This preliminary study sought to determine the feasibility of establishing an independent, commercially viable, on-shore venture capital fund in Vietnam to address the severe shortage of investment capital faced by the country’s corporate private sector. In 1999, of 24,000 registered private companies, 7,000 were limited liability or joint stock companies. The government aimed to have an additional 1,500-1,700 equitized companies by 2000. Based on MPDF’s previous experience with them, the study’s authors identified many of these firms as high growth companies, able to accept proven technologies and business models and with the potential for eventual stock listing – the kind of companies a venture capital fund could benefit, and benefit from.
Despite much demand and potential, challenges included: the difficult regulatory environment; lack of transparency and acceptable standards in auditing and accounting; and the absence of both a mature legal environment and – as of then - a stock market (allowing for an acceptable exit strategy). The authors considered the reasons behind the limited success of off-shore funds and also looked at the success of venture capital funds in neighboring Southeast Asian countries. Provided that a stock market was established in three to four years time, the authors concluded that with the initial support of an international financial institution (IFC, MPDF), an on-shore capital fund was entirely feasible. They suggested that a more in-depth study was warranted to begin establishing the framework for one.
September 1998
Full report English 
(192kb) | Full report Vietnamese 
(558kb)
