VIPC Capital Management International Investors Brochure Vietnam economic overview – VIPC capital Management
VIPC Capital Management www.vipc.com.vn
Contents A.
Vietnam in general................................................................................................................................ 4 I.
Background information................................................................................................................... 4 1.
Quick fact ...................................................................................................................................... 4
2.
Political Structure.......................................................................................................................... 4
3.
Policy Issues .................................................................................................................................. 4
4.
Taxation ........................................................................................................................................ 5
5.
Foreign Trade................................................................................................................................ 5
II.
PESTEL Analysis................................................................................................................................. 6 1.
Summary....................................................................................................................................... 6
2.
Politic ............................................................................................................................................ 6
3.
Economic....................................................................................................................................... 7
4.
Social............................................................................................................................................. 8
5.
Technology.................................................................................................................................... 9
6.
Environment ............................................................................................................................... 10
7.
Legal............................................................................................................................................ 11
III.
B.
C.
SWOT Model about economical and political Issues.................................................................. 12
1.
Summary..................................................................................................................................... 12
2.
Strengths................................................................................................................................. 12
3.
Weaknesses ............................................................................................................................. 15
4.
Opportunities .......................................................................................................................... 19
5.
Threats ...................................................................................................................................... 21
Vietnam Economic Review ................................................................................................................. 23 I.
Economic Timeline.......................................................................................................................... 23
II.
Vietnam Economic vs Asia .............................................................................................................. 24
III.
Vietnam Economic vs the World ................................................................................................ 24
IV.
Vietnam Economic ...................................................................................................................... 25
1.
GDP ............................................................................................................................................. 25
2.
FDI ............................................................................................................................................... 25
3.
FDI Vietnam vs neighbors ........................................................................................................... 26
4.
FDI by sectors.............................................................................................................................. 26
VIPC Capital Management .................................................................................................................. 27 2|Page
I.
Company ......................................................................................................................................... 27 1.
VIPC Capital Management .......................................................................................................... 27
2.
Mission........................................................................................................................................ 27
3.
VIPC’s strengths .......................................................................................................................... 27
4.
VIPC’s Culture ............................................................................................................................. 28
5.
Social Responsibility.................................................................................................................... 29
II.
Services ........................................................................................................................................... 29 1.
For Private Wealth Management ............................................................................................... 29
2.
For Institute Asset Management ................................................................................................ 31
3.
For Professional Advisors............................................................................................................ 31
III.
Products ...................................................................................................................................... 32
1.
VIPC diversify Fund ..................................................................................................................... 32
2.
Securities Fund............................................................................................................................ 33
3.
Private Equity Fund..................................................................................................................... 36
4.
Real Estate Fund ......................................................................................................................... 37
5.
Contact........................................................................................................................................ 37
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A. Vietnam in general I.
Background information After declaration of independent in 1945 from France, Viet Nam itself had been divided into two: the communist North and the US – backed South in 1954. Until 1975, Vietnam finally got independent. In the 1990s, Vietnam became a member of World Bank, the international Monetary Fund and the Asian Development bank. In July 1995, Vietnam had the acceptance to join in Asean, Association of Southeast Asian Nation. After three year, Vietnam took part in APEC, Asia-Pacific Economic Cooperation. In 2001, a milestone for Vietnam’s economy had been set up through Bilateral trade Agreement with US. In 2007, Viet Nam became a member of WTO and fully in the international trade integration to the world.
1. Quick fact Population: 84.1 million GDP: $2363 per capital and 8.2% growth Unemployment: 4.3% Inflation: 8.3% Age structure: 15yers – 65yrs: 67%
2. Political Structure Vietnam is still organized by sole Communist Party and in all level of government also. This could bring very different point of views depending on how they stand on. However, in doing international business, this could assure the stable in government and policy.
3. Policy Issues Vietnam government has progressed in many fields in order to improve the poverty and economic growth such as monetary policy, legal frame…However, after joining WTO about two years, Vietnam still face to problem of inequality between rural and urban areas, also the wide space between poor and rich. Besides, human resource for the WTO demanding is also huge. In order to be able to provide skill-graduated students/workers, Vietnam has to adjust the educational system to fit into the trend of economy. Those
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problems bring a sign about whether Communist Party chooses to pursue a greater openness or tighter control?
4. Taxation Just be applied in this recent year, taxation is seen to be a new thing in Viet Nam. It starts at 10% on monthly earnings from VND4m (about US$ 312) and rises to 40% if monthly earning over VND40m. This number is for Vietnamese and quite the same application for foreigner, but the latter number is VND80m. A corporate tax rate of 28% applies to both domestic and foreign-invested enterprises. Certain preferential rates still apply. Value-added tax (VAT) was simplified in 2004, and rates range from zero to 10%.
