From the workshop to a high-tech hub
Vietnam continues its reform course Doi Moi with determination and offers equity investors a broad universe of high-return companies. A conversation with Mario Timpanaro, fund manager of the Lumen Vietnam Fund at Aquis, about the country’s progress, potential risks, and Vietnam’s upgrade to an emerging market.
Mr. Timpanaro, Vietnam is considered a country on the rise. What is happening specifically?
Mario Timpanaro: We are currently experiencing the next stage of Doi Moi – a paradigm shift. In 1986, the focus was on opening up to entrepreneurship. Today, the focus is on efficiency and productivity. Three things are central: First, industry is increasingly relocating to Vietnam. In northern Vietnam around Hải Phòng and in the south around Ho Chi Minh City, new clusters for electronics and component manufacturing are emerging. Second, the government is accelerating major projects in infrastructure, ports, and energy supply. This lowers costs and boosts competitiveness. Third, domestic consumption is growing at double-digit rates. Modern retail, e-commerce, and tourism are developing an entirely new dynamic.
Which sectors are driving the economy?
Timpanaro: Vietnam has long since diversified beyond the classic “textile-shoe path.” Today, electronics and high-tech account for a growing share – now over a quarter of GDP. In addition, banks, insurance, logistics, infrastructure, IT services, and fintech are contributing. Textiles remain important for employment, but the direction is clear: more value creation, less dependence on low labor costs.
What makes Vietnam attractive for investors?
Timpanaro: For the Lumen Vietnam Fund, we look at three factors: structural growth, reform dynamics, and geopolitical relevance. The country has a young, well-educated population, benefits from the “China-Plus-One” trend, and remains fiscally disciplined. Government debt stands at 35 percent of GDP, a low level compared to global debt dynamics. For investors, this means: Vietnam is no longer just a frontier market but an emerging market with a broad, investable universe of listed companies, high returns on capital, and improved governance.
Where are the risks?
Timpanaro: Challenges lie in implementation and energy supply. Reforms must continue consistently, and electricity supply must keep pace with growth. Externally, weak demand and tariffs are a burden. The interconnection between real estate and banks also remains a potential risk factor. For investors, this means: balance sheet quality, cash flows, and transparency are decisive. At Lumen Vietnam, we have a competent, experienced, and local analyst team that monitors companies closely on the ground. This gives us a clear advantage in a still inefficient market.
Vietnam has not been spared from Trump’s tariffs. Curse or blessing?
Timpanaro: In the short term, tariffs are a margin headwind in tariff-sensitive segments. Compared with some regional competitors, however, Vietnam is in a better position. The agreed tariff rate of 20 percent is manageable. Companies can better enforce their prices through diversified supply chains, higher quality, and more reliable delivery times. Overall, tariff policy has accelerated the diversification of production to Vietnam and, in the medium to long term, is more of a catalyst than a brake, despite short-term volatility.
In September, FTSE Russell may upgrade Vietnam to “emerging market.” What would that mean?
Timpanaro: One must not compare the dimension with an MSCI inclusion. The capital inflows will be modest. But the symbolic power is significant. It is a clear signal that Vietnam can no longer be ignored by international investors. Passive money will flow in, but more interesting is that active managers will have Vietnam more firmly on their radar. What remains decisive is that the fundamental story holds – and it does: growth, reforms, demographics, and a growing number of investable companies. The fact that our Lumen Vietnam Fund has risen significantly more this year than most other emerging markets, which are also in a bull market, underlines this dynamic impressively.
Source: https://www.private-banking-magazin.de/von-der-werkbank-zum-hightech-standort/