Van Cuong Construction Company, a private business well known as a contractor of large transport infrastructure projects, took over Vivasco, a marine shipping firm, and through the firm, acquired a 65 percent stake in Vietnam Feature Film (VFS). 

Investors could not understand why a construction firm would invest in two enterprises which have no relation to Van Cuong’s core business field. 

A senior executive at a Vietnamese auditing firm said foreign investors are often concerned about investing in local firms because Vietnamese businesses pour money into many business fields.

“A Vietnamese mechanical engineering company buys a stake in real estate firms and retail banks. This makes it difficult for investors to assess the potential of the company,” he explained.

Nguyen Van Ngai from the HCMC Agriculture and Forestry University commented that Vietnamese businesses prove to be ‘nimble-witted’ and jump into any business field they believe can bring high profits.

Vietnamese investors like injecting money into many different business fields to optimize their profits, but investments based primarily on “feelings” have led to hundreds of suspended projects.

Some years ago, Vietnam witnessed enterprises rushing to pour money into banks and real estate firms. The investment movement kicked off after the enterprises heard that banks and real estate firms made fat profits. 

Ngai said that such amateur investment poses high risks to investors. “When you make investment in business fields which you don’t have deep knowledge about, you will fail,” he said.

Not only small private companies, which have modest capital and mostly target short-term investments, but also large state-owned enterprises made investments in non-core business fields.

The situation was so serious that the government requested state-owned conglomerates to divest from non-core business fields as soon as possible.

Dang Dinh Dao, former head of the Institute for Economics and Development Studies, said there are many reasons for enterprises to invest in various business fields.

The most important reason is that Vietnamese enterprises don’t have long-term vision. They just want to invest in the business fields with hot growth to get profit after a short time. 

If the business fields cannot bring profit, they withdraw capital and jump into other business fields.

Nguyen Van Nam, former head of the Trade Institute, doesn’t think it is a problem.

“In a market economy, investors have the right to pour money into the fields they want. If they take a loss, the capital in society won’t be lost. The failure of some businesses could be opportunities for others,” he said.

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