietnam’s human, vice natural, resources.  Educational Institutions and Services Vietnam has a large unfulfilled demand for international-standard education and training services, from graduate education to technical certifications. A commercial or not-for-profit organization staffed by OV experts could offer an effective platform for these services. The 28 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu market for English language instruction and admissions coaching, whether for the children of affluent families or for rising young professionals, will grow as it has throughout Asia.  Financial Services There is a tremendous market for attracting OV investment and allocating it in Vietnam in a way that emphasizes transparency on par with returns. This market includes the gamut of financial services from consumer banking and wire transfer services to forming private equity/venture capital funds to a vertically-integrated, full-services company. There may even be a day when capital flowing outward from Vietnam exceeds inward flowing OV capital.  Market Platforms Much like what Alibaba.com and baidu.com have done for China, e-commerce platforms have the ability to create efficient markets for goods and services across borders. There is a rapidly growing effort to emulate this model in Vietnam, whether for IT and business process outsourcing, to exports and imports of handicrafts to finding local manufacturing partners. Given the vast potential, the competition to develop a globally recognized “go to” brand or website for trade in Vietnam is particularly fierce.  Information and Risk Protection Services As with many emerging markets, accurate, timely business information in Vietnam remains opaque for a variety of reasons. Hence, locally-based sourcing and due-diligence firms manage to carve out profitable niches as translators of Vietnamese language and culture and brokers of information and contacts. Such firms also facilitate means of by-passing or mitigating costs incurred by weak governance---administrative delay and corruption. Such firms succeed by cultivating ties to influential business, administrative, and political players over many years. An innovative firm that could scale these services through the power of social media or in combination with an e-commerce provider or lending operation could become a powerful player.  Acculturation Services The widening cultural gap between Westernized Vietnamese and Vietnam provides an opportunity for acculturation services. Readily available air corridors and telecommunications with Vietnam bridge the physical, if not cultural distance. Acculturation services would cater to OV looking to re-discover their roots and for the growing population of affluent Vietnamese who crave experiences and information from abroad. Acculturation services could include: Vietnamese language instruction for OV who desire to return for business or personal reasons, customized tourism services for Vietnamese visiting overseas or for OV visiting Vietnam, entertainment and media companies, and community- based language and cultural exchange programs. 29 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Policy Recommendations Entrepreneurs, not-for-profit entities, corporations, and investors have a large role to play in steering OV investments in Vietnam towards profitable and responsible outcomes. However, policymakers in Vietnam and community leaders in Little Saigon have far more power and authority to eliminate structural barriers and provide incentives for Viet Kieu investment. The following recommendations are desirable not only from the perspective of actual Vietnamese government and Party officials, but are useful for persons and organizations of influence within the larger diaspora community who share an interest in assisting Vietnam achieve long-term economic and social progress. Protecting Rights: Systemic Legal Reform (see Exhibit 9) The OV community’s apprehension of doing business in Vietnam stems from the perceived irony of Vietnam having both too much and not enough government intervention. The fear of too much government arises from stories of arbitrary reprisals or targeted repression by the Communist Party and State, including detention, expropriation of assets, surveillance, and extortion or blackmail against Viet Kieu and local Vietnamese business professionals. Conversely, Viet Kieu fear of too little government stems from stories of many entrepreneurs (OV or local Vietnamese) “losing their shirts” to corrupt local officials or the predations of con-artists and thieves as contract enforcement and legal recourse appear non-existent or unenforced.82 Though foreign businesses share these concerns, Viet Kieu appear to face exaggerated risks since their businesses relationships are much more intertwined with local Vietnamese and they do not enjoy the benefits of collective bargaining power or dedicated legal support as large, multi-national corporations do. In response to these concerns, Minister of Planning and Investment Vo Hong Phuc replied in a 2008 investment promotion tour that Viet Kieu investors should be accorded the same legal rights and protections as local Vietnamese.83 However, this is precisely what many OV business owners and investors fear. As unfair as it may seem to local Vietnamese or foreign businesses, Viet Kieu business owners would like to have the legal status and diplomatic protections of their adopted (Western) nations, yet have the economic rights and privileges of Vietnamese citizens. Even for Viet Kieu business- owners not inclined to cross the ill-defined and shifting line of what Hanoi defines as sedition or incitement of “hostile forces”, the lack of clear and transparent legal standards, consistent enforcement, and due process rights serve to directly inhibit the growth of OV investment. Modern capitalism, as practiced in Vietnam and many other newly-industrialized countries is more raw and untamed than in the developed world, exactly because legal reform has yet to catch up to market liberalization. Systemic legal reform in Vietnam requires a shift in paradigm from enforcing compliance with government mandates and regulations towards protection of the fundamental rights of 82 Don Danh of VSVN notes that exploitation is a two way street---local Vietnamese have been taken advantage of by Viet Kieu scams as well. 83 Question by author during Q&A, following remarks by Vo Hong Phuc, Vietnam Minister of Planning and Investment. Vietnam Investment Forum hosted by Asia Society, Washington DC. April 11, 2008. 