5. Foreign Trade On a balance-of-payments basis, exports reached US$48.6bn in 2007, up by 22% year on year, while the import bill increased by around 38% toUS$58.9bn. As a result, the merchandise trade deficit reached an estimated US$10.4bn, up from only US$2.8bn in 2006. Major exports 2007 Crude oil
% of total 16.7
Textiles garments Footwear Fisheries products
16.4 8.3 7.8
Leading markets 2007 US Japan Australia China Source: CIA
% of total 21.5 10.8 7.0 5.9
Major imports 2007 Machinery, equipment parts Refined petroleum Steel Material for textile industry
Leading suppliers 2007
% of total 16.3 11.6 7.9 3.7
% of total
China
20.1
Singapore
11.8
Japan South Korea
9.6 7.7
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II.
PESTEL Analysis
1. Summary
POLITIC •One party •Social stability •High corruption •Better legal framework •Global integration
ECONOMIC •Market-oriented •Increasing GDP •Rocketing FDI •Great potential
SOCIAL •Condensed population •Young labor force. •Education improvement •Environment threats
TECHNOLOGY •Infrastructure •High demand telecommunication and postal •51% growth of Internet users
2. Politic Environmental Regulations and Protection Regulations
Problems concerning environment and how to keep a clean environment are guided. However, there are still big state-owned organizations that don’t follow these laws themselves.
Tax Policies
There are around 10 different types of taxes and fees for a normal foreign owned business. In small business operating in cities, information on tax duty of Vietnamese citizen is less known by people than the amount suitable for corrupted tax officers. As a member of World Trade Organization, Vietnam is doing business with almost all countries all over the World.
International Trade Regulations and Restrictions
Contract Enforcement Law – Consumer Protection
An incomplete law document that lacks a lot of information concerning how to deal with defect producers.
Employment Laws
Viet Nam where employees outnumber employers’ need; there are still non- written laws in the labor market in 6|Page
market sector, government sector, employees are almost never fired.
Competition Regulation
Political Stability
Safety Regulations
Two of the most important contents of Vietnamese competition regulation are anti- competitive practices that lead to dominant position and unfair competition. These are all to protect the right of customers. There is only one party in Viet Nam and a lot of information about political instability is hidden from the public There are many rules and laws for the society but not many people follow that regulations
3. Economic Income Distribution
Demographic, Population Growth Rates, Age Distribution
Labor/ Social Mobility
Lifestyle Changes Work/Career & Leisure Attitudes Entrepreneurship Spirit
Education
Fashion, Hypes Welfare, Feelings on Safety
No clear data on the internet about income distribution in Vietnam. Even if there is, the data can not reflect correctly the unequal distribution of income among Vietnamese people. This is a result of prevailing corruption in Vietnam. Population density in Vietnam is very high (252 people/square. kilometer), 2 times as many as the density in China and ten times as much as that of developed countries. According to Statistic Vietnam, There is72.88% of the whole Vietnamese population who are living in the rural area. And there is a trend to move from countryside to big cities to work. The trend of the youth to go abroad to have better education and follow new styles of America, Western… People now care more about holiday and relaxation. There is a growing entrepreneurship spirit in Vietnam nowadays. Especially in big cities such as Ha Noi and Ho Chi Minh city. Universities in Vietnam nowadays are always overloaded as there are fewer places for students in universities than the need to receive university education. Quality of education is not so good as a result of this overloaded and the low-fee-education, red tapes happen everywhere. But recently Gov. offers loans for students. Anything “new” and “abroad” intrigue youngsters of these days. There are no welfare and unemployment benefit in Viet Nam. But if you work for Gov., you can get retirement benefit. 7|Page
Living Conditions
Living condition in Vietnam is good and bad depending on your economical status. One of the biggest problems of the living condition in Vietnam is traffic and pollution. Healthcare is also a problem. Red tape happens even in hospital, insurance is slow and it doesn’t play a big role here. Corruption is a big issue in Viet Nam
4. Social Economical Growth
Interest Rates & Monetary Policy
Government Spending
Unemployment Policy
Taxation
Exchanges Rates
