Dominic Scriven believes that recent global events are sorting emerging markets into economic winners and losers. Many have some of the features needed to be a winner, he says, but only one has them all – Vietnam, where the economic outlook is the best it has been in years.
Mr Scriven visited Vietnam as a young Hong Kong-based fund manager in the late 1980s, and never really left. He was struck by its Confucian drive for order and improvement. He also realised that the heavy dependence on its relationship with the (soon-to-collapse) USSR would have to change.
After studying at Hanoi General University for two years, he co-founded Dragon Capital, which now runs five offshore-quoted funds. It also has stakes in Ho Chi Minh City Securities, the country's largest broker, and Vietfund Managers, the first and largest local asset management company. Together, Dragon Capital and its affiliates run capital of about $1.5bn. Its own shareholders include the company's management, the International Finance Corporation and Proparco, the French development institution.
Dragon Capital's road has been a long and bumpy one. The country, and the firm, have survived a number of upheavals, including the Asian crisis of 1998 – which provided the impetus for important market reforms. After Vietnam joined the World Trade Organisation in 2007, the resulting over-exuberance eventually culminated in a classic balance sheet crisis, from which the country's economy is now emerging. The key official response this time around has been to tackle the state-owned behemoths that have controlled the economy.
"Vietnam's macro outlook is the best in the emerging markets," says Mr Scriven. "It's the fastest growing country in Asia, apart from China, and its foreign exchange, balance of payments and debt profile are all healthy. Banking reform is in its final phase and will resurrect new lending."
Vietnam already has a strong manufacturing export base, focused on the US, with a leading position in cell phones and a steady shift into higher value-added goods. Underpinning that is the country's position as the world's number two exporter of footwear, number five in textiles and garments, and number one by volume in cashews, peppercorns and, surprisingly, coffee (robusta).
Among the other criteria needed for emerging market winner status, according to Mr Scriven, Vietnam has youthful demographics, political stability (as a one-party but not a police state), a serious domestic economy, competent monetary and fiscal management, and a government pursuing some disengagement with the economy.
FDI as a percentage of GDP is higher than any other country in Asia, with major injections from Japan, South Korea and Taiwan. "There are challenges to investing in Vietnam, but being foreign is not one of them," says Mr Scriven.
The Vietnamese government recently announced the removal of the 49% cap on foreign ownership of some listed companies, though not those with links to national security. This should help to speed up the slow process of privatisation in the country. The plan has been to sell 430 state-owned enterprises, with a book value of $28bn, between 2014 and 2016. However, only 100, worth $3bn, were done in 2014, and the government says it has partly sold off only 61 of the nearly 300 planned for this year.
The list of imminent candidates for privatisation includes ACV, the airport services monopoly; the Dung Quat oil refinery; Vissan, the biggest supplier of meat and vegetables in Ho Chi Minh City; retailer Satra; Mobifone, the second largest of Vietnam's three mobile operators; leading brewer Sabeco; and the country's number two electricity generator, PV Power.
Many of these will involve some form of initial public offering. "But the key driver is not raising money," says Mr Scrivener. "It's changing the way businesses are run, by bringing in local people and strategic investors."