30 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu consumers, investors, and business owners. However, this is a radical departure from orthodox Vietnamese and certainly Communist political philosophy, which seeks to subordinate the needs of the individual to the needs of the State. Yet any motorbike-clogged street in HCM City or any community celebration in any Little Saigon, USA demonstrates that Vietnamese people are very adept at finding a way around regulation. Indeed, the black markets and illegal remittances of the 1980s prior to Vietnam’s Doi Moi economic reforms in 1986 not only circumvented, but eventually replaced State-controlled economic activity. Any entity in Vietnam, whether government agency seeking to enforce the law with its citizens or a company seeking to shape the consumer behavior of consumers, must be comfortable with the paradigm of organized chaos.84 Despite the external perception of a strong, conformist Confucian culture of subordinating individuality, it is the author’s observation that Vietnamese are highly individualistic and hyper-competitive. And yet, for causes that attract their passions, they can be extremely cohesive and disciplined as many wars against foreign invaders have shown. Thus, Hanoi’s traditional central planning paradigm will be as ineffective for legal reform as it was for economic modernization. Instead, policies and services must be designed to serve the citizen/customer. Legal modernization must focus on cultivating trust amongst citizens, rather than striking fear into would-be perpetrators. Vietnam has passed a series of laws designed specifically to attract and facilitate OV investment. Notable laws include granting home ownership for OV and waivers for tourist visas for up to three months. With technical assistance from abroad, Vietnam has also passed, with increasing frequency, laws designed to counter corruption and promote transparency. However, even state media has expressed consternation at the rather tepid response from OV investors. This should not be surprising. These new laws appear to be steps in the right direction, but are only tactical solutions. As Vietnam legal scholar Mark Sidel of the University of Iowa argues, Vietnam has managed to create more laws and yet fewer rights.85 Viet Kieu doing business in Vietnam limit themselves and potential OV investors avoid Vietnam altogether because Vietnamese legal reform has not yet ensured their protection from the whims of the Party or the Hobbesian world of their local competitors. In short, to attract and grow overseas Vietnamese investment and entrepreneurship, Hanoi must embark upon fundamental legal reform: 1) Based on the core premise of protecting rights, rather than enforcing compliance 2) Comprehensively clarify the legal status of Viet Kieu and their assets, recognizing that they play a unique role in Vietnam’s economic development, compared to either Vietnamese citizens or foreign enterprises 3) Clear and transparent legal standards regarding business and consistent enforcement amongst locals, Viet Kieu, and international businesses alike 84 Wallace, R.. (2009, September). CRASHING Into the Global Economy! Minority Business Entrepreneur, 26(5), 35- 36,39. Retrieved February 10, 2010, from Ethnic NewsWatch (ENW). (Document ID: 1909975471). 85 Sidel, Mark. Law and Society in Vietnam: The Transition from Socialism in Comparative Perspective”. Cambridge: Cambridge University Press, 2008. Pg. 221. 31 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Diaspora Emerging: Building Institutional Capacity and Market Platforms Like most diaspora and exile groups, the overseas Vietnamese community has no central representative body or coordinating authority to pool and allocate resources or serve as a unified voice. Rather, a vast universe of ethnic Vietnamese organizations has proliferated across the world with affiliations based on family ties, religion, political party, community service, geographic location, profession, business, military service, and other common interests. For groups that aim to represent the larger community or advocate a particular stance towards Vietnam, community politics has proven to be divisive. The unfortunate result of this division is the lack of any institutional capacity by the OV community to mobilize and efficiently deploy capital. There is no way for OV investors to systemically benchmark investment projects, share data, or compare service providers. Informal networks are the only means of transferring capital and collecting information. The Vietnamese diaspora have no representational voice for collective advocacy before their home nations, Vietnamese authorities, or multi-lateral institutions. Hence, overseas Vietnamese cannot collectively bargain or negotiate with Vietnamese authorities to articulate their interests. There are encouraging grassroots-level efforts taking place in Vietnam and around the world to coordinate efforts, share knowledge and contacts, and pool resources. As mentioned previously, VANGO has proven to be an effective umbrella coalition for the dozens of OV-led philanthropic efforts in Vietnam. Savvy young Vietnamese-American community organizers and activists often belong to a number of Vietnamese-American and Asian Pacific-American student associations, interest groups, and community organizations such as NAVASA86, NCVA87, BPSOS88, and SEARAC89 and share common humanitarian interests that cut across organizational or ideological divides. The initiative displayed by these young people could develop into promising organizational constructs in the future. Institutional capacity need not be a unified political or community organization. A significant opportunity exists for any person or organization that can create a transparent and credible investment vehicle for mobilizing overseas Vietnamese capital. Even a coordinated and systemic data collection and research effort to publish credible OV economic information would serve a vital function. Credibility--a demonstrated track record of favorable returns and transparent, accountable corporate governance and financial reporting—is a rare quality amongst large Vietnamese institutions anywhere. Fraud and corruption is not unique to the Vietnamese state but is unfortunately common to many collective economic activities in overseas Vietnamese communities. Accordingly, OV investors and entrepreneurs should be developed and encouraged. The OV community could realize tremendous benefits by serving as the intermediaries between their home 86 National Association of Vietnamese-American Student Associations, a student leadership organization: www.navasa.org/ 87 National Congress for Vietnamese-Americans, a community-service based not-for-profit: www.ncvaonline.org 88 Boat People S.O.S., a refugee-assistance organization: www.bpsos.org/ 89 Southeast Asia Resource Action Center, an advocacy organization for Southeast Asians in the United States: www.searac.org/ 32 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu countries and Vietnam. In contrast to its success stories of accomplished individuals and businesses, the OV community has a darker side of poverty, gang violence, domestic abuse, and other social problems. This community suffers from socio-economic disparity and from fragmented families scattered across wide geographies. The Vietnamese-American community needs economic development as much as Vietnam does. Furthermore, aspiring OV entrepreneurs should be allowed to do business in a manner consistent with their values, rather than being forced to choose between profits and principles. They should not be accused of being “Communists” for pursuing opportunities in Vietnam, any more than they should be accused of being “hostile forces” for being faithful to the belief systems of their parents. Building Trust: A Path to Reconciliation In Vietnam, April 30, 1975 is commemorated as National Re-Unification Day, a national holiday to celebrate its victory and unification as a nation. In most overseas Vietnamese communities around the world, April 30, 1975 is commemorated as a day of solemn mourning and reflection on the fall of South Vietnam, the war dead, and the refugee’s plight. However, mutually exclusive political belief systems need not impede the exchange of culture, commerce, and friendship amongst younger Vietnamese who have no personal grievances against each other. Taiwan is the largest