GDP (PPP): $198.8 billion 8.2% growth 7.8% 5-year compound annual growth $2363 per capita Inflation in Vietnam is high. The government controls prices and influences prices through regulation, subsidies, and state-owned enterprises and utilities, including electricity, gasoline, telecommunications, water, and fares for train and air travel. Total government expenditures in Vietnam, including consumption and transfer payments, are moderate. In the most recent year, government spending equaled 26.7 percent of GDP, and the government received 7.8 percent of its revenues from state-owned enterprises and government ownership of property. Progress in reforming state enterprises has been confined mainly to the smaller ones. Compensations and Supports from Government and Society to the unemployed are adequate, uncooperative, inconsistent and ineffective to be really helpful. Still are there lots of obstacles for receiving subsidies which are not very high to help. The top income tax rate is 40 percent, and the top corporate tax rate is 28 percent. In the most recent year, overall tax revenue as a percentage of GDP was 13.6 percent. Collecting Tax Rate is low due to corruption and tax-paid attitude. Employers are required to contribute an amount equal to 17% of salaries and wages in respect of government Health Insurance and Social Insurance Plans. Employees contribute 6% of their salaries and wages to the plans by way of payroll deduction. 1 USD=16,970VND and=Euros: 23,863.00VND as normal. However, this year2009 has many periods of 8|Page
Inflation Rates
Stages of Economic Cycles
Consumer Confidence
fluctuations in currencies. Euros had up to28,000VND and now down to about 25,000VND. Inflation rate has been increasing dramatically these recent years shifting up the price. It is harder to support life with current income as the increase in salary level is rather slow. In 2006, the Vietnamese economy will continue to rise in this economic cycle. With political stability and a dynamic economy (fast growing GPD), Vietnam is one of the safest place for foreign investment As there are rules to protect customer but the efficient is not high.
5. Technology Government Research Spending
Industry Focus on Technological Effort
Capacities of acquiring
Energy Use & Cost (Changes in) Internet
It is not clear statistical data in detail in research spending from government budget, which has 7 main sectors: roads (transportation), electricity (energy), irrigation, water supply, telecommunication, education-training and health. However, we can say that the government is now increasing budget for researching effort on the new and modern technological development such as telecommunication, bio- techs, and internet service and so on. Science and Technology Development Objectives by 2010 (from The Ministry of Science and Technology). Research and wide use of technical advancements should be promoted in agriculture-forestry- fishery and processing industries of agricultural products and foods Capacities of acquiring, mastering, adapting and improving modern technologies imported from foreign countries should be enhanced in some fields of services, infrastructure (finance, banking, posts, telecommunications, transportation, airlines, etc) to ensure the international relevance and compliance, successful integration into the regional and global economy. Total energy consumption in VN by type: Oil (50%), Hydro (20%), coal (18%) and natural gas (12%) Vietnamese government has announced plans to increase the country’s Internet penetration to 35% by 2010, according to a report by news agency AFP dated February 9|Page
(Changes
in) Information Technology
(Changes in) Technology
Mobile
20, 2006. Internet access: 19.7% of the population The changes have been an engine in the country’s IT growth. Main fields that IT jobs would serve are in educational and healthcare service together with internet enterprises. There is a boom in Mobile usage in Vietnam the recent years. Telecommunication and internet are considered the two key sectors expected to expand the socio- economic growth rate
6. Environment Low awareness among Vietnamese
There are crucial problem in Vietnam with air/ water pollution. In Saigon and Nhue river‌water contamination is quite high. Moreover, Nhieu Loc channel is flowing inside Ho Chi Minh City with deeply dumped with household garbage.
Pollution around the industrial center
Some centers for example: Ha Noi, Ho Chi Minh, Bien Hoa, Dong Nai, Binh Duong..They do not have equipment for water treatment before releasing to rivers.
There are only some city water treatment
Because the rapidly changing in industry or too much focusing on growing the economic of the country, government did not tight the law for environment.
Un-useable water treatment.
Project or treatment has to be delayed due to technical problems and social issues.
Polluted air from factories
Factories are located in center and quite density in an industry city. Besides that, they do not have any retreatment before releasing.
Global warming
With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities. However,
Environmentally friendly products
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this attitude is just in a small group of high-position with well educated Vietnamese
7. Legal the legal environment in As law has written down for a firm, they have to have all kind of treatments for which firms operate releasing waste into river or air. However, a huge number of government firms do not follow that law. greater requirements for Some firms have full fill the requirements. But in application that treatment firms to recycle for recycle is another question! consumer laws Laws that protected customers from weak party and firms, strong party. But, in order to build the awareness from customers about protections, it takes a long time for government to do so. health and safety There are limitations for health and safety. However, firms do not care much legislation about that and employees do not have much knowledge in understand the legislation to protect them. Therefore, there are still big problem in taking care for employees.
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III.
