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COUNTRIES & COMPETITORS
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6 main steps on how you can identify Vietnam as the best country for your investments right now
Our task is to find possible fintech opportunities in any Asian country. Based on personal preferences, I would like to consider only emerging markets with a large population, public companies, and an existing stock exchange. The last ones indicate that some kinds of financial institutions in the country exist and can be used as the basis for my future fintech idea. Also, I would like to exclude China as a very specific, extremely competitive, and complex market in all possible ways for foreign players.
- Nominal GDP
Let's take the biggest Asian countries by population and look at their nominal GDP in US$. GDP doesn't mean that one country is better than others in terms of financial opportunities or profits, however we may start from this metric as one of the most comprehensive one and find out that India has been the largest economy among others in this research since the last century (which is not a surprise), and Vietnam has shown really impressive growth for the last decade
2. Growth Rate of GDP
Since we take GDP as the most general metric for evaluating the countries, let's look from the growth rate perspective to find out that all countries have been experiencing volatility in their economy (especially, during COVID-19), however one of them was the most stable — Vietnam. Vietnam showed +2.87% GDP Growth Rate even in 2020 when all countries experienced negative gross domestic product due to the pandemic
3. Market Capitalisation of listed domestic companies
I would like to consider this metric to shift our focus from the global economy to the growth of domestic companies in each country that we use in our research. As far as we can see, India is still a leader in terms of the market capitalization of all listed domestic companies they have (which is also not a surprise), however I would like to pay attention one more time to Vietnam and the growth that the companies have been demonstrating for the last 15 years there
As far as you can see, I have two favourites from the first 3 paragraphs — India & Vietnam. India — because of the largest GDP in the region. Vietnam — because of the significant growth even in 2020. For reasons