investor in mainland China. South Korea is subsidizing many of North Korea’s forays into capitalism. The creation of mutual wealth is a visible and explicit means of building trust and cooperation between two parties. On April 30, 2001, Professor Le Xuan Khoa of SAIS90 articulated a path for reconciliation and normalization between the OV community and Vietnam91. He originally postulated that Hanoi’s institutional modernization and recognition of OV contributions, and Vietnam’s increasing business ties and educational exchanges with their counterparts in the West would lay the foundation for eventual normalization of relations between Vietnam and its diaspora. If one starts with the assumption that all Vietnamese, OV, and international stakeholders share a common interest in encouraging foreign investment in Vietnam as a means of developing and modernizing Vietnam, there is common ground that can bridge the ideological divide. Professor Binh Tran-Nam of the University of New South Wales, Australia argues that in order to more effectively harness overseas Vietnamese financial and intellectual capital, Hanoi should: 1) “demonstrate a more genuine spirit of reconciliation, including acknowledgement of past policy shortcomings”, 2) follow lessons learned from China and India in attracting diaspora investment, and 3) better coordinate policies amongst various government departments92 90 John Hopkins School of Advanced International Studies, Washington DC 91 Le, Xuan Khoa. “Quan điểm của bạn đọc: Normalization of Relations between the Overseas Vietnamese and Vietnam”. April 30, 2001. (www.giaodiem.com/doithoai/lexuankhoa.htm) 92 Nam, Binh Tran. “Mobilizing Overseas Vietnamese Human Capital to Promote Economic Growth in Vietnam”. Asean Focus Group: Asian Analysis. Australian National University. November 2005. Accessed via Google on December 22, 2009. No longer posted online. 33 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu To realize this “genuine spirit of reconciliation”, it is important for Hanoi and Little Saigon to shift away from the old paradigms. Rather than trying to demonize each other, both sides should adopt a framework for reconciliation in which both sides can identify common goals and explore mutual interests. Since their desired end-states are so radically divergent, the actual process may be more valuable than any stated outcome. The simple ability to engage in civil and constructive discourse is an accomplishment by itself. This would help launch a virtuous cycle whereby economic development and reconciliation efforts are mutually re-enforcing. This process should be defined by four guiding principles:  Focus on Common Interests Wealth creates options for poverty alleviation, educational attainment, and cultural preservation.  Transparency Being open and honest in all political and financial dealings and welcoming an independent and critical media are the only ways to eliminate corruption and inspire public trust. Closed-door reconciliation efforts are still vital, but momentum can only be achieved by having public buy-in.  Engagement Concerted economic engagement is needed.93 Frequent contact at all levels will bridge the cultural and political divide. Rather than fear opposing viewpoints as a ideological contamination, each side should welcome the opportunity to openly compare and contrast different points of view---all united by the common purpose of creating opportunities for Vietnamese everywhere.  Dialogue Dialogue should be honest and respectful or not occur at all. All parties should be secure enough with their respective viewpoints to articulate beliefs without attacking each other. The following chart summarizes the root causes and barriers to investment and identifies the appropriate innovation opportunity or policy recommendation. 93 Huynh, Thi. (2004, December 4). Life in Vietnam changing for the better. Northwest Asian Weekly,p. 9. Retrieved February 10, 2010, from Ethnic NewsWatch (ENW). (Document ID: 784668261). 34 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Table 7. Summary of OV Investment Obstacles, Business Opportunities, and Policy Recommendations Root Barrier to Business Policy Recommendation94 Cause Investment Opportunity Apathy Cultural Acculturation distance Services Risk Legal Risk Information and - Hanoi: Clarify legal status and rights of OV Risk Protection - OVC: Establish internationally recognized, Services independent association for OV-owned businesses operating in Vietnam to represent collective interests Systemic Information and - Hanoi: rights-based legal reform; consistent corruption Risk Protection enforcement Services - Hanoi, OVC: Independent, critical media Bureaucracy - Information - Hanoi: Streamline, consolidate, and automate and Risk administrative process across agencies for Protection receiving business permits and licenses (e- Services government) - Market Platforms Financial risk; - Market market Platforms inefficiencies - Financial Services Lack of OV - Market - OVC: Coordinating or cooperative mechanism for Community Platforms promotion of economic development in OV Capacity and - Financial community and Vietnam across public, Markets Services commercial, and civil society spheres - Establish independent research institute for OV- centered economic, social science research Principles Mistrust - Educational - Hanoi, OVC: Reconciliation process institutions and services Conclusion This study has examined not only the economic, but also the social, legal, political, and ethical dimensions of the role that overseas Vietnamese investment plays in Vietnam. Born in the aftermath of great tragedy and sorrow, the Vietnamese diaspora have emerged to become valued members of their adopted homelands and more recently, their mother nation. For the 94 OVC: Overseas Vietnamese Community 35 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu last two centuries, Vietnam’s history has been defined by war, injustice, and internal discord. For many Westerners, Vietnam is a synonym for war and suffering. However, the 21st century and the age of globalization ushered in by the dynamic economies of Asia portend exciting and hopeful new opportunities. Vietnamese culture has endured for 2000 years because it has successfully resisted foreign invasion and occupation, yet has readily adopted foreign ideas to achieve progress. Like seeds scattered throughout the world, Vietnamese are returning home to bear the fruits of their knowledge and wealth. Vietnam’s destiny rests with those who look to its future, not its past. 36 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Knowledge Gaps: Future Areas of Research There are many topics related to OV investment that are not included in this brief study, but are quite relevant to the overall objectives of identifying business opportunities and spurring economic development in Vietnam. Any study should be relevant, rigorous, and actionable in order to be useful for government policymakers, entrepreneurs, investors, and economic development specialists alike. Some interesting examples include: 1. Applying the framework of this study towards other prominent diaspora from economically struggling nations: Cuba, Iran, Afghanistan, Iraq, Pakistan, Nigeria, Philippines, and Bangladesh. 