SWOT Model about economical and political Issues
1. Summary STRENGTHS - Political stability - Improved legal system
WEAKNESS
- High GDP growth
- Slow decentralization
- Rocketing foreign trade volume
- Brain drain
- Dynamic private sector - Poverty reduction SWOT
OPPORTUNITIES
THREATS
Reforms
Unbalance income
Full integration
Low competitive determination
Improved awareness
Corruption International relation
2.
Strengths
a. Political Stability Vietnam has political stability with one ruling party for 24 years (1975 - 1999). The party is claimed "to be of people and for people". Special efforts of the national leaders to have new policy approaches and new renovative policies can be seen clearly through every national congress since 1986 until now.
b. Strengthen policies: Another aspect is the introduction of policies aiming at enhancing the competition of the economy, restructing public sector and encouraging private 12 | P a g e
sector. For example, one of the measures to reform banking and financial sector is to merge or close the banks, which are not efficient. At the moment, Vietnam has 50 public listed banks, of which 30 banks have offices in the urban areas and 20 banks have offices in the rural areas. Among them, 4 banks were already merged into 2 bigger banks (Do 1999: 10).
c. Improving legal system: Moreover, the determination of the national leaders in consolidating legal system and enforcement of law can be seen through severe sentences to criminals no matter who they are and which position they hold. For example, in sensational graft cases as Epco, Tamexco, Minh Phung, etc‌, a series of people in high position were sentenced to death (Cong An, 7/1999).
d. GDP Growth: If we look at the period from 1998 to 2002, the Asian Development Bank estimates growth at 5.5% a year, about the same as India and much slowerthan China and Bangladesh. (Official data show over 6% growths; the IMF estimates less than 5%.) Projections for 2003 are 6-7%, with some uncertainty due to the world economy and SARS.
e. Exports: A bright spot has been exports, which have risen from $9.1 billion in 1997 to $16.5 billion in 2002, a 13 | P a g e
growth rate of over 12% a year. This is much faster than most other countries, and about the same as China.
f. Manufacturing: Manufacturing growth has also been healthy, averaging about 10% a year in real GDP terms from 1998 to 2002. The growth of gross industrial output has been faster, at over 14% a year from 1998 to 2002.
g. Macroeconomic Stability: Inflation is low and fiscal deficits have been contained to acceptable levels. Reported bad bank loans are falling to levels that can be managed – less than10% of total credit outstanding. External debt is acceptable.
h. Private Investment: The most dynamic sector since 2000 when the Enterprise Law was passed has been the private formal domestic sector. Industry for this form of ownership, which excludes household level activity, has since 1999 grown nearly 20% a year, albeit from a low initial base. The entire formal private sector created 1.75 million new jobs from 2000 to 2002, compared to near zero growth in jobs for the entire public sector.
i. Poverty Reduction: Poverty rates measured at international levels have 14 | P a g e
declined from 58% in 1992/3 to 37% in 1997/98 to about 32% now. This near halving of poverty rates in ten years is a remarkable accomplishment, and has been accompanied by rapid increases in enrollment ratios at all levels and improvements in health and nutrition.3 Inequality, while rising, is still low by international standards. This is already a considerable list, and one that can give the Vietnamese leadership a degree of justified pride. Other successes, such as a rapid increase in telephone lines and mobile handsets, or the robust doubling from 1995 to 2002 in tourism, are also noteworthy, though not listed in the six major points. Still more positive items could be listed such as progress in improving infrastructure and increased prosperity among many ordinary Vietnamese. It is not surprising that Vietnamese were the most optimistic people of the 44 countries covered in an international survey conducted by the Pew Research Center concerning their future expectations as reported in the International Herald Tribune on December 5, 2002.
3. Weaknesses a. Slow implementation: Firstly, when new cabinet is elected, new policy and regulations have been enacted and implemented. Nevertheless, the span life of the policy is not long and the implementation is conducted so slowly that policy makers can hardly see the fruits of their work. Most of the time, one regulation has just been enacted and has not been applied throughout, 15 | P a g e
a new regulation has been introduced. Consequently, regulations are overlapped, which cause confused and difficult in implementing.
b. Inconsistency application policies: Secondly, although the government has made special effort to restructure the economy, the policies have not been implemented as tentative. The foundation is not strong enough to carry big changes. Most of the policies have been continued halfway. It means new objectives, new instruction and new target groups would be aimed at.
c. Decentralization, is it good? In addition, there is a dilemma between political ideology and economic policy. On one hand, the government wants to maintain the socialist ideology in which the state has to take care everything for its people. Here, the principle of "collective interest and collective responsibility" creates a sense of "moral harzard" and "tragedy of common". Consequently, the limited resources are not utilized fully. Top-down policy approach and centralization has been highlighted. On the other hand, the government wants to pursue "Doi Moi" policy to restructure the collapsing economy. This policy requires a bottomup approach or at least the combination of top-down and bottom-up principles to decentralize making decision. Thus, the paradox is how to keep the dominant role in political ideology and at the same time how to be a "new capitalist" in economic 16 | P a g e
activities.
