Dragon Capital: Solve capital problems to help businesses achieve a sustainable roadmap

The information was given by Mr. Dominic Scriven, Chairman of Dragon Capital Vietnam at the National Conference to research, study, grasp and implement Resolution No. 10-NQ/TW of the Politburo on economic development with foreign investment, on June 30.

According to Mr. Dominic Scriven, Resolution No. 10-NQ/TW is important in affirming that the foreign-invested economic sector is an integral part of the Vietnamese economy. The resolution also emphasizes the need to attract high-quality capital flows, associated with innovation, technology transfer, sustainable development and enhancing the role of the capital market.

However, to truly build an effective capital market, he believes there are still many challenges. Most prominent is the fact that capital mobilization costs of businesses remain high. Many businesses still have to mobilize capital at an interest rate of 10-12% per year, even for three-year terms. Therefore, when capital mobilization costs decrease, businesses have an additional foundation to improve competitiveness, promote economic growth, and support long-term growth goals.

To achieve that goal, the Chairman of Dragon Capital Vietnam made many proposals.

The first is to create a mechanism to encourage FDI enterprises to retain foreign currency in Vietnam, instead of transferring it abroad. Currently, the group of FDI enterprises creates about 20% of GDP value. If the profits of this group of businesses are retained in sanctions institutions and circulated more domestically, the market will have more capital at a reasonable cost.

In addition, it is necessary to continue to accelerate the roadmap to upgrade Vietnam’s stock market to the emerging market group according to MSCI standards before 2030. When upgrading, Vietnam will have more opportunities to attract international investment funds, increasing opportunities to access capital for businesses.

The next proposal revolves around considering adjusting listing conditions for science and technology enterprises, especially emerging industries such as digital technology and artificial intelligence. Currently, listed enterprises must have no accumulated losses and be profitable in the previous year. Many technology businesses need years of investment in research and development before turning a profit. If the same listing conditions as traditional businesses are applied, many startups may miss the opportunity to raise capital from the market.

“Researching appropriate mechanisms will contribute to promoting innovation and developing Vietnamese technology enterprises,” he said.

He also emphasized the importance of building international financial centers in Ho Chi Minh City and Da Nang. This center can pilot new mechanisms to attract foreign capital, in accordance with international “rules of the game”.

Continuing, Mr. Dominic Scriven said that it is necessary to continue to develop the domestic investor system to form long-term capital sources, increase capital market stability and reduce dependence on short-term capital flows.

Closing the speech, Mr. Dominic Scriven said that in more than 30 years of operation in Vietnam, the unit believes in the long-term growth prospects of the economy. The business said it will prioritize capital allocation into businesses with good governance, transparency, effective risk management and development according to ESG standards.

Dragon Capital is the first enterprise specializing in domestic fund management in Vietnam, established in 2003. The main business unit is in the field of securities investment fund management and investment portfolio management. This business is at the forefront of deploying many fund certificate products, including closed-end funds, open funds and exchange-traded funds (ETF). In addition, the unit is also a pioneer in investing in the private sector and participating in the equitization process of state-owned enterprises.

At the end of last year, this business consulted and managed about 140,000 billion VND (5.4 billion USD). Dragon Capital is also one of the leading public fund management companies in the market in terms of both number of funds and scale of total mobilized net asset value (NAV).