Conference set to underscore Vietnam’s booming economy

ON A HIGH: There has never been a better time to do business in Vietnam

High economic growth averaging 7.4 per cent over the past five years, political stability, developing capital markets, deregulation, rapid urbanisation, an emerging tourism industry and a young population offer attractive opportunities for foreign and domestic investors.
“The influx of foreign investment into Vietnam and the improvement in the country’s legislative system make it a viable destination,” said Andrew Brown, managing director of Jones Lang LaSalle, which opened its first representative office in Ho Chi Minh City last week.
VinaCapital is among thousands of foreign companies fast expanding to tap emerging investment opportunities. Starting with a mere $10 million fund four years ago, the company now manages more than $1 billion, including the $560 million Vietnam Opportunity Fund, $205 million VinaLand Fund and $50 million Technology Fund.
VinaCapital managing partner Don Lam said the company was raising another $350-$400 million for VinaLand to invest in hotel, office, and residential sectors within the next 12 months as it believed the strong economic outlook would trigger demand for real estate.
The overall real estate market has a positive and prospective outlook, driven by high economic growth, rising foreign investment and deregulation. Annual overseas remittances, reaching $4.5 billion last year, have driven demand for better-quality housing, Jones Lang LaSalle said its recent report Destination Vietnam: The Final Frontier.
“The Real Estate Trading Law which took effect on January 1 will free up opportunities to non-resident Vietnamese and foreign property investors,” the report stated.
Indochina Capital is also focusing on the real estate market, having raised $300 million for two real estate funds and made investments into Nam Hai, a luxury resort in Hoi An, and River Garden, a residential complex in Ho Chi Minh City.
“It is now not difficult to raise capital,” said Peter Ryder, chief executive officer of Indochina Capital. “The country’s accession to the WTO, high economic growth, and abundant resources offer many opportunities.”
Other foreign investors are moving in, aiming to pour billions into manufacturing. Taiwan’s Foxconn is working out a plan to invest up to $5 billion to set up residential property and electronics factories in the northern region while the UK’s Pacific Land has spoken to Hanoi authorities about a $1 billion high-tech park.
Foreign investment inflows reached a record high of $10 billion last year and were expected to exceed $12 billion this year. That will require good infrastructure such as bigger airports and seaports, paving the way for foreign investors to move in this business.
VinaCapital has been quick to tap the opportunities, launching Vietnam Infrastructure Ltd. with the aim of raising $150-$200 million from international investors to invest in Vietnam infrastructure.
US company SSA Marine has received the thumbs-up to build a $100 million port in Quang Ninh province while the UK’s P & O Ports is teaming up with Tan Thuan Industrial Promotion Company to build a $250 million port in Ho Chi Minh City.
However, Buu Le, senior manager of Jone Lang LaSalle, said market challenges existed such as the country’s low administrative efficiency, low transparency, an underdeveloped legal system and its requirements for significant infrastructural improvements.
“Vietnam’s attractiveness to foreign investors remains but they require long-term commitment, deep pockets, flexibility, patience and persistence,” he said.