2. Breakdown of officially licensed Viet Kieu-led projects and investments by: size, geography, citizenship of owners, percent ownership, industry 3. Failure rate of both Viet Kieu and local commercial ventures 4. Percentage of remittance flow used for investment/business purposes 5. Official census of worldwide OV population 6. Aggregate ‘wealth’ of OV population; breakdown by country 7. Risk appetite of local vs. OV entrepreneurs (self-selecting immigrants) 8. Comparison of proportional intellectual capital capabilities of OV vs. Vietnam 9. Comparing of the income levels and relative wealth of different OV émigré cohorts worldwide 10. Defining and measuring the aggregate ‘GDP’ of the Vietnamese diaspora.95 11. A study of knowledge transfer and the role of OV in building Vietnam’s intellectual capital and innovation capacity 12. The effect of OV as third party facilitators for other sources of investment (agents for multi- national corporations, agents for large-scale financial services transactions and portfolio investment, third party management of large import/export operations, etc.) 13. Measuring intellectual capital (patents, academic output) of OV population; comparing with domestic intellectual output of VN; comparative study with other diaspora 95 The US Census Bureau Survey of Business Owners recorded in 2002 that over 147,000 ethnically-Vietnamese owned firms in the U.S. generated $15.5 billion in revenue, 4.7% of the total revenue from all Asian-owned small businesses in the U.S. 37 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu References Interviews and Correspondence Phone conversation with Ernest Bower on February 22, 2010. Earnest Bower is the lead Vietnam expert at CSIS, a partner at Brooks Bowers Asia, and the former chairman of the US-ASEAN Business Council. Interview with Katie Dang, Executive Director of National Vietnamese-American Chamber of Commerce. January 29, 2009. Estimate based on projection of 16% annual growth from US Census Bureau 2002 Survey of Small Business (http://www.census.gov/econ/sbo/#asian) Phone conversation with Don Danh, co-founder of VSVN and SVP of Emerging Markets at East-West Bank of California. February 22, 2010. Email exchange with David Dapice, Economist for the Vietnam Program at the Ash Institute for Democratic Governance and Innovation (Harvard JFK School of Government). January 26, 2009. Email exchange with Mr. Chris Harvey, General Director of VietnamWorks.com in November 2008. E-mail correspondence with Dr. Lan Pham, University of Minnesota, Department of Applied Economics. February 10, 2010. Phone conversation with Ivan Small, PhD candidate, Cornell University, Department of Anthropology. February 10, 2010. Phone interview with Dat Trinh (Darden ‘00), CFO of Levlad, LLC on December 7, 2009. Correspondence with Markus Taussig, PhD candidate, Harvard Business School. February 2010. Companies Glass Egg Digital Media corporate website/Who We Are: (http://www.glassegg.com/weare_management.htm) Highlands Coffee corporate website. “About Us/History”. Accessed via Google on February 6, 2010. (http://www.highlandscoffee.com.vn/aboutus_history.html) IDG Ventures Vietnam is part of IDG Ventures, a global network of VC funds totaling $3.6 billion: http://www.idgvv.com.vn/ Mekong Capital corporate website: (http://www.mekongcapital.com/index.htm) Microsoft in Vietnam: (www.microsoft.com/vietnam) 38 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Microsoft press announcement. “Microsoft and Government of Vietnam partner to accelerate toward a vibrant Vietnamese ICT economy”. May 21, 2007. VinaCapital Group corporate profile: http://www.vinacapital.com/?l1=81 Vietnam Capital Partners, LLC corporate website: (http://vncapitalpartners.com/) VietNamWorks.com is Vietnam’s largest internet job portal: (http://www.vietnamworks.com/about_us.php) Media Amojelar, Darwin G. “Remittances may cause inflation”. Manilatimes.net. December 17, 2009. Citing ADB Working Paper, “Remittances in Asia: Implications for the Fight against Poverty and the Pursuit of Economic Growth”. (http://www.manilatimes.net/index.php/business-columns/7950- remittances-may-cause-inflation) Balfour, Frederick. “Vietnam is Hot. Don’t Get Burned”. Businessweek.com. April 18, 2005. Retrieved via Google on November 25, 2009. (http://www.businessweek.com/print/magazine/content/05_16/b3929159.htm?chan=gl) Banh, Hai. “Bringing them back”. VnEconomy News. December 8, 2009: (http://news.vneconomy.vn/2010010604370392P0C1/bringing-them-back.htm) Boudreau, John. “ ’Little San Jose’: Vietnamese take Silicon Valley tech culture to Vietnam”. San Jose Mercury News. May 18, 2008. Accessed via “Le Viet-Nam aujourd hui” blog on February 10, 2010: (blog.vietnam-aujourdhui.info/post/2008/05/18/Little-San-Jose-:-Vietnamese-take-Silicon-Valley- tech-culture-to-Vietnam) Blinch, Jenny. “Mekong Capital in fundraising for Fund III”. Pei Asia: the magazine and website for private equity in Asia, Australia, and the Middle East. September 25, 2009. Accessed via Google on February 11, 2010: (http://www.peiasianews.com/Article.aspx?article=46041&hashID=587050307F79675BAB9417D6E D0B8B9BD474D0B6) De Ramos, Abe. “Vietnam technology: don’t miss Saigon”. CFO Asia. July 21, 2006. Acccessed via EIU Global Technology Forum on February 15, 2010. (http://globaltechforum.eiu.com/index.asp?layout=rich_story&doc_id=9012&title=Vietnam+technol ogy:+Don't+miss+Saigon&categoryid=30&channelid=4) Do, Trinh. “When Is the Right Time for Vietnamese Americans to Invest in Vietnam?” Nha Magazine. December 10, 2005. Accessed via New American Media on February 5, 2010: 39 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu (http://news.newamericamedia.org/news/view_article.html?article_id=c73c8c325182172877e0414 29068018c) “Capital from Viet Kieu poised to flow to Vietnam”. Vietnam Economic Times. August 27, 2009. Flanigan, James. “Little Saigon Exports Its Propserity”. New York Times. January 19, 2006. Retrieved via Google on September 23, 2009. (http://www.nytimes.com/2006/01/19/business/19sbiz.html?_r=1&pagewanted=print) Gittelsohn, John. “Real estate developer Frank Jao and silent partners have put $10 million into projects in his former homeland, suggesting a sea change in political climate.” Orange County Register. September 30, 2006. Accessed via “VietQ” blog on February 9, 2010: (http://vietq.wordpress.com/2006/09/30/little-saigon-godfather-sets-sights-on-vietnam) Huong, Cat. “Overseas tech club established”. Youth Union of Ministry of Science and Technology. January 4, 2006. Accessed via Google on September 23, 2009: (http://www.thanhnienkhcn.org.vn/ettchitiet.asp?code=56) Huynh, Thi. (2004, December 4). Life in Vietnam changing for the better. Northwest Asian Weekly,p. 9. Retrieved February 10, 2010, from Ethnic NewsWatch (ENW). (Document ID: 784668261). Johnston, Tim. “Vietnamese confidence fades on bubble fears”. FT.com. January 4, 2010. (http://www.ft.com/cms/s/0/fb7e1d48-f96e-11de-8085-00144feab49a.html?nclick_check=1) LePedus, Mark. “Vietnam sees delays in IC manufacturing push”. EETimes.com. August 21, 2009. Accessed via Google on March 3, 2010. (http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=219401051&pgno=3) Marklein, Mary Beth. “Vietnam, other nations look to US-style community colleges”. USAToday/Education. September 9, 2009. (http://www.usatoday.com/news/education/2009-09-23- vietnam-community-college_N.htm). Accessed via same-day Yahoo! News feed. “A Marriage Made in Vietnam”. Little Saigon Inside blog. January 29, 2009. Accessed via Google February 2, 2010. (http://littlesaigoninside.blogspot.com/2009/01/marriage-made-in-vietnam.html) “The return of the boat people”. (2008, April). The Economist, 387(8577), 9. Retrieved February 