d. Unable to keep talents Moreover,
the
development
lack
of concrete
policy
for the
of human resources leads to the
outflow of local talents from public sector to private sector as well as from inside to outside Vietnam. With regards to banking sector, it still remains largely undeveloped. According to Marketing Management (Winter 1997, Volume 5, Number 4): "Ambiguous laws, the lack of a capital market and developed independent auditing system, a scarcity of skilled staff in the credit arena and a low national savings rate have all contributed to an inadequate capital base and a shortage of credit. Government banks have felt pressure from local and central authorities to lend to troubled state-owned enterprises, creating large troubled loan portfolios. Prior to 1992, banks were required to follow a negative interest rate spread structure" (Access online on 9/10/1999). Such negative aspects together with the inadequate payment system (personal checks, credit cards, cash cards, etc.) have made Vietnamese people reluctant to deposit their savings in state banks. More than 50% of savings is kept as cash (foreign currency) and gold outside the banking sector (Marketing Management, 1997).
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e. Inflexible in adapting Although the government tries to learn from the past but the corrective process is really painful because the network and “relationship� ("guang xi") are so deep and wide. It takes a long time to change the view, the traditional thinking and agricultural habit to adapt with the industrialized working style. Coming to worklate and going back early
is commonly practiced
in
government agency. Wasting too much time on paper work due to lack of manpower, professionalism as well as facilities is inevitable. The political and economic environment is not attractive to foreign investors. Repatriation of profit with relative low "hidden cost" is a challenge to them. To illustrate for above ideas, I would like to quote some shortcomings of Vietnam economy in Marketing Management (Winter 1997, Volume 5, Number 4):
"Inconsistent and frequently inexplicable policies that hinder all aspects of the transition ‌.. Persistent and expanding trade deficits, which ballooned from $60 million in 1992 to $2.2 billion dollars in 1996. Growing overseas debt. Burgeoning current account deficit, which hit an estimated 15.1% of GDP in 1995.
Stagnating
foreign
direct
investment
(FDI)
realizations; while approval rates are soaring, actual realization of the projects is slowing, partly because of the frustrations presented by bureaucracy. 18 | P a g e
Inefficiencies of state-owned enterprises, as evidenced by little job creation and the failure to create value-added exports."
4. Opportunities a. Full integration Although, Vietnam has faced too many difficulties and challenges, we cannot deny the optimistic aspects. First of all, becoming a member of economic groups and international organizations such as ASEAN, APEC, WORLD BANK, IMF is a progress step for Vietnam to integrate into the global market. This helps Vietnam to obtain necessary information and to have her voice articulated in regional and international meetings and discussion. Becoming member of such organizations also helps Vietnam gain mostfavoured-nation(MFN) status as well as obtain lower tariff for exported goods.
b. Bilateral trade agreement Secondly, signing a bilateral trade agreement with USA on Sunday, July25, 1999 marked an important step to achieve a "normal diplomatic relationship" between the two countries (Do, Mekong Bulletin, 1999). This will give domestic suppliers more chance to enter US market with favorable tariffs and other conditions, such as modes 19 | P a g e
of payments.
c. Positive attitude Moreover, the change in ideology and thinking of the authority from blaming external factors into blaming themselves and try to find out a positive resolution should be considered as a big opportunity for the recovery of Vietnam economy.
d. Highly FDI The importance of shrewd provincial economic policies may not yet be fully appreciated. There is an immense difference in the ability of provinces to generate growth without government subsidy. Some argue these differences are largely matters of luck or geography. For example, only a few provinces are very good at attracting foreign direct investment. It is widely sensed that FDI tends to be concentrated in a few places, mostly in or near the two major cities of HCMC and Hanoi. In a few other cases it is due to one or a few large projects or some natural resource such as food processing or tourism. According to the MPI at the end of 2002, Hanoi and HCMC and six other nearby provinces accounted for two-thirds of cumulatively implemented FDI.7 Another eight provinces accounted for 12% of total FDI, leaving only about 20% for the remaining 45 provinces.8 Just for 2002, the top ten provinces accounted for over 90% of FDI. Given that on average FDI inflows provide only $10 to $15 per 20 | P a g e
capita each year while total investment per capita is $120 to $150, it is pretty clear that most provinces will do well to get as much as a few dollars per capita per year from foreign investors.
