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 environment.'' While many investors have established joint ventures with inefficient state companies, Scriven sees the opportunities in the communist-ruled country's nascent private sector. 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 processing. It is also involved in corporate finance, helping private firms raise capital and restructure their balance sheets. Dragon Capital is unusual in its approach. 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 facility. Each deal requires Scriven or fellow director John Shrimpton to obtain approval from the Prime Minister's Office. ``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 family-run businesses. 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 said. 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.