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VinaCapital: Vietnam promises enormous investment opportunities

May 07, 2020 | 11:43

Consumer goods, healthcare, energy, construction materials, infrastructure, and technology are among the sectors with enormous potential for investment in Vietnam once the COVID-19 pandemic subsides, according to Don Lam, CEO of VinaCapital. 

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vinacapital vietnam promises enormous investment opportunities
Don Lam, CEO of VinaCapital (Photo: Sai Gon Businessman)

Don Lam, co-founder and CEO of fund management company VinaCapital, recently spoke to a group of Korean investors through video conferencing about Vietnam’s efforts to manage the outbreak, how the pandemic would affect the economy and investment opportunities now and post-pandemic.

The consumer discretionary sector had traditionally seen the highest growth since people with more money in their wallet spend it on dining out, consumer electronics, jewellery, and others, he said.

“Although there is a short-term hit from the outbreak, we can continue to expect the sector to resume strong growth.”

Healthcare is another sector benefiting from the growing middle class since the public healthcare system is expanding yet overburdened.

Private healthcare is expanding, enabling some people who previously would have gone to Bangkok or Singapore for treatment to get it at home today, according to Lam.

vinacapital vietnam promises enormous investment opportunities
"LNG and renewables are the future" - Don Lam (Photo: Communist Party Online Newspaper)

Energy is another promising sector, with demand outstripping supply, requiring the country to import from neighbouring countries, cited VNS.

"LNG and renewables are the future," he said.

Domestic manufacturing, with companies that are involved in infrastructure or catering to the needs or desires of the growing middle class, is also an interesting sector as is technology, according to Lam.

VIetnam has been going through a tech boom in the past few years, with start-ups working in a wide range of areas like fintech, AI, real estate technology, and logistics.

vinacapital vietnam promises enormous investment opportunities
Many stocks are now attractive (Photo: Industry and Trade Magazine)

Tourism will definitely make a comeback in 2021,” he said.

Vietnam could benefit enormously as it is seen as a safe haven amid the outbreak and offers great value for money in addition to its beautiful scenery and rich culture, he said.

Of course the recovery time depends on the global economic condition, transportation options and the medical situation, but now is a good time to invest in the sector, according to Lam.

The stock market is also an option since its valuation has declined by 30-40 per cent during the outbreak, and many stocks are now attractive.

It now trades at a P/E of 10.3, the cheapest since 2012 and the lowest in the region, reported by VNS.

But he also shared notes of caution about investing in Vietnam, saying there are some risks just like in any other frontier and emerging market.

"To mitigate the risks and prepare for the best possible outcomes, investors need to take a long-term view, do thorough due diligence, fully understand the market, and have a trusted local partner," he said.

"The days of 'fast money' are over and patience is important when operating in Vietnam," he warned.

vinacapital vietnam promises enormous investment opportunities
"The opportunity here is virtually endless" - VinaCapital CEO (Photo: Investment Bridge)

"One of the biggest mistakes foreign investors make is that they assume all of Southeast Asia is the same, but Vietnam is not the same as Thailand, Indonesia or Malaysia, and each country has its own development strategies and own way of working," he said.

Successful foreign investors would be those who tailor their products, services and workplaces to Vietnam.

The global economic recovery would take time, but Vietnam was well-positioned to rebound once the Covid-19 outbreak is under control, with revised forecasts still ranking Vietnam among the fastest growing economies in the world, he added.

“The opportunity here is virtually endless.”, Lam said.

vinacapital vietnam promises enormous investment opportunities
Tourism can recover safely and soon (Photo: Travel Today)

Don Lam also gives 7 advices for Vietnam to develop in the long term. Accordingly, since the German government guarantees that all bank loans to businesses affected by the disease will be repaid. Mr. Don Lam said Vietnam should apply the same measures.

Apart from that, current financial and credit measures will help reduce the negative effects of the pandemic, but Vietnam needs to find ways to stimulate economic growth, Lam said.

"Infrastructure development is one of the simplest ways for long-term economic growth," said Don Lam.

In the last 2 years, many real estate projects across the country have developed slowly due to the appraisal process at the request of the Government.

Mr. Don Lam believes that the real estate industry's bottlenecks will be removed and the economy will benefit greatly in the short and long term.

With the production of complex medical equipment, most "clinical research development" companies - or CRO - become a promising industry. VinaCapital expects the industry to expand beyond Covid-19 and the Government of Vietnam can help promote the development of the industry, cited CafeF.

Another industry that can be boosted by policy is tourism. Lam believes the Government of Vietnam can take a number of measures to help this industry - currently employing 1.3 million people, accounting for 10% of GDP - recover as safely as possible.

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