e. Equally DPI It is domestic private investment – especially from the formal private sector. This investment has grown rapidly in recent years, especially since the Enterprise Law was made effective in January of 2000. The growth rate has truly been striking. On average, private formal domestic investment was under $2 per capita in 1997 and just over $3 in 1999. In 2000, it rose to $7.40 and in 2001 to $22, with a rise to about $25 in 2002. From 2000 to 2002, there were 54 thousand new private firms registered with a capital of $4.7 billion. As the World Bank points out, the rapid growth is impressive, but has to be balanced against the sector’s tiny initial starting position. Even by 2002, “it [the private formal domestic sector] accounted for less than 4% of total GDP, 6% of output in manufacturing, and about 3% of total employment.”10 Yet if ways could be found to further hasten this growth, it has one highly desirable aspect: it is more equally spread over Vietnam than FDI and can grow faster than state spending.
5. Threats
a. Unbalance income 21 | P a g e
Firstly, there is big gap on the delivery of income between cities and countries. This leads to condense cities. As a consequence, it creates many social problems such as: security, housing‌
b. Corruption Secondly, corruption, graft and patronage-client relationship has been practiced for a long time in Vietnam. Now, they have become "traditions" and hinder the development of the national economy and other renovation policies. This practice becomes a well-known feature as "business culture" in Vietnam.
c. International relation With regards to international relation, the dispute about Spratly island with other claimants Philippines, Malaysia, Brunei and China - which are neighbors and ASEAN members as well as main trade counterparts may spoilt the diplomatic and trade relationship among these countries.
d. Low competitive determination Lastly, the lack of competition and a sense of "Kaisu" ("want to be the best" which help Singapore achieve amazing results) makes Vietnam economy recover more slowly than other countries.
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B. Vietnam Economic Review I.
Economic Timeline
1986 - 1989
1989 - 1993
1994 - 1997
1997- 1999
1999 - 2007
2008 present
• Initiation of Doi Moi • Targeting econimic stabilization and transforming from center planning to FDI and trade
• Price liberalization, moneraty and SOEs reduction, currency devaluation. • 1989: Publish First Foreign Investment Law
• 1994 US embargo lifter • 1995 join ASEAN,
• Asian Crisis • 1998 join APEC
• 2000 Ho Chi Minh City stock market makes its debut • 2001 US Bilateral Trade Agreement • 2006 New INvestment Law and Enterprise Law adopted • 2007 join WTO member 150th
• 2009 100% foreign own licensed granted
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II.
III.
Vietnam Economic vs Asia
Vietnam Economic vs the World
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IV.
Vietnam Economic 1. GDP
2. FDI
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3. FDI Vietnam vs neighbors
4. FDI by sectors
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C. VIPC Capital Management I.
Company
1. VIPC Capital Management VIPC Capital Management or well-known as VIPC Fund Management is an independent national licensed investment fund built upon teamwork management and trustworthy pass relationships with investors. The legal entity shareholder of VIPC is Viet Vinh Phu Company, a highly reputation domestic and international financial investment organization. Together with Viet Vinh Phu Company, VIPC is established by individual investors who have comprehensive education and extensive experience in the world and Vietnamese financial and stock market. Standing on a strong foundation, VIPC’s shareholder now has the largest shares in Saigon Commercial Bank, major shares in Great Truong Son project and Khanh Hoi Sugar Joint Stock Company. VIPC offers independent and institutional investors variety range of investment capabilities to match with hundreds of valued contact professionals and investment opportunities in one of the most attractive emerging markets, Vietnam in Real Estate, Security and Private Equity.
2. Mission Secure opportunities by improving market orientation Develop long term relationships with investors; Run aggressive business strategies and develop an efficient diversified investment portfolio. place optimal policies on human resources; Add value to all stake holder parties, investors and investees.
3. VIPC’s strengths a. Board of Management o o o
Experienced and Inside out Vietnam Financial market Unity and smoothly team working skills Working under righteousness business manner’s drive 27 | P a g e
b. Investment Team o Well trained with strong financial back ground by holding MBA, PhD and CFA degrees o Commitment to the organization and stick to the investor’s targets. o Investment carefully inventor’s assets as company’s property. o Having many ideal output projects
c. Relationship o Good local and international connections with potential partners and authorities. o Well-maintaining business relationship with international and domestic universities, financial organizations.
d. Corporate Governance o Setting long-term relationship with service providers to achieve the investment process successfully, quickly and effectively. o Corporating based on active business operations and strategy for sustainable development
4. VIPC’s Culture VIPC is built upon teamwork management and trustworthy pass relationships with investors. Leading by company a culture that motivates people to work hard and stay with the business is part of a key to success of VIPC. Therefore, instead of leaving it to grow on its own, VIPC is nurtured in a way that breeds loyalty and motivation by creating a strong culture — one of fun, sharing, collaboration and connection through five simple steps : understanding the needs and expectations of each staff by communication and sharing in every week, implementation the need from step-by-step, this will shows that VIPC has taken its employees' interests and concerns to heart, getting employee’s involve in all aspect is where VIPC’s culture comes from, giving room for staff to free with their own ideas but also guiding and encouraging them follow concrete directions when putting ideas into action and the last is demanding accountability.
