TECONOMIC Vietnam’s development now has a permanent monument in one of the world’s most prestigious learning locations. After a $ 207 million investment announced earlier this month by Sovico, a Vietnamese holding company, Oxford University’s Linacre College (for graduate students) is set to be renamed in honor of Nguyen Thi Phuong Thao, its president.
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Thao College is the marker of an important change. As recently as 2012, Vietnam was a land without dollar billionaires. Today, six have joined the club, according to Forbes, a magazine. A rising stock market means the list is likely to grow. While American and Chinese billionaires are in the crosshairs of their respective governments, wealthy Vietnamese entrepreneurs are the beneficiaries of the authorities’ ambition to foster internationally competitive national champions.
Topping the list is Pham Nhat Vuong, founder of Vingroup, a sprawling conglomerate – and the first to enter the billionaire club, in 2013. It’s hard to find parts of the domestic service industry that Vingroup doesn’t have. affected, from tourism to hospitals, from pharmacies to education to car construction. It competes with Vinhomes, the real estate arm it established in 2018, as Vietnam’s largest private company by market capitalization. Each is worth a little over $ 15 billion, a scale that could admit an American company to the S&P index 500.
Mr. Vuong has since been joined by other tycoons, including Ms. Thao. Masan Group, a consumer-focused conglomerate, and Techcombank, one of the country’s largest lenders, have a close bond thanks to their founders, Nguyen Dang Quang and Ho Hung Anh. All four share a curious start in their entrepreneurial history: they originally started business ventures in the former Soviet Union.
The Soviet bond is a function of the modern economic and political history of Vietnam. In 1985, Vietnam had a GDP per person about $ 500 in today’s dollars, one of the lowest in the world at the time. Until the collapse of the Soviet bloc, brilliant and politically connected students in Vietnam had the opportunity to study in Russia and its various satellites; in 1980 about 3,000 did so, along with young people from other places ruled by the communists.
Those who found themselves in the region in the late 80s and early 90s discovered more profit opportunities than in Vietnam. Mr Vuong launched an instant noodle brand, Mivina, which has become a staple in Ukraine. Ms Thao earned her first million dollars at Moscow University, importing office equipment and consumer goods from East Asia.
Later, as Vietnam’s development continued, they were among the few citizens outside the country with starting fortunes to invest in their country. The government has hailed the return of this so-called “patriotic capital,” according to Bill Hayton, author of a book on the country’s rapid growth. “They were getting bigger when the party state needed it, so it became a kind of symbiotic relationship,” he says.
In recent years, the state’s relations with the tycoons have grown even stronger. Prime Minister Nguyen Xuan Phuc recently spoke about Vietnam’s need to produce internationally competitive trading giants to continue its rapid growth. This friendly attitude can translate into easy driving; such unofficial government assistance is particularly useful in securing user rights to prime plots of land, which, like in mainland China and Hong Kong, technically 100% state-owned. While most billionaire-run businesses cater to the Vietnamese middle class, much of their wealth comes from real estate and banking, according to research by Nguyen Xuan Thanh of Vietnam’s Fulbright University. Finance and property are typical fields of oligarchs across the world: operating in a one-party state in such industries requires permissions, licenses, and close political connections.
While useful in itself, diversification beyond areas that benefit from political patronage can serve as a signal to sponsors that they are supporting exciting entrepreneurs. Foreign investment brings an additional burst of credibility. This month SK Group, one of South Korea’s largest conglomerates, announced a $ 340 million investment in the consumer arm of Masan Group. This follows a $ 400 million investment from Alibaba, a Chinese e-commerce giant, earlier this year. SK The Group also owns 6% of Vingroup.
Former oligarchs who stuck to the old-fashioned banking and real estate playbook haven’t always felt the warm glow of state support. Nguyen Duc Kien, founder of Asia Commercial Bank, and Ha Van Tham, president of OceanBank, were sentenced to heavy prison terms for corruption in 2014 and 2017 respectively. Mr Tham’s deputy was sentenced to death at the same time. As the experience of many oligarchs in Vietnam and around the world shows, being on the right government books can be a huge benefit, but it also comes with risks. For the current harvest, their reputation as valuable entrepreneurs and innovators will be key to staying in the good graces of the state.■
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This article appeared in the Affairs section of the print edition under the headline “Return from the USSR”