During his visit and work in Vietnam, American billionaire Nicolas Berggruen - Director of Berggruen Holdings Group, Chairman of Berggruen Institute - met with Prime Minister Pham Minh Chinh. He shared about the model of a fund for investment and development.
According to the American billionaire, having an investment fund helps to have capital to improve infrastructure and reduce the gap between rich and poor. In the photo: the construction site of a multi-level underpass at An Phu intersection, Thu Duc City, Ho Chi Minh City on the afternoon of February 9 - Photo: THANH HIEP
Sharing exclusively with Tuoi Tre about the proposal to establish a new investment fund, the American billionaire said that to meet the current growth rate, Vietnam needs to develop a separate fund model, suitable for its culture, economy and governance system.
Billionaire Nicolas Berggruen
Efficient Funds Help Maintain Low Taxes
* Specifically, what does the development investment fund model that you proposed in your recent meeting with the Prime Minister look like?
Billionaire Nicolas Berggruen
- I will give two examples. First, as a relatively young country compared to Vietnam, Singapore has achieved success in just a few decades.
The highlight lies in building a sovereign wealth fund (SWF) - one of the key drivers of shared well-being and prosperity for Singaporeans.
These funds, professionally and independently managed, focus on investing in areas that offer optimal returns, from domestic infrastructure to international investment opportunities. The ultimate goal is to grow the fund's value, thereby providing resources to the national budget.
Currently, the sovereign wealth fund (SWF) is the largest contributor to Singapore's budget, helping the government maintain low taxes.
As a result, citizens enjoy high-quality public services, including education, health care, security and housing, while still bearing a lower tax burden than many other countries. This is a prime example of the effectiveness of using sovereign wealth funds to serve the common good.
Another model comes from Australia, where super savings funds (also known as superannuation funds) have transformed the socio-economic landscape over the past two decades.
This policy was initiated by former Prime Minister Paul Keating and was designed to provide financial security to all citizens. It has proven effective in helping people significantly improve their living standards and reduce inequality.
In Australia, the fund is built on the principle that each individual knows their savings and how to manage them.
Remarkably, in just 20 years, thanks to the power of compound interest and a sound investment strategy – including investments in infrastructure at home and abroad – the fund has grown so much that almost every Australian family now has a retirement savings account, helping to alleviate poverty in a sustainable way.
This success story started small: just 3% of the employee's salary, then gradually increased to 6%, 9% and now 12%. Although the contribution rate is not high, the accumulated value is amazing.
The total assets of these funds now exceed Australia's GDP, making it the country with the highest average wealth in the world, surpassing the US.
The key to this model is the principle of “pre-distribution”, rather than post-tax redistribution, which means that people’s contributions are tax-free, provided they can only be withdrawn at retirement age.
It helps people participate and benefit directly from economic growth, while reducing inequality from the start. Over the past 20 years, these funds have created significant value, helping the majority of Australian households build significant wealth.
Australia is not only a rich country, but also has an equitable distribution of wealth, thereby reducing inequality and ensuring that everyone has a stake in the economic future.
Having an effective fund will help maintain low tax rates. In the photo: people doing procedures at the Ho Chi Minh City Tax Department - Photo: TTD
Need to develop own model
* So what can Vietnam learn from these models?
- Vietnam needs to develop its own model, suitable to its culture, economy and governance system. For example, the national investment fund model, which means creating a professionally managed fund, investing in high-yield sectors, both domestic and foreign, including infrastructure.
Or we can also mobilize resources through personal savings funds. Introduce savings accounts for citizens, similar to Australia, but adapted to Vietnam's informal economy.
Another proposal that I think Vietnam can also consider is to require newly established enterprises in Vietnam to contribute a portion of their shares (10 - 20%) to the national investment fund.
In return, they can enjoy tax incentives that allow society as a whole to benefit from the success of large businesses, while not putting too much pressure on them.
Additionally, Vietnam could leverage digital technology to track and allocate individual ownership in large funds. With each citizen having a digital identity, they would know exactly what share they own in companies, roads, bridges, and other public assets.
* Do you have any advice for the Government to start such a new model?
- The government needs to research which model is suitable for Vietnam. As I said, they can look at other existing examples, so there is no need to innovate from scratch. The government also needs to take advantage of the team of domestic and foreign financial experts to build an effective fund management strategy.
One of the key factors for success is to ensure consensus and trust from the people through clear and transparent communication. In addition, the application of technology, such as building digital identity, will help allocate fund benefits accurately and transparently, ensuring that all citizens can track and benefit from the national investment fund.
Like a number of countries in the region, the Vietnamese government and the private sector need to work very closely together. The success of sovereign wealth funds is due to this cooperation.
Help entrepreneurs raise capital easily
Australia is rich because of its savings plans. Their pension funds are savings plans because they invest in stocks, in the growth of the economy. That helps the economy grow very fast and strong. Singapore is the same. The saving habits of Vietnamese people are good.
That means a lot of money is put into the economy through these savings schemes or through sovereign wealth funds, making it easier for entrepreneurs to raise capital, for companies, including state-owned companies, to raise capital, and for infrastructure projects to be built. Savings will boost the economy. That's what happened in Singapore and it's happening in Australia.
There are always challenges, but if you don't try, there will be no chance.
Anything new and ambitious has challenges. I think the first thing is to design the right model for Vietnam. It is a creative and intellectual challenge, but there are many talented people in Vietnam.
Make sure that the process finds people who truly want to work for the common good, for the prosperity of the Vietnamese people. There may be mistakes during the implementation process, be ready to adjust, do not give up. There are always challenges, but if we do not try, we will not have the opportunity.
I believe that the new fund is a novel idea but has been successful elsewhere. Vietnam can create its own model that fits its institutions such as universal basic capital, pre-distribution model, truly economic empowerment for everyone, making people participants in the economy.
Source: https://tuoitre.vn/ti-phu-my-de-xuat-quy-dau-tu-moi-o-viet-nam-20250209224153286.htm
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