Dragon pierces Vietnam investment veil
HO CHI MINH CITY - Few foreign
investors have put more faith in
Vietnam than Dominic Scriven.
An eight-year veteran of a country
fighting a losing public relations battle
over its foreign investment allure,
Scriven sees opportunity where
others head for the exits.
``Of course there are opportunities in
Vietnam and they are actually
growing. But you must be flexible
and very aware of what you can
achieve,'' Scriven, director of
investment company Dragon Capital,
said in an interview.
``People say Vietnam is not
responsive to investors but I don't
think that is really true,'' he added.
``Some foreign-invested firms made
the wrong investment decision in the
first place but in any event changes
across the board are being made to
the regulatory and policy
While many investors have
established joint ventures with
inefficient state companies, Scriven
sees the opportunities in the
communist-ruled country's nascent
Dragon Capital manages two funds
worth $37 million and has invested in
15 mainly private firms in
manufacturing, software, real estate,
construction, banking and food
It is also involved in corporate
finance, helping private firms raise
capital and restructure their balance
Dragon Capital is unusual in its
It has applied financial mechanisms
such as convertible bonds that are
conventional elsewhere but untried in
Vietnam to invest cash from its $27
million Vietnam Enterprise
Investments (VEIL) Ltd fund. The
other $10 million fund is a private
Each deal requires Scriven or fellow
director John Shrimpton to obtain
approval from the Prime Minister's
``Vietnamese private firms may not
have the most modern technology or
huge international experience but
they know how to make something
at the lowest possible cost and get it
done the easiest way,'' said Scriven,
35, who hails from England.
Vietnam has a vibrant private sector
but the bulk is household level or
Scriven acknowledges the fund's
investors are not making money --
VEIL trades at a 10 percent discount
to its net asset value, something he
calls the ``greatest disappointment''
of Dragon Capital. But that
compares favourably with other
funds which have either packed up
or trade at a deep discount.
He also said Dragon Capital was too
ambitious about when Hanoi would
establish a stock market -- there is
still no date -- and hence a liquid exit
mechanism for the fund's investors.
However, no stock market in a
country where state firms get most
bank credit means private firms are
starved of capital.
To Scriven that presents not only an
opportunity but a chance to build
Dragon Capital's name and positions
in corporate Vietnam before a
bourse finally emerges.
``A few years ago when Vietnam
was hot we were always behind
Merrill Lynch and the rest. Now
these guys haven't the slightest
interest in this country and therefore
we have much better access and
more of an entrenched position,'' he
Scriven said it was important for
investors to understand that Vietnam
would move gradually on economic
reform and place a high premium on
stability, not least because the
country has been spared the severe
strain suffered by its neighbours.
``There is a very strong desire among
the leadership to be fully convinced
that a step forward is the right step
before it's taken,'' he said.
Reuters - April 27, 1999.