Half of portfolio investment in Vietnam tapped from US

It is estimated that 1/3 or 1/2 of total portfolio investment capital flowing into Vietnam in mid 2006 was coming from the US.

The information was released at a ceremony announcing the report on the 5-year impact of the Vietnam-US Bilateral Agreement (BTA) on Vietnam’s trade and investment by James Riedel, Senior Advisor to the technical project on supporting the implementation of the BTA. The ceremony was co-organised by the Central Institute for Economic Management (CIEM) and the US Agency for International Development (USAID).

Mr Riedel said that this tendency would be maintained in the future with the official participation of big-scale investment banks and institutional investors from the US.

US portfolio investment capital has been flowing into Vietnam through well-known investment funds. Recently, JP Morgan and Citigroup have been granted trading codes to make transactions on Vietnam’s bourse. Small investors have also tried to access Vietnam’s stock market through investment funds.

Indochina Capital, a US-based investment bank, set up an investment fund in Vietnam with the capital of $100mil in 2005, in which American investors hold 45% of total capital. The US’s Vietnam Partners joined forces with the Bank of Investment and Development of Vietnam (BIDV) to set up a $100mil investment fund in Vietnam (US partner holds 30% of capital). Dragon Capital is now managing the fund of $600mil, 30% of which comes from American investors.

IDG Venture has 100% of its capital coming from the US. It has injected money in several tens of companies in Vietnam, and is now planning to raise its investment capital here in Vietnam to $1bil in the time to come.

Vietnam has been successful in attracting both direct and indirect investment. The first foreign investment fund, Vietnam Fund, was established in 1991, which then had the investment capital of $54mil. Six more funds had been established four years later, capitalised at $438mil in total, including the Vietnam Investment Fund ($90mil), Beta Vietnam Fund ($71mil), Vietnam Frontier Fund ($67mil).

However, the Asian financial crisis then froze the funds’ development, forcing the funds to stop operating in Vietnam.

Between 2001, when the BTA came into effect, and mid 2006, 13 more funds were established with the total investment capital of $1bil. The well-known funds are Mekong Enterprise Fund ($19mil), Vietnam Opportunity Fund ($171mil), Indochina Land Holdings ($100mil).

Source: VNE