5, 2010, from ABI/INFORM Global. (Document ID: 1469393961). Rian Maelzar. “The Highlands Coffee Company is Percolating”. Nightly Business Report Transcript. October 4, 2007. Accessed via Google on February 6, 2010. (http://www.pbs.org/nbr/site/onair/transcripts/071004c/) 40 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu “Overseas Vietnamese Business Association Set-up”. Vietnam Foreign Press Center. August 11, 2009. Retrieved via Google on September 23, 2009. (http://www.presscenter.org.vn/en/content/view/807/44/) “Plan before PM would provide incentives to Viet-Kieu talent”. Lookatvietnam.com. November 25, 2009. (http://www.lookatvietnam.com/2009/11/plan-before-pm-would-provide-incentives-to-viet-kieu- talent.html) Organizations American Chamber of Commerce-Vietnam: www.amchamvietnam.com Ash Institute-Vietnam Program. Harvard JFK School of Government: http://ash.harvard.edu/asia/programs/vietnam Boat People S.O.S., a refugee-assistance organization: www.bpsos.org/ Center for Strategic and International Studies (CSIS), Southeast Asia Program: http://csis.org/program/southeast-asia-program; led by Ernest Bower Institute for Vietnamese Culture and Education: www.icve.org National Association of Vietnamese-American Student Associations, a student leadership organization: www.navasa.org/ National Congress for Vietnamese-Americans, a community-service based not-for-profit: www.ncvaonline.org National Vietnamese-American Chamber of Commerce: Southeast Asia Resource Action Center, an advocacy organization for Southeast Asians in the United States: www.searac.org/ Overseas Vietnamese Business Association: www.ov-club.com/ Overseas Vietnamese Club for Science and Technology: www.ovsclub.com.vn/ Transfer of Knowledge Through Expatriate Nationals (TOKTEN) was a joint program between the Vietnamese government, UN Volunteer Program, and UN Development Program to use expatriate 41 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Vietnamese to help build capacity from 1990-2002. (www.unv.org/en/what-we-do/countries/vietnam/doc/tokten-channels-global-expertise.html) US-ASEAN Business Council: www.usasean.org US Foreign Commercial Service in Vietnam: www.buyusa.gov/vietnam/en/contact_us.html US-Vietnam Trade Council, key US-based policy advocacy group that played large part in normalizing US relations with Vietnam: www.usvtc.org Vietnamese-American Entrepreneurs Association: www.vaeaonline.org/Home/tabid/376/Default.aspx Vietnam Chamber of Commerce and Industry: http://vibforum.vcci.com.vn/, Small and Medium Enterprise Center directed by economist Dr. Pham Thi Thu Hang Vietnamese-American Non-Governmental Organization Network (VANGO): www.va-ngo.org/about.html Vietnam Development Forum, a joint research project with Japan: http://www.vdf.org.vn/aboutus.html Vietnam Education Fund, education exchange funded by US Congress: http://home.vef.gov/ Vietnam Strategic Ventures Network: www.vsvn.org/about.php?whichpage=faqs Primary Source Data Asian Development Bank-Vietnam: www.adb.org/VietNam/ Government Statistics Office of Vietnam: www.gso.gov.vn Migration Policy Institute. “State Proportion of Vietnamese-Born Population in the United States”. US Census Bureau/American Community Survey 2006. (http://www.migrationinformation.org/USfocus/display.cfm?id=691#3) US Census Bureau. “2002 Survey of Business Owners: Asian-Owned Firms”. Revised August 29, 2006. U.S. Census Bureau. “American Community Survey 2007: Selected Population Profile in the United States, Vietnamese Alone or in any population”. (http://tinyurl.com/uscensus2007-vietn); 8.5% for Vietnamese, 6.7% national average United Nations Statistics Office UNdata: http://data.un.org/ World Bank Development Indicators Online. Access via Darden School of Business/Camp Library. 42 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu World Bank Estimates Based on IMF BoP Statistics Yearbook 2008 (http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/0,,contentMDK:211219 30~menuPK:3145470~pagePK:64165401~piPK:64165026~theSitePK:476883,00.html) Scholarly Publications Asian Development Bank. “Part II.D: ADB’s Assessment of the Government’s Development Strategy”. Country Strategy and Program Update 2007-2010: Viet-Nam, Socialist Republic of. September 2006: (http://www.adb.org/Documents/CSPs/VIE/2006/csp0200.asp) Chen, Ming-Jer. Inside Chinese Business. Boston: Harvard Business School Press, 2001. Le, Xuan Khoa. “Quan điểm của bạn đọc: Normalization of Relations between the Overseas Vietnamese and Vietnam”. April 30, 2001. (www.giaodiem.com/doithoai/lexuankhoa.htm) Nam, Binh Tran. “Mobilizing Overseas Vietnamese Human Capital to Promote Economic Growth in Vietnam”. Asean Focus Group: Asian Analysis. Australian National University. November 2005. Accessed via Google on December 22, 2009. No longer posted online. Pham, L.. Access to credit, remittances, and household welfare: The case of Viet Nam. Ph.D. dissertation, University of Minnesota, United States -- Minnesota. Retrieved February 10, 2010, from Dissertations & Theses: Full Text.(Publication No. AAT 3324437). Sidel, Mark. Law and Society in Vietnam: The Transition from Socialism in Comparative Perspective. Cambridge: Cambridge University Press, 2008. Sidel, Mark. “Vietnamese-American Diaspora Philanthropy to Vietnam. Prepared for The Philanthropic Initiative, Inc. and The Global Equity Initiative, Harvard University. Supported by the Hewlett Foundation. May 2007. Studwell, Joe. Asian Godfathers: Money and Power in Hong Kong and South-East Asia. London: Profile Books, 2007. Truong, T., Small, I., and Vuong, D. “Vietnam: Practices and Patterns of Diaspora Giving”. Diasporic Giving: An Agent of Change in Asia-Pacific Communities Conference. Conference paper. Hanoi: May 21-23, 2008. Pg. 256. Accessed via Google on February 11, 2009: (http://www.asiapacificphilanthropy.org/files/APPC%20Diaspora%20Giving_vietnam.pdf) Unattributed. “Important Take-Aways from MBA Asia Trip 2008”. Santa Clara University-Leavey School of Business. (http://www.scu.edu/business/asia-2008/vietnam/works.cfm). Accessed via Google Feb. 2, 2010. 43 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Valley, Thomas J. and Wilkinson, Ben. “Vietnamese Higher Education: Crisis and Response”. Harvard Kennedy-Ash Institute. November 2008. (http://www.hks.harvard.edu/innovations/asia/Documents/HigherEducationOverview112008.pdf) Wain, Barry. “Falling to earth”. Far Eastern Economic Review. May 15, 2003. Pg. 46-48. Accessed via ABI/INFORM Global on February 5, 2010. Wallace, R.. (2009, September). CRASHING Into the Global Economy! Minority Business Entrepreneur, 26(5), 35-36,39. Retrieved February 10, 2010, from Ethnic NewsWatch (ENW). (Document ID: 1909975471). Vietnam Government Documents and Laws 1992 Constitution of the Socialist Republic of Vietnam: Chapter Two: Economic System, Article 25, Chapter Five: Fundamental Rights and Duties of the Citizen, Article 75. Embassy of Vietnam-USA website: (www.vietnamembassy-usa.org/learn_about_vietnam/politics/constitution/) “Structure of the Vietnamese Foreign Ministry”. Ministry of Foreign Affairs website in English: (http://www.mofa.gov.vn/en/bng_vietnam/nr070622153725/#7iKiAtwwhNaL) SRV Foreign Investment Agency (Ministry of Planning and Investment): (http://fia.mpi.gov.vn/) SRV Ministry of Planning and Investment. “The Five Year Socio-Economic Development Plan: 2006-2010”. March 2009. (Sections on remittance: Pg. 67, human capital: Pg. 87). Vo Hong Phuc, Vietnam Minister of Planning and Investment. Vietnam Investment Forum hosted by Asia Society, Washington DC. April 11, 2008. (http://www.mpi.gov.vn/portal/page/portal/mpi_en/32343?p_page_id=1&pers_id=417323&folder _id=&item_id=566804&p_details=1) Vietnam National Administration of Tourism figures for the purpose of “visiting relatives” (http://www.vietnamtourism.gov.vn/English/index.php?cat=0120) 44 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Exhibits Exhibit 1. GDP Growth and Major Historical Events of the Socialist Republic of Vietnam, 1975-200896 96 Source: World Bank (GDP figures in current USD terms); Historical events from Southeast Asian Resource Action Center, US-Vietnam Trade Council’s “Chronology of Key Events in US-Vietnam Relations”. 