Việt Nam is joining the “Golden Triangle of Start-ups” in Southeast Asia. — VNA/VNS Photo

HÀ NỘI — Việt Nam is joining the “Golden Triangle of Start-ups” in Southeast Asia with its strong, young domestic market, tremendous tech talent and continuous innovation which is expected to open up growth opportunities for the region in the near future.

In his opening remarks at the Vietnam Venture Summit 2022 under the theme “Shifting Global Capital Flows” on Monday, Minister of Planning and Investment Nguyễn Chí Dũng said global investment trends are changing profoundly as a result of geopolitical uncertainties and risk of recession in many big economies. The shift of capital flows has been taking place strongly among regions and countries, in which there are fewer investment opportunities for both start-ups and investors.

Braving difficulties and challenges, Dũng said the Vietnamese Government has always adhered to the goal of stabilising the macro-economy, controlling inflation and ensuring social security, laying solid ground for the country’s strong recovery after the pandemic and turning Việt Nam into an attractive investment destination.

In the first 11 months of 2022, the realised capital of foreign direct investment projects in Việt Nam is estimated at nearly US$20 billion, up 15.1 per cent year-on-year.

Dũng said foreign funds committed to investing in Vietnamese start-ups have been also increasing over years, from $425 million in 2019 to $815 million in 2020.

“The value reached nearly $2 billion during 2020-22 which demonstrates the growing attractiveness of Vietnamese start-ups to international and regional investors,” he said, adding Việt Nam attracted nearly $500 million of investment in innovative start-ups in the first nine months with higher deal values compared to the same period of last year, which is a good sign for Việt Nam’s innovative start-up ecosystem.

Vinnie Lauria, founder and CEO of Golden Gate Ventures, affirmed Việt Nam is the third pillar of the “Golden Triangle of Start-ups” in Southeast Asia. The symbiosis of Singapore, Indonesia and Việt Nam will open up the next growth opportunity for Southeast Asia.

Lauria said in the first decade of Southeast Asia’s start-up ecosystem, Singapore and Indonesia were the leading growth drivers, with Singapore bringing financial and human capital to the table, and Indonesia bringing a huge domestic market.

“Fast forward to 2022, Việt Nam is the third pillar of this golden triangle, bringing a lethal combination of top tech talent, an inherent Vietnamese culture of entrepreneurship and a fast-growing domestic market. When you put all these elements together, it’s not hard to see why more global investors are betting big on Southeast Asia,” he said. 

Việt Nam has a number of advantageous factors that make it Southeast Asia’s latest crown jewel and an attractive destination including political stability, a young and highly educated workforce, developing infrastructure, digital skills and ability to innovate, and the support of the Government for the start-up ecosystem.

Expected $5 billion value during 2023-25

Thirty-nine investment funds pledged to invest $1.5 billion in Việt Nam’s start-ups in the 2023-25 period. Total investment value in Vietnamese start-ups is expected to reach $5 billion during this period.

Vietnam Venture Summit is an annual conference hosted by the Ministry of Planning and Investment, co-organised by the National Innovation Center (NIC) and Golden Gate Ventures to connect Southeast Asia's start-up ecosystem with the global community of venture capitals.

Vietnamese start-ups raised a record $1.4 billion with 165 transactions in 2021, up 1.6 times from $894 million and 126 transactions in 2019, which indicated the market has regained momentum after the pandemic-induced decline. According to NIC, the upward trend is forecast to continue in 2023 with GDP forecast to reach 6.7 per cent in 2023.

Việt Nam has become a leading candidate for the shift of capital flows, the NIC said, adding that the country is now at an important turning point in its economic development process. Its stature in the region, the impacts of the COVID-19 pandemic and the strong growth of investment funds have created a favourable context for Việt Nam to hold an outstanding position.

Up to now, Việt Nam has 20 private innovative start-up investment funds established under Decree No. 38/2019/NĐ-CP in 2019 with total charter capital of more than VNĐ100 billion ($4.2 million). Việt Nam’s institutional quality and policy-making capacity for Industry 4.0 are highly appreciated internationally.

In the Global Innovation Index (GII) 2022, Việt Nam’s institutional rating increased sharply from 83rd place in 2020 and 2021 to 51st place in 2022. Support mechanisms and policies of the Government, ministries and localities have created the necessary premise for the strong development of the innovation ecosystem.

However, according to Minister Nguyễn Chí Dũng, in addition to developing ecosystem actors, it is necessary to soon form a practical and effective start-up investment environment so that domestic and international investors can invest and withdraw capital proactively, flexibly and transparently. — VNS

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Shifting Global Capital Flows

According to an analysis by Crunchbase News, total global venture capital in the third quarter of 2022 was $81 billion, which was $90 billion (53 per cent) less than last year and $40 billion (33 per cent) lower compared to the previous quarter. In Southeast Asia, this start-up investment market attracted $3.72 billion in the third quarter of 2022, which is a 36.4 per cent decrease from the last year and 22 per cent from the second quarter of 2022. 

Although the total investment value has decreased, the Southeast Asian market is still considered as having potential due to a number of key factors such as the growth rate of the region is expected to remain at 4-5 per cent per year, the large market size with 680 million people, the extensive internet coverage, and the total value of economic goods is estimated to reach $200 billion by 2022 – three years earlier than previous predictions.

Moreover, Southeast Asia continues to witness growth in the number of Internet users with 20 million new users by 2022, bringing the total number of Internet users to 460 million. — VNS