Emerging consumer is king in Vietnam

The emergence of a middle class in Vietnam offers investors plenty of opportunities.
ôThe rapid urbanisation of Vietnam presents tremendous investment opportunities,ö said Tung Kim Nguyen, a partner at Indochina Capital speaking at the Credit Suisse Asian Investment Conference last week. ôUrbanisation is leading to an emerging middle class in Vietnam and I believe Vietnam has the potential to become one of AsiaÆs biggest consumers in the years to come.ö

Despite recent volatility and equity market declines, interest in Vietnam remains keen. ôA year ago, Vietnam was really the darling of foreign investors looking into Asia. Looking around the room, that sentiment doesnÆt seem to have dampened,ö said Lito Camacho, Vice Chairman and Head of Public Policy, Asia Pacific, Credit Suisse, as he introduced the morning panel on equitisation of state-owned enterprises and investment opportunities in Vietnam.

Investors are attracted by strong earnings growth and well-run state-owned enterprises (SOEs) that the government intends to privatize in the years ahead. ôThe government is committed to ensuring Vietnam remains an attractive market for investors. When making policy decisions, the government puts itself in the position of investors,ö said Dr. Pham Viet Muon, Deputy Head of the Government Office, Standing Vice Chairman of the National Steering Committee for Enterprise Reform and Development for Vietnam.

ôAt last yearÆs AIC, I told delegates that the environment was more favourable for companies looking to take advantage of the rising stock market. The tables have turned and the time for the buy-side is now,ö said Hung Nguyen Duy, Chairman and CEO of Saigon Securities.

Le Hong Minh, Co-CEO and Co-Founder of VinaGame, agreed that the government has been supportive of start-up private businesses. ôA healthy regulatory environment allows companies to grow and the business community plays a vital role in educating the government on the corporate sector, and the role it can play in the expansion of the economy,ö he said. However, the biggest challenge facing the corporate sector is the lack of expertise, given Vietnam is still a young economy. ôAs the private sector evolves, it must learn how to manage business more efficiently and establish a framework for long-term sustainable growth.ö

Nguyen noted there are a number of sectors that present exciting opportunities for investors. The consumer sector, notably food and beverages and consumer goods, is a growth opportunity, as well as companies that produce raw construction materials and transportation businesses.

VietnamÆs draw-cards

ò Broad political security
ò Appreciating currency
ò Emergence of middle class with rising incomes and consumption
ò Ongoing plans to privatize state-owned firms
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