45 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Exhibit 2. 2008 Estimated Worldwide Overseas Vietnamese Remittances97 2008 Estimated Overseas Vietnamese Remittances Exterior Circle: $8.22 Billion Total Remittances Interior Circle: 3.75 Million Overseas Vietnamese 8% 0% 0% 6% 1% 20% 6% North America Western Europe ANZ 48% 8% Eastern Europe-Eurasia Asia-Pacific 17% 6% Thailand-Cambodia-Laos 63% Other 4% 13% 97 Derived from multiplying assumed household remittance amount by OV population in each country. OV population sourced from census data posted in Wikipedia (for lack of any existing amalgamation of worldwide OV census statistics) and corrected by anecdotal media reporting. Household remittances assumed to be $2500 for OECD nations, $2000 for lower to middle income nations, and $500 for poorer nations or unskilled labor wages. Dr. Lan Pham confirms that these estimated distributions generally conform to household data collected from Vietnam Living Standards Surveys conducted in 1992-1993 and 1997-1998. 46 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Exhibit 3. Remittance Compared to Other Forms of Foreign Investment in 200898 (in current USD millions) 16000 14000 12000 10000 Est Total Remittance 8000 ODA 6000 FDI 4000 2000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Exhibit 4. 2008 Foreign Sources of Capital as Percentage of GDP 18.0% 16.0% 14.0% 12.0% 10.0% Remittance 8.0% ODA 6.0% FDI 4.0% 2.0% 0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 98 Sources: World Bank Estimates Based on IMF BoP Statistics Yearbook 2008 (http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/0,,contentMDK:21121930~menuPK:3 145470~pagePK:64165401~piPK:64165026~theSitePK:476883,00.html) 2009 GDP estimate from CIA World Factbook (https://www.cia.gov/library/publications/the-world- factbook/geos/vm.html) Vietnam National Administration of Tourism figures for the purpose of “visiting relatives” (http://www.vietnamtourism.gov.vn/English/index.php?cat=0120) 47 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Exhibit 5. Total 1988-2008 FDI by Source (in current USD millions)99 Samoa 1549.1 Switzerland 1693.1 Australia 1811.2 Fed. Russian 1935.4 Overseas Vietnamese-aggregate 2000.0 China, PR 2188.3 United Kingdom 2711.1 Netherlands 3018.8 France 3216.2 Cayman Islands 4352.2 Canada 4892.4 United States 5029.0 Thailand 6121.6 Hong Kong SAR (China) 7416.7 British Virgin Islands 13824.1 Korea Rep. of 16666.3 Singapore 17071.0 Japan 17362.2 Malaysia 18005.6 Taiwan 20951.9 0.0 5000.0 10000.0 15000.0 20000.0 25000.0 Series1 It is not known how much of the FDI from the listed countries (especially the United States, Canada, Australia, and France) overlaps with overseas Vietnamese investment. This is based on recorded overseas Vietnamese investment projects and ventures only—actual amount may be much larger. 99 Source: Government Statistics Office of Vietnam. Retrieved September 10, 2009. (http://www.gso.gov.vn/default_en.aspx?tabid=471&idmid=3) 48 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Exhibit 6. 2008 Licensed Foreign Direct Investment Projects by Province (Registered Capital > $1 B)* *Source: Government Statistics Office of Vietnam. Retrieved March 3, 2010. 49 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Exhibit 7. 2008 Foreign Direct investment Projects Licensed by Kind of Activity* Exterior Circle: $6.40 B (USD) in registered capital Interior Circle: 1171 projects Manufacturing Real estate, renting business activities Mining and quarrying Transport; storage and communications Hotels and restaurants Construction Health and social work Agriculture and forestry Education and training Financial intermediation Other *Source: Government Statistics Office of Vietnam. Retrieved March 3, 2010. 50 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Exhibit 8. Major SRV Branches of Government and functions of relevant economic policymaking institutions100 100 Source: Embassy of Vietnam: www.vietnamembassy-usa.org/learn_about_vietnam/politics/overview/ ; CIA World Factbook: www.cia.gov/library/publications/the-world-factbook/geos/vm.html 51 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Exhibit 9. Vietnamese Laws Pertinent to OV Investment* 1992 Constitution of the Socialist Republic of Vietnam  Chapter Two: Economic System Article 25: The State encourages foreign organizations and individuals to invest funds and technologies in Vietnam in conformity with Vietnamese law and international law and usage; it guarantees the right to lawful ownership of funds, property and other interests by foreign organizations and individuals. Enterprises with foreign investments shall not be nationalized. The State creates favourable conditions for Vietnamese residing abroad to invest in the country.  Chapter Five: Fundamental Rights and Duties of the Citizen Article 75: The State shall protect the legitimate interests of Vietnamese people residing abroad. The State shall create the necessary conditions for Vietnamese residing abroad to maintain close ties with their families and native land and to contribute to national construction. Five Year Socio-Economic Development Plan 2006-2010. SRV Ministry of Planning and Investment, March 2006.  Part II, Section IV, Part 5b: Education, training, and human resource development: “Encourage scientific education experts and overseas Vietnamese expatriates to teach in Vietnam.”(Pg. 87) “Install mechanism and policies to attract foreign expatriates, particularly talented experts among overseas Vietnamese into the country’s science and technology development activities.” (Pg. 89) Politburo resolution on Viet Kieu. RESOLUTION No 36 - NQ/TW OF MARCH 26, 2004 BY THE POLITBUREAU ON THE OVERSEAS VIETNAMESE AFFAIRS. Notable excerpts:  Section I,1 Vietnamese communities overseas have certain economic potentials. They also have connections with both foreign businesses and international organizations, and could help seek partners for Vietnamese enterprises and organizations. Many of them have a high level of education and expertise. Some hold important positions in research or educational institutions, businesses, and international organizations, and therefore can have strong connections with economic and scientific establishments in the host countries.  Their contributions to the national construction, especially their brainpower, are not commensurate with their potentials.  Section II, 2 Moreover, overseas Vietnamese, depending on their conditions, could also make contributions to the national construction, and actively participate in the struggle against attempts that run counter to the common interests of the nation.  