Creating 'leverage' for Vietnamese technology enterprises to break through

Seminar "Creating capital market leverage for Vietnamese technology companies to break through in the digital age" - Photo: VGP/HT

This was the content discussed at the Seminar "Creating capital market leverage for Vietnamese technology companies to break through in the digital age" organized by Nhan Dan Newspaper in collaboration with the Institute of Digital Economic Development Strategy (IDS) on March 19 in Hanoi. The seminar brought together many experts and businesses to find practical solutions to analyze the role of the capital market in the development of Vietnamese technology companies.

Investment trends in technology enterprises

In the era of global digitalization, science, technology and innovation are not only the driving force but also the key for Vietnam to develop. Resolution No. 57-NQ/TW of the Politburo, issued on December 22, 2024, clearly affirmed: Science, technology, innovation and digital transformation are "top priority breakthroughs" in the country's new growth model.

However, to realize this goal, a strong financial system is needed, in which the capital market plays a central role - not only providing financial resources but also creating confidence for investors, helping to develop domestic private enterprises, developing an international financial center and contributing significantly to double-digit growth under the direction of the Party and State leaders.

Mr. Le Quoc Minh, Editor-in-Chief of Nhan Dan Newspaper, Chairman of Vietnam Journalists Association speaking at the seminar - Photo: VGP/HT

Mr. Le Quoc Minh, Editor-in-Chief of Nhan Dan Newspaper and Chairman of the Vietnam Journalists Association, said: "Developed countries have proven that a strong capital market is the key to promoting innovation and growth of technology enterprises."

Leading technology countries such as the United States, China and Singapore all have developed capital markets, allowing technology startups to raise capital from the public through initial public offerings (IPOs), thereby creating "unicorns" - companies valued at more than 1 billion USD. In Vietnam, although the startup ecosystem has developed strongly, the number of "unicorns" is still limited due to obstacles in support mechanisms, especially in clearing capital flows. As of the end of 2021, Vietnam had 4 recognized technology unicorns: VNG, MoMo, VNLife (VNPay) and Sky Mavis - making Vietnam the third largest in Southeast Asia, after Singapore and Indonesia.

To turn Vietnam into a center for digital technology industry development, with at least 5 digital technology enterprises reaching international stature by 2030 as set out in Resolution No. 57-NQ/TW, the discussion focused on raising issues arising from practice, thereby proposing specific solutions that can be implemented immediately.

Ms. Pham Thuy Chinh, Vice Chairwoman of the National Assembly's Economic and Financial Committee, speaks - Photo: VGP/HT

Ms. Pham Thuy Chinh, Vice Chairwoman of the National Assembly's Economic and Financial Committee, affirmed: Resolution No. 57-NQ/TW has clearly stated that institutions must go one step ahead, creating a foundation for innovation. The National Assembly will continue to perfect legal regulations to support technology enterprises in accessing the capital market. According to experts, in order for Vietnamese technology enterprises to make a breakthrough, there must be breakthrough policies in the capital market. Solutions such as easing IPO conditions, building a separate trading floor for technology enterprises and attracting talent will be important steps to help Vietnam become a center of innovation in the region.

According to Ms. Nguyen Ngoc Anh, General Director of SSI Asset Management: Vietnam has the potential to become a leading destination for foreign investment in technology. Compared to countries in the region such as Indonesia, Singapore, and Thailand, Vietnam has many competitive advantages in attracting investment. However, to surpass these countries, it is necessary to pay attention to the change in investment appetite of global funds in emerging markets. "

Foreign investors are interested in the Vietnamese technology market, but they have difficulty finding companies to invest in due to barriers to IPOs and divestment strategies. In fact, the listing conditions on the Vietnamese stock exchange require companies to have two consecutive years of profits, which has invisibly become a major barrier for technology startups.

"Investors are still concerned about risk factors such as IPO mechanisms and divestment strategies. They expect policies to create a more stable market, thereby helping them plan strategies and build more solid, long-term business models," said Ms. Nguyen Ngoc Anh.

Many challenges in capital mobilization need to be resolved

Mr. Il-Dong Kwon, Managing Director of Boston Consulting Group Vietnam, highly appreciated the Government's decisions in encouraging resources for innovation such as Decision No. 1236/QD-TTg of the Prime Minister: Promulgating the National Strategy on application and development of blockchain technology to 2025, with a vision to 2030... These are solid policy foundations to help Vietnam implement and move towards this important goal.

Furthermore, Vietnam has a great advantage with a young, tech-savvy population, talented engineering workforce and rapid digital transformation.

"Fields such as fintech, artificial intelligence, e-commerce and blockchain have great potential. However, access to capital and divestment mechanisms are not really favorable," said Mr. Il-Dong Kwon.

Next is the capital aspect, the number of transactions and the level of capitalization, investment activities. It is necessary to remove legal and institutional barriers to create conditions for the capital market to develop.

Mr. Il-Dong Kwon, Managing Director of Boston Consulting Group Vietnam, highly appreciated the Government's decisions in encouraging resources for innovation - Photo: VGP/HT

Mr. Il-Dong Kwon emphasized: Building trust is always very important, therefore, market manipulators need to be punished to demonstrate the seriousness of state agencies in protecting the market and building and maintaining trust.

Regarding human resources, in Vietnam there are many talented people with strong motivation and aspirations. The problem is to attract and retain these talents.

Sharing the same view, Dr. Tran Van, Director of the Institute for Digital Economic Development Strategy (IDS) analyzed: All forms of capital mobilization can only meet a certain stage when the scale of start-up enterprises is still modest. During the development process, start-ups all aim to mobilize capital from the public (IPO) and consider this a measure of success and a milestone marking the maturity of the start-up, becoming a complete enterprise that fully contributes to the country's socio-economic development.

This expert believes that Vietnam can learn from international markets. Accordingly, countries such as China, the US, and Singapore have established more flexible mechanisms to support technology startups in IPOs, helping them raise capital more effectively.

"It is necessary to allow technology enterprises to list without being bound by the condition of 'no accumulated loss', especially on exchanges such as HOSE, HNX or the International Finance Center," Dr. Tran Van proposed.

From the perspective of enterprises operating in the capital market, Ms. Nguyen Ngoc Anh, General Director of SSI Asset Management, said that enterprises receive many requests from foreign investors. They say that Vietnam has great potential in technology and want to invest in the technology industry. However, they do not have enterprises to invest in and also have problems in mobilizing capital sources for technology enterprises in Vietnam.

First, the characteristics of technology enterprises worldwide. In particular, in technology enterprises, they do not have assets or real estate. That leads to very difficult access to traditional loans. This is a huge barrier in accessing capital for technology enterprises.

Second, technology enterprises grow rapidly and have large capital needs, but introducing their own potential is a relatively abstract issue for technology enterprises, leading to a barrier that makes it difficult for them to access traditional capital sources.

Third, in the early stages, and even for startups in Vietnam today, they are still in a state of loss, despite very high valuations in terms of product value.

Returning to the story of IPO or listing, in recent years, only 16 enterprises have listed and registered to trade on the stock market.

Currently, there are 3 trading floors: Upcom, HoSE and HNX. For both HoSE and HNX, all have requirements related to profits, almost no technology companies can meet this requirement.

SSI representatives recommended that listing conditions should be flexible, allowing unprofitable technology companies to access capital more easily to promote growth.

Huy Thang

Source: https://baochinhphu.vn/tao-don-bay-de-dn-cong-nghe-viet-but-pha-102250319130756468.htm