In the context of slowing private investment growth in recent years, Resolution 68 of the Politburo has raised the confidence of businesses in taking off. However, the success of economies in Asia shows that to form a strong private sector, it is necessary to have “seed capital” from the ecosystem of investment funds.
Need “seed capital” for the private sector
Looking back at the model of capital supply for private enterprises in Asian economies , a prominent feature is that no country has achieved a "miraculous" leap forward without resources from domestic investment funds.
For example, behind Korean chaebols like Samsung, SK or LG is an abundant flow of capital from domestic investment funds. It is this resource that has promoted research capacity, developed breakthrough products and expanded scale at an extraordinary speed.
Singapore, with two prestigious sovereign wealth funds, Temasek Holdings and GIC, not only focuses on investing in domestic enterprises but also strongly expands to the region, including Vietnam. Despite its small territorial size, this island nation impresses with its prosperous economy, driven by outstanding diversification in the fields of finance, technology and services. Singapore's secret lies in its policy of building a strong investment fund ecosystem, with large funds as the core, combined with an open mechanism to attract international and regional funds to set up operations.
Meanwhile, Israel, a resource-scarce country, has transformed itself into a “startup nation” thanks to its strategy of developing venture capital flows. In 1993, the Israeli government launched a venture capital-backed program, which acted as a “catalyst” to stimulate both domestic and foreign investment flows. This model has created a vibrant innovation ecosystem, spawned a series of famous technology companies, and promoted many global mergers and acquisitions (M&A).
Taiwan also has a national development fund, investing and providing early support for future giants like TSMC - the world's largest chip manufacturer, or MediaTek (chip design).
In general, domestic funds, both public and private, play an essential role as “seed capital” to start the development journey of enterprises. However, the role of funds is not only to provide finance but also to act as a bridge to improve management methods, development experience, market expansion, technological capacity and international connections. Enterprises “incubated” by these funds have become core growth drivers, contributing to creating “economic miracles” and expanding their influence in the global market.
Domestic Resources: A Turning Point for Change
Vietnam also experienced an impressive period of development, promoting domestic enterprises to grow in a unique economic context. In the 2000-2010 decade, the economic picture changed dramatically with the event of joining the WTO, the birth of the stock exchange and abundant net investment capital.
Many private enterprises have risen during this period, typically Hoa Phat. In 2007, VinaCapital's VOF fund invested 47 million USD (equivalent to 5% of the capitalization value at that time) in the form of private equity, creating a financial foundation for Hoa Phat to build an integrated steel production complex with a capacity of 2.5 million tons of construction steel per year. By the end of 2024, Hoa Phat's steel capacity had reached 8.5 million tons/year. Along with that, the company's value also increased sharply, with capitalization value increasing 13.6 times, revenue increasing 25.6 times by the end of 2024, compared to 17 years ago.
Similarly, with capital from VinaCapital's investment fund, Kido has also strongly transformed from a traditional confectionery company into a multi-industry food corporation, focusing on essential products. In the healthcare sector, Tam Tri Hospital has increased the number of hospitals from 4 to 8 in the 2018-2022 period, while increasing its capacity from 400 beds to 1,200 beds.
These achievements not only demonstrate the strong growth potential of Vietnamese enterprises, but also affirm the key role of domestic investment funds. These funds not only provide necessary capital but also support enterprises to overcome challenges in governance and market expansion, helping them reach new heights and compete in the regional arena.
However, the current problem is that the fund industry ecosystem is still lacking and weak, and does not have enough types, such as national investment funds, infrastructure investment funds, real estate investment funds (REITs), strategic ETFs, green development funds, pension funds, insurance, etc.
Ms. Nguyen Thi Dieu Phuong - Deputy General Director of VOF Fund, VinaCapital Group - said: “With the participation of investment funds, not only do they provide capital but they also accompany businesses in establishing transparent governance systems, strict financial control, and process optimization. In addition, investment funds have the ability to promote the consolidation and expansion of businesses, especially in important areas such as technology, healthcare, finance, and manufacturing. Through mergers and acquisitions, investors help businesses grow stronger, have a better position to participate in global supply chains, attract more investment capital, and achieve a leading position in the industry.”
At a recent workshop on private economic development from the perspective of listed enterprises and public companies, Mr. Phan Duc Hieu, a full-time member of the National Assembly's Economic Committee, said that this Resolution mentioned two "very new" points: increasing protection and continuing to unlock resources for the development of the private economic sector. Accordingly, if the resolution is fully implemented and deployed soon, it will create a qualitative change, with the expectation that there will be businesses that develop sustainably and reach out internationally.
In terms of internal resources, Vietnam is not lacking in domestic capital when looking at many domestic funds that are operating actively. “Resolution 68 encourages us to continue to seek and accompany potential enterprises, contributing to the strong development of Vietnam’s private economy as we have been doing for over 20 years,” Ms. Dieu Phuong shared.
Source: https://baodautu.vn/quy-dau-tu-chat-xuc-tac-thuc-day-tang-truong-kinh-te-tu-nhan-d306232.html
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