DHVP Research & CCI Indochina                         www.vietnamica.netThe Vietnamese Economy and Business Environment   ...
GDP Growth, 1989-201212%10%8%6%4%2%0%   86   88   90   92   94   96   98   00   02   04   06   08   10   12191919191919192...
Registered FDI, 1988-2012                        Unit: US$ million                                       Quantity vs. Qual...
Sources of FDI, 2010                                                                Chinese Taipei, 22.8 ,                ...
Vietnam Stock Markets                      Source: GSO            VNIndex: as of the end of the year   Number of listed fi...
Vietnam Stock Markets
Vietnam Stock Markets                    MktCap/GDP, %60                                    4850                   40     ...
VSM: Properties / Features• Two markets: HCMC HSX (est. 2000) and Hanoi HNX  (est. 2005)• Watchdog: State Securities Commi...
Credit Institutions System                                 (By December 31, 2011)   M&A    M&AOpportunities Opportunities ...
Vietnam Commercial Banks                         (December 31, 2010)• Total Assets: US$175 billion; 167% GDP• Outstanding ...
Banking Sector Issues•   Recurring problems of bad debts•   Liquidity crunch•   Does size matter?•   Interrelation to othe...
The Charm Is No More Hidden•   First investment funds in Vietnam: early 1990s     – First half 1990s: Eight funds; US$700 ...
Entrepreneur: Genuine vs. ‘Disguised’ •   Chinese-originated Confucianism      – Hierarchy      – Face-saving      – Relat...
Strategic Planning•   Many set up and start running a new    company with:     –   A list of wishes                       ...
Organized Chaos- Relation-based businessenvironment- Rent seeking- The problem of corruption
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Understanding of the Vietnamese Economy and Business Environment 2012
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Understanding of the Vietnamese Economy and Business Environment 2012

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Understanding of the Vietnamese Economy and Business Environment 2012

  1. 1. DHVP Research & CCI Indochina www.vietnamica.netThe Vietnamese Economy and Business Environment Dr. Vuong Quan Hoang vuong@vietnamica.net Dept of Finance, Centre Emile Bernheim Solvay Brussels School of Economics & Management The University of Brussels – ULB Hanoi, March 2012
  2. 2. GDP Growth, 1989-201212%10%8%6%4%2%0% 86 88 90 92 94 96 98 00 02 04 06 08 10 121919191919191920202020202020 Source: GSO; 2012: ADB’s forecast, 6.3%
  3. 3. Registered FDI, 1988-2012 Unit: US$ million Quantity vs. Quality 60,000 50,000• Oct. 2011: 22 FDI 40,000projects incurred baddebts of US$80 mln 30,000 20,000• Mar. 2012: 50% ofFDI Enterprises 10,000reported losses. - 04 06 08 10 12 88 90 92 94 96 98 00 02 20 20 20 20 19 19 19 19 19 19 20 20 20
  4. 4. Sources of FDI, 2010 Chinese Taipei, 22.8 , 12% Others, 38.5 , 20% Korea, 22.1 , 11% Thailand, 5.8 , 3% Caym an Islands, 7.4 , 4% Singapore, 21.7 , 11%Hongkong, 7.8 , 4% USA, 13.1 , 7% Japan, 20.8 , 11% BVI, 14.5 , 7% Malaysia, 18.3 , 10%
  5. 5. Vietnam Stock Markets Source: GSO VNIndex: as of the end of the year Number of listed firms: including Upcom (OTC market)
  6. 6. Vietnam Stock Markets
  7. 7. Vietnam Stock Markets MktCap/GDP, %60 4850 40 394030 26 22.720 17.510 1.20 - 2005 2006 2007 2008 2009 2010 2011
  8. 8. VSM: Properties / Features• Two markets: HCMC HSX (est. 2000) and Hanoi HNX (est. 2005)• Watchdog: State Securities Commission, under Vietnam Ministry of Finance• In their infancy• 100 broker firms• 1.5 million trading accounts• 600 listed firms• Strong herd mentality• Strong influence by foreign buyers of shares• Malfunctioning of the info disclosure system• Special interest groups
  9. 9. Credit Institutions System (By December 31, 2011) M&A M&AOpportunities Opportunities State- Joint-stock owned Joint- Comm. Comm. venture Banks (35) Banks (5) Banks (4)PolicyBanks (2) Foreign Leasing Banks’ State Bank Companies Branches of Vietnam (12) (50) People Credit Funds (915) Foreign Wholly Finance Banks’ Foreign- Companies Rep. Off. owned (18) (51) Banks (5)
  10. 10. Vietnam Commercial Banks (December 31, 2010)• Total Assets: US$175 billion; 167% GDP• Outstanding Loans: US$125 billion; 125% GDP• Non-performing loans (Jun. 31, 2011): – US$4 billion; 3.1% outstanding loans – Question of which standards of accounting systems applicable• Lending on real estates and securities (Jun. 31, 2011): – US$12 billion; 12% outstanding loans• Problem of Liquidity• Restructuring banking sector: – Merger & Acquisition? – New business methods?
  11. 11. Banking Sector Issues• Recurring problems of bad debts• Liquidity crunch• Does size matter?• Interrelation to other asset markets that gives rise to further complications: real estates, risky assets (equity and bond), speculative assets (foreign currencies, gold)• Structural problems• Special interest groups• Does high bank profitability help the economy?• Has it been under-regulated or over-regulated?
  12. 12. The Charm Is No More Hidden• First investment funds in Vietnam: early 1990s – First half 1990s: Eight funds; US$700 Mln. – After 1997: only two (Vietnam Enterprise Investment Fund run by Dragon Capital Vietnam, and Vietnam Frontier Fund by Finansa)• 2002-2005: – Quite period – Mekong Capital, VinaCapital, IDG, VietFund, PXP Asset Management• 2006-2007: – Booming period – More: 22 funds and 17 fund management companies• 2009-2010: – Closing, exiting, leaving (Indochina Capital exited in May 2009) – Poor performance (May 16, 2011) • VMFVF1: 9.8; PRUBF1: 5.3; MAFPF1: 4.1 • Par value: 10
  13. 13. Entrepreneur: Genuine vs. ‘Disguised’ • Chinese-originated Confucianism – Hierarchy – Face-saving – Relation-based business • Social Ranking “Sĩ – Nông – Công – Thương” – Gentry Scholar/Intellectual Official – Farmer – Craftsman – Trade/Businessman • The Hidden Entrepreneur’s Aspiration to Become a Non-Entrepreneur • ‘Disguised’ entrepreneur: – A bunch of ideas and proposals Creativity? – NO risk-taking, NO implementing, etc. – Trying to be on the “safe-side”
  14. 14. Strategic Planning• Many set up and start running a new company with: – A list of wishes What is STRATEGY? – No business plan• New fashion of the Vietnamese large corporations: – Doing “big things,” – Thinking globally, – Developing strategy• Strategic planning services: a multi-million dollars market• High prices for: – Well-known consulting brands (experts, professors) – The business owner’s ex-ante strategy – Higher prices of equity
  15. 15. Organized Chaos- Relation-based businessenvironment- Rent seeking- The problem of corruption
  16. 16. Welcome to Vietnam!

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