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VIPC’s strong culture will be reflected with the result of creativity and care through strong communication and follow-up. Moreover, building a responsible trustworthy pass relationship with investors is a part of VIPC’s culture. Each step of VIPC development is mainly from investors’ trust and close relationship. VIPC is highly appreciated and cared for investors’ needs and demands because investors’ success is also our achievements. And we are proud of putting reputation of VIPC and investors’ trust in front. The whole process brings VIPC up to a united family with the variety of creative - talented members and investor’s inspirations, working together for the sole goal, VIPC investor’s success.
5. Social Responsibility VIPC is a young growing company which is guided by social responsibility manners. The company is developed and shaped to meet the complexities of today’s business integration and the challenges of a global society. The Board of Directors sought to “people aiming investment” and “social responsibility” is a way of VIPC’s life. This means VIPC remains committed to supporting the communities through non-profit organizations which is placed upon kids’ support and enriching our communities’ projects including:
Protecting environment Ensuring a safe, healthy workplace Children Happiness
Our commitment to social responsibility is as strong as business’ drive. We are proud of our progress, but there is still much we can do.
II.
Services
1. For Private Wealth Management Wealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financial services. High net worth individuals, small business owners and families who desire the assistance of a credentialed financial advisory specialist call upon 29 | P a g e
wealth managers to coordinate retail banking, estate planning, legal resources, tax professionals and investment management. Wealth managers can be independent certified financial planners, MBAs, CFAs or any credentialed professional money manager who works to enhance the income, growth and tax favored treatment of long-term investors. One must already have accumulated a significant amount of wealth for wealth management strategies to be effective. Independent wealth managers use their experience in estate planning, risk management, and their affiliations with tax and legal specialists, to manage the diverse holdings of high net worth clients. Banks and brokerage firms use advisory talent pools to aggregate these same services.
a. Philosophy of Wealth management The philosophy of wealth management at VIPC is “specialization”. “Specialization” means we shall design a strategy which is suitable for your specific circumstances. Our experienced and professional staffs will discuss with you about your risk and return objectives; liquidity needs and other constraints such as investment horizon and legal concerns.
b. Strategy of Wealth Management Based on this information, they will advise you the most appropriate strategy. Currently, VIPC offers a wide range of strategies that provide different risk-return trade off to satisfy your needs. Besides, we can also construct a new strategy just for you.
Fixed income: a portfolio of bonds that offers fixed payments
per year.
Income: a portfolio of bonds and shares that pays high and
stable dividend to achieve stable cash flows.
Indexing: a portfolio of shares that replicates the performance
of an index, so your return will be the same as the index.
Growth: a portfolio of shares that provide a return that exceeds
the return of the indexing portfolio, net of transaction costs, on a risk-adjusted basis. 30 | P a g e
Balance: a combination of Income and Growth provides not only
high return but also stable income yearly. Risk and return are higher than Income’s but lower than Growth’s.
Private equity: investing in companies which are newly
established or need business innovation. This is high risk-high return investment.
2. For Institute Asset Management With VIPC’s specialized expertise, institutional investors are offered the full spectrum of investment strategies and financial analysis. VIPC highly commits to utilize excellently the investment and perfect service in order to reach investor’s expectation and company’s unique financial goal.
c. Philosophy of Institute Asset management The philosophy of wealth management at VIPC is “specialization”. “Specialization” means we shall design a strategy which is suitable for your specific circumstances. Our experienced and professional staffs will discuss with you about your risk and return objectives; liquidity needs and other constraints such as investment horizon and legal concerns.
d. Portfolio Management VIPC provides a diversity portfolio management to reach a wide range of personal demand in order to bring most benefit for personal investor’s capital. Institutional Investment chooses VIPC’s Portfolio Management option to utilize VIPC’s knowledge, skill and experience in financial investment projects for consultant purposes. VIPC is proud of working professionally which is able to meet the multiform of portfolio management requirements nationally as well as internationally of financial investment organizations
3. For Professional Advisors If you need a Developing a personal plan that suits your objectives, financial situation and needs. Our financial adviser can help you work out your attitude to risk and develop an investment strategy, tailor made for you. 31 | P a g e
If you need strategic analysis to decide on an investment strategy that is best suited to you. We can make a detailed assessment of your financial situation, help you define your investment goals, and select products that suit your needs and your risk and return preferences.