Section III, 1-4 52 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Facilitate their return to visit their homeland, relatives and pay tribute to their ancestors; further streamline regulations on immigration, residence and travel of overseas Vietnamese in Viet Nam; Quickly process applications for repatriation or return for business or stay on definite terms in Vietnam; Continue to solve outstanding issues that involve overseas Vietnamese such as house purchase in Vietnam, inheritance, marriage and family, adoption and so on; introduce a single price system for all Vietnamese, domestic and overseas alike. Put in place an appropriate mechanism for consultations with overseas Vietnamese before the promulgation of legal documents and policies concerned. 2- Improve existing and issue new policies on talents attraction to maximize overseas Vietnamese brainpower to the cause of national development; build a satisfactory mechanism of incentives and rewards for overseas Vietnamese experts and intellectuals who have good command of knowledge and skills and can advise the Government on management, transfer of technology and national arts and cultural development. 3- Improve the existing and introduce new policies to encourage overseas Vietnamese to invest and do business in Vietnam; attach importance to small and medium sized projects managed by overseas Vietnamese or through their relatives in Vietnam; further liberalize policies on remittance; make use of overseas Vietnamese’ ability and skills in the service sector to establish and expand distribution channels for Vietnamese products and to build new business and investment relations with foreign partners. Establish a coordination mechanism among relevant authorities to solve cases involving overseas Vietnamese businesses in Vietnam to secure their legitimate and lawful rights and interests and deal with their violations in accordance with laws, thus creating a stable legal environment to build confidence among overseas Vietnamese investors. 4- Renew and diversify mobilizing activities aimed at uniting overseas Vietnamese in mutual assistance, encouraging them to turn towards the motherland, especially that of the young generation on the voluntary basis and in accordance with laws, traditions and customs of the local countries; assist overseas Vietnamese’ projects to achieve that goal; take active steps to increase contacts with overseas Vietnamese including those who still have prejudices against or sense of inferiority to our State and regime. National Assembly Law No. 34/2009/QH12. “LAW AMENDING AND SUPPLEMENTING ARTICLE 126 OF THE HOUSING LAW AND ARTICLE 121 OF THE LAND LAW”  Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam, which was amended and supplemented under Resolution No. 51/2001/QH10; The National Assembly promulgates the Law Amending and Supplementing Article 126 of Housing Law No. 56/2005/QH11 of Article 121 of Land Law No. 13/2003/QH11.  Article 1. To amend and supplement Article 126 of the Housing Law as follows: "Article 126. Right of overseas Vietnamese to own houses in Vietnam 1. Overseas Vietnamese defined below who are permitted by competent Vietnamese agencies to reside in Vietnam for three or more months may own houses for their own and their family members" residence in Vietnam: a/ Persons having Vietnamese nationality; b/ Persons of Vietnamese origin who return to Vietnam to make direct investment under the investment law; persons with meritorious contributions to the country; scientists, cultural scholars and persons with special skills who are needed by Vietnamese agencies or 53 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu organizations and working in Vietnam; and persons who have Vietnamese spouses living in the country. 2. Persons of Vietnamese origin not defined at Point b. Clause 1 of this Article who are issued visa exemption papers by competent Vietnamese agencies and are permitted to reside in Vietnam for three or more months may each own a separate house or a condominium apartment in Vietnam for their own and their family members’ residence in Vietnam." - Article 2. To amend and supplement Article 121 of the Land Law as follows: "Article 121. Right and obligation to use residential land of overseas Vietnamese eligible to own houses in Vietnam 1. Overseas Vietnamese defined in Article 126 of the Housing Law may own houses associated with the right to use residential land in Vietnam. 2. Overseas Vietnamese eligible to own houses associated with the right to use residential land in Vietnam have the following rights and obligations: a/ To have rights and obligations defined in Articles 105 and 107 of this Law; b/ To transfer the right to use residential land upon selling, donating, bequeathing or exchanging houses to/with domestic organizations or individuals or overseas Vietnamese eligible to own houses in Vietnam for residence: to donate houses associated with the right to use residential land to the State or communities, or donate houses of gratitude under Point c, Clause 2, Article 110 of this Law. If donating or bequeathing houses to persons ineligible to own houses in Vietnam, these persons may enjoy only the value of houses associated with the right to use residential land: c/ To mortgage houses associated with the right to use residential land at credit institutions licensed to operate in Vietnam; d/ To receive compensation under Vietnamese law upon land recovery by the State; e/ To lease, or authorize others to manage, unused houses. - Article 3. 1. This Law takes effect on September 1, 2009. 2. The Government shall detail and guide articles and clauses as assigned in the Law; and guide other necessary contents of this Law to meet state management requirements. This Law was passed on June 18, 2009, by the XIIth National Assembly of the Socialist Republic of Vietnam at its 5th session. INTER-MINISTERIAL CIRCULAR No.11/TTLB/BKH-NG OF DECEMBER 31, 1996 GUIDING THE PROCEDURES FOR CERTIFYING THE VIETNAMESE ORIGIN AND LEGAL RECORD OF OVERSEAS VIETNAMESE WHO INVEST IN VIETNAM UNDER THE LAW ON PROMOTION OF DOMESTIC INVESTMENT In order to create conditions for overseas Vietnamese to fill in the procedure for certifying their Vietnamese origin and legal record so as to invest in Vietnam under the Law on Promotion of Domestic Investment already stipulated in Decree No. 29-CP of May 12, 1995 of the Government detailing the implementation of the Law on Promotion of Domestic Investment, the Ministry of Planning and Investment and the Ministry of Foreign Affairs jointly provide the following guidance: Article 1.- Certifying the Vietnamese origin: 54 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu 1.1. The overseas Vietnamese stated in Article 2 of Decree No. 29-CP of May 12, 1995 shall include the persons bearing Vietnamese nationality and residing in foreign countries and the persons of Vietnamese origin and bearing the nationalities of other countries. The persons who still carry valid Vietnamese passports shall not need to have their Vietnamese origin certified. In cases where the concerned person only has a foreign passport, his/her Vietnamese origin must be certified by one of the following agencies: a/ The diplomatic representative mission or the consulate of Vietnam based in the foreign country; b/ The Committee for Overseas Vietnamese ; c/ The competent agency of the foreign country where the person of Vietnamese origin carries its passport. 