Vietnam's private economy is one of four pillars of growth

The private economy is expected to become one of the four pillars promoting Vietnam's economic growth, especially the start-up companies.

Vietnam News - The private economy is expected to become one of the four pillars promoting Vietnam's economic growth, especially the start-up companies.

Excessive private investment


From the full picture of 2018 private investment activity rebuilt with successful deals in 2018, the Private Investment Prospects 2019 was recently reviewed by Auditing and Business Consulting firm Grant Thornton Vietnam. As a comment, Vietnam is one of three attractive destinations for the most private investment (PE) in Southeast Asia. Attraction is reflected in the number of outstanding deals and record values.


Heading in Southeast Asia is Singapore with 141 deals with a value of 7 billion USD, and Indonesia has 42 deals with 1.672 billion USD. Vietnam has had a number of outstanding deals (38 deals - up 41%) and the transaction value increased to 285% (USD 1.6 billion), this is the record of 10 years.

Grant Thornton said that 34% of surveyed investors rated Vietnam as the most attractive investment destination in Southeast Asian markets. The factor that makes new resurgence attractive is that Vietnam's entrepreneurial ecosystem has been promoted in 2018. This attraction is reflected in the start-up figure that has attracted a total investment of 889 million USD, three times higher than the same period last year. According to a survey by Grant Thornton, in 38 deals, there are 27 deals in startups (accounting for 71%), up 56% compared to 2017.


In terms of prospects in 2019, Grant Thornton Vietnam said that the Vietnamese economy will enjoy favorable conditions from participating in private trade agreements that have been and will become effective, typically the Agreement. Comprehensive Trans-Pacific Partnership and Progress (CPTPP), Vietnam-EU Free Trade Agreement (EVFTA) and Free Trade Agreement (FTA) between the Association of Southeast Asian Nations (ASEAN) and Hong Kong (ASEAN - Hong Kong FTA). This is expected to boost development for production and export activities of Vietnam, as well as diversify sources of imported materials. After difficulties and delays in 2018, the equitization and divestment of state-owned enterprises is expected to be boosted in 2019. This is expected to bring attractive investment opportunities in next year.

“The private economy is expected to become one of the four pillars to boost the growth of Vietnam's economy in 2019, especially the growth of start-up companies,” Grant Thornton Vietnam identify.

Grant Thornton Vietnam also said that there are 6 sectors in Vietnam with great attraction for private investment funds in the next 12 months. In which, there are 2 emerging industries: financial technology (Fintech) and e-commerce; Besides, there are 4 traditional industries, including education, renewable energy, pharmaceuticals and transportation-forwarding.


See more: Vietnam's economy belongs to the group with the highest growth rate in the world

The challenge is not small for Vietnam's economy


Although it is considered "a very attractive destination for private investment" and a lot of opportunities, Grant Thornton's analysis also shows that challenges to private investment are not small. It is noteworthy that inherent conceptions of the type sold must have high prices compared to the potential of businesses (DN), which is the leading challenge. 24% of respondents said that the selling price was too high compared to the potential.

Another important challenge in calling capital from private investors from investors - buyers - is a low level of acceptance. low. This challenge is quite typical in Vietnam when most private enterprises owned by individuals or families and founders are also business executives. Concerns about potential conflicts in vision and mission, along with difficulties in sharing executive rights make private companies reluctant to cooperate with investors.

Given more about the factors that investors always consider when making investment decisions, this report shows that 87% of investors expressed considerable concern for inconsistencies in regulations. and investment procedures, as well as corruption issues. 76% of respondents said that lack of transparency in information of enterprises is the main factor causing the failure of the deals.

The report also shows the challenges that the party wants to call for investment - the seller faces. In particular, potential conflicts of strategy and vision in enterprise development are the biggest obstacles between businesses and potential investors, and this is the concern of most private business owners.

Stubborn demands and constraints from investors are also the reason that makes deals do not come to an end. In order to protect themselves from the risk of losses, investment funds will provide tight binding terms and conditions on business results (such as revenue, profit, EBITDA), commitment to engagement time. of key personnel. Failure to meet these commitments may trigger the option, which could become an extremely unfavorable financial option for owners.

However, Grant Thornton Vietnam said that these challenges are not difficult to improve. Along with outstanding advantages and political stability, favorable macroeconomic stability and international integration, if improving these challenges will bring Vietnam to a higher position on the village. Investment attraction in the area.
 
 
 
  Vietnam Economy

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