e. Philosophy of Professional Advisors Running by a team of experienced and clear-headed professional, VIPC offers international and domestic investors an end-to-end service with a specialized and tailored plan to meet your personal situations and expectations. VIPC services are ranging across the specialties of market intelligent, financial investment, legal process and general advisor for personal and institutional investment. With VIPC Professional Advisor Service, investors are invited to join to a wide network of professional advisers who share the same values that maximize your wealth creation through a customized solution.
III.
Products
1. VIPC diversify Fund a. Overview Fund size:
US$100 million
Investment horizon
5 -8 years
Investment objectives & focus:
with investment focus on Vietnamese blue chip listed stocks, IPO shares, real estates, M&A, the company will provide investors high level of return and potential capital growth
Size of a single investment
not excessive 20% of the company’s NAV
Fund structure
To be decided
Management fee
2 % p.a. of the total fund size
Incent fee
20% of profit over 12% benchmark
Fund set up expenses
1,5% of total fund size (flat-upfront)
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Custodian bank
Deutsche Bank
Auditor
Ernst and Young /KPMG or Grant Thornton
Legal consultant
Vilaf Hong Duc
b. Investment Strategy o
Disciplined acquisitions
o
Growth strategy
o
Conservative gearing
o
Complementary partnerships
o
Prudent risk management
o
Straightforward de- investment strategy
c. Investment Process Step 1: Investment sourcing and screening Step 2: In-depth company analysis Step 3: Investment review and approval Step 4: Post-investment monitoring & management Step 5: Exit process
2. Securities Fund a. Overview
Fund size:
VND 1OO Billion
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Investment horizon
5 years
Investment objectives & focus:
with investment focus on Vietnamese blue chip listed stocks, IPO shares, the company will provide investors high level of return and potential capital growth
Size of a single investment
Minimum of VND 100 million
Fund structure
Limited investment company registered in Vietnam
Management fee
2 % p.a. of the total fund size
Incent fee
20% of profit over 12% benchmark
Fund set up expenses
4% of total fund size (flat-upfront)
Schedule
February 2009 – March 2009: memorandum from investors April 2009: apply for fund launching April 2009 – June 2009: fund certificate delivery
b. Investment Objectives o
Long term growth in fund value gained through investing in key
industries and growth industries.. o
Efficiently diversified investment portfolio.
c. Investment Strategy GAAP a combination of both value and growth investing: it looks for companies: that is somewhat undervalued and has solid sustainable growth potential 34 | P a g e
d. Investment Process
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3. Private Equity Fund a. Private Equity Strategy o
Private Equity Investment
The Fund will have significant interest in companies that focuses on one business sector, has market niches, a defensible franchise or technology and competent management. A platform companies would be held by the Fund for the long term, continuously building value and generally reaching the stage of becoming a publicly listed company. Platform company will often purchase other smaller companies (which maybe asset of the Fund) to achieve greater synergies and value for the investors o
Venture Capital Investment
Early stage investments which can later be sold into platform companies or other realized through another exit either by a trade sale or Initial Product offering on a Public Capital market
b. Investment process o
Phase I: Preparation Stage
Market Research, Analysis, and Strategy
Valuation
o
Phase II: The Decision To Market
Confidential Offering Memorandum (COM)
Qualification: Identification of Synergistic.
Candidates.
Confidential Approach to Qualified Prospects.
Negotiations
Deal Structuring - Letter of Intent
Due Diligence
Definitive Agreement
Closing and Transition to New Ownership 36 | P a g e
4. Real Estate Fund c. Investment Process o
Phase 1: Searching for a residential investment property
Look for a consistent streetscape. A mixture of conflicting
building styles lowers the desirability of the street.
The property should be located within easy walking distance of
all amenities.
The street should have potential.
o
Phase 2: Methodical purchasing decision
Assess financial position.
Strategy based decision.
Assess financial capability of the investment.
Negotiate effectively.
Obtain legal advice.
Obtain professional property management services.
5. Contact VIPC CAPITAL MANAGEMENT 2nd Flr. 8 Nguyen Hue St., Dist.1, HCMC, Vietnam Tel: (84-8) 38277478/79 – Fax: (84-8) 38277487 Email: info@vipc.com.vn - www.vipc.com.vn
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