Financialisation and Development in Asia by Toby Carroll Darryl Jarvis

Author:Toby Carroll, Darryl Jarvis [Toby Carroll, Darryl Jarvis]
Language: eng
Format: epub
ISBN: 9781138082939
Barnesnoble:
Publisher: Taylor & Francis
Published: 2018-08-14T00:00:00+00:00

Figure 1. VC Market AuM (in USD million)

Figure 2. VC market AuM (as per cent of GDP) Source: AVCJ (2005); Note for Figure 2: In 2003 GDP for each country was as follows: Indonesia’s USD 666 billion, Malaysia’s USD 210 billion, Philippines’ USD 356 billion, Thailand's USD 429 billion, Vietnam’s USD 183 billion. GDP figures were used to calculate VC as a percent of national GDP for each country.

National funds to support the technology sector and SME financing have been initiated by the MoST (the 2006 VCF), the Science, Technology and Environment Committee via their 2007 discussion of a USD 30 million fund for high-technology SMEs (Zavatta, 2008), and the MPI (the 2013 SME Development Fund). These funds have been designed for SMEs directly in the form of loans, not equity investments. According to Prime Minister Decision 601/QĐ-TTg (dated 17 April 2013), the SME Development Fund offers “preferential interest rate loans at an interest rate 90% cheaper than financial markets” rather than equity investments in SMEs (Author email exchange with ASMED manager, 20 May 2013). Similarly, in Resolution No. 22/NQ-CP on 5 May 2010, which details the plans for implementing Government Decree No. 56/2009/ ND-CP on supporting the development of SMEs, there was no mention of “venture capital” or “equity”. Instead, an entire section (II) of the Resolution is dedicated to the “accessibility of credit capital sources”. The resolution dictates the following actions for the MPI in implementing SME financing support

negotiating, receiving or arranging official development assistance (ODA) sources to provide technical assistance and enhance capabilities for credit institutions to expand their credit to small-or-medium-sized enterprises … and submitting to the Prime Minister a report on the application of credit mechanisms and policies … and proposing measures to boost the development of products and services suitable to small- and medium-sized enterprises, such as factoring and financing leasing (Socialist Republic of Vietnam, 2010).

The SME Development Fund (also called the Enterprise Development Fund) carries on the tradition of focusing on credit solutions as the Fund consists of low interest rate loans rather than equity investments.

Vietnam has not adopted the LP, or an alternative, legal structure explicitly for VC fund managers. Rather than regulations for VC managers, licences for VC managers to operate have come via one-off deals with government ministers, as in the case of IDG Ventures Vietnam. In IDG’s agreement with the MoST minister in exchange for their licence they agreed to

help to market and promote the Hoa Lac Hi-Tech Park outside Vietnam and provide advice and support to the Ministry as it plans construction and operation of a High-Tech Conference and Exposition Centre in Hoa Lac Hi-Tech Park (IDG Ventures Vietnam, 2007).

The IDG agreement exemplifies the individual, inconsistent nature of policymakers’ involvement with the VC market, rather than their transparent offering of VC industry-wide incentives or access. Limitations on foreign ownership of local companies and capital controls remain, despite 2007 WTO accession, impeding VC managers’ ability to buy and sell shares in Vietnamese start-ups (Freeman and Le, 2007; Do, 2008; Freeman, 2004).

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