1.2. The applicants for certification of their Vietnamese origin by one of the Vietnamese agencies defined in Points a and b, Clause 1.1 of this Article must meet the following conditions and complete the following procedure: a/ Filing an application for certification of Vietnamese origin (form No. 01/NG-LS-UB attached to this Circular); b/ Producing one such valid document (including those issued before 1975) as the birth certificate, identity card, residence registration book (or the household book), marriage certificate, old passport, etc. evidencing that they now bear or used to bear the Vietnamese nationality or that their father or mother now bears or used to bear the Vietnamese nationality; c/ Carrying a valid foreign passport. Article 2.- Certifying the legal history: The overseas Vietnamese (including those having Vietnamese passports and those having foreign passports) who wish to invest in Vietnam under the Law on Promotion of Domestic Investment must have: a/ The certification by a competent agency in the foreign country where they reside that when living in that country they are not examined for penal liability, that though they were convicted their criminal record was already cleared and currently they are not forbidden to do business according to the ruling of a foreign court; b/ A written commitment that when living in Vietnam (including the time before they left the country to reside abroad and during their short-term stays in Vietnam) they are not examined for penal liability, that though they were convicted their criminal record was 55 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu already wiped out and currently they are not forbidden to do business according to the ruling of a Vietnamese court; Article 3.- The documents certifying their Vietnamese origin and legal record, issued or certified by foreign countries as stated in Point c, Clause 1.1, Article 1 and Point a, Article 2 of this Circular must be legalized by a competent agency as prescribed by Vietnamese law. Such documents must be translated into Vietnamese and the translation must be certified by a competent agency prescribed by Vietnamese regulation. Article 4.- Within 10 working days from the date of receipt of the valid dossier, the competent agencies as prescribed by Vietnamese law shall have to grant the certificate of Vietnamese origin (forms No.02/NG-LS-UB and No.03/NG-LS-UB attached to this Circular) or must legalize the documents certifying the Vietnamese origin and legal record, issued or certified by foreign countries. Article 5.- This Circular takes effect from the date of its signing and replaces the provisions concerning the certification of Vietnamese origin and legal record in Circular No.02-BKH/DN of January 30, 1996 of the Ministry of Planning and Investment guiding the implementation of Decree No.29-CP of May 12, 1995 on the procedure for direct investment in Vietnam by overseas Vietnamese and by foreign residents in Vietnam. DECISION No.48-QD/NH7 ON THE 23RD OF FEBRUARY 1995 OF THE GOVERNOR OF THE STATE BANK ON REMITTANCES IN FOREIGN EXCHANGE BY OVERSEAS VIETNAMESE THE GOVERNOR OF THE STATE BANK Pursuant to the Ordinance on the State Bank of Vietnam promulgated under Order No.37- HDNN8 on the 24th of May 1990 of the President of the Council of State; Proceeding from the Regulations on Management of Foreign Exchange issued together with Decree No.161-HDBT on the 18th of October 1988 of the Council of Ministers (now the Government); At the proposal of the Director of the Department for Management of Foreign Exchange, DECIDES : Article 1.- The State Bank encourages, and creates every favorable condition for Vietnamese who have settled abroad and Vietnamese who are on mission, working or studying abroad (hereafter referred to as overseas Vietnamese ) to send home foreign exchange to assist their families and relatives, or to contribute to national construction. Article 2.- Overseas Vietnamese who send home foreign exchange are allowed to open bank accounts or savings deposits in foreign exchange at banks which are licensed to do business in foreign exchange in Vietnam in accordance with existing provisions, and to transfer abroad both the principal and interest. 56 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu Article 3.- In-country Vietnamese, who receive foreign exchange sent by overseas Vietnam, are allowed to open bank accounts and savings deposits in foreign exchange at banks which are allowed to do business in foreign exchange. The foreign exchange, which is deposited in banks accounts or savings accounts, is allowed to be withdrawn in foreign exchange or in Vietnam Dong at the request of the depositor. Article 4.- This Decision takes effect from the date of its signing. The Director of the Office of the State Bank; the Director of the Department for Management of Foreign Exchange; the General Directors of the Commercial Bank, the Bank for Investment and Development; and the Directors of the branches of the State Bank in the provinces and cities directly under the Central Government, are responsible for implementing this Decision. CIRCULAR No.02/2000/TT-NHNN7 OF FEBRUARY 24, 2000 GUIDING THE IMPLEMENTATION OF THE PRIME MINISTER’S DECISION No.170/1999/QD-TTg OF AUGUST 19, 1999 ON ENCOURAGING OVERSEAS VIETNAMESE TO TRANSFER MONEY BACK TO THE COUNTRY (Excerpts) In order to encourage and create favorable conditions for overseas Vietnamese and foreigners to transfer foreign currencies back to Vietnam to help their families and next of kin or for other charity purposes on the basis of observing the provisions of Vietnamese law and foreign laws, on August 19, 1999, the Prime Minister issued Decision No.170/1999/QD-TTg, encouraging overseas Vietnamese to transfer money back to the country. Pursuant to Clause 2, Article 10 of the Prime Minister’s Decision No.170/1999/QD-TTg of August 19, 1999 on encouraging overseas Vietnamese to transfer money back to the country, the State Bank guides the implementation thereof as follows: I. Rights of beneficiaries 1. To receive transferred amounts in foreign currency(ies) or Vietnam dong (in cash or via account transfers) at their requests; 2. In case they receive transferred amounts in foreign currencies, the beneficiaries may: a/ Sell them to the licensed credit institutions or foreign currency exchange counters; b/ Deposit them as foreign-currency savings at the licensed credit institutions; c/ Transfer them into their personal foreign-currency deposit accounts opened at the licensed credit institutions; d/ Use foreign-currency amounts for other purposes according to provisions of the Government’s Decree No.63/1998/ND-CP of August 17, 1998 on foreign exchange management, the State Bank’s Circular No.01/1999/TT-NHNN7 of April 16, 1999 guiding the implementation of the said Decree and other relevant current regulations on foreign exchange management. 57 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

Tino Dinh | dinht10@alum.darden.edu 3. Beneficiaries shall not have to pay income tax for foreign-currency amounts they receive from money transferors. Also, the Law on Foreign Investment in Vietnam makes no distinction between overseas Vietnamese and other foreign investors. The law stipulates conditions for joint ventures, 100% foreign-owned ventures, expatriation of funds, dispute resolution, and other matters. *English translations of statutes courtesy of Asian Legal Information Institute: (//www.asianlii.org/resources/269.html) which translates laws posted by SRV Ministry of Justice 58 | P a g e Copyright Pending. Not to be reproduced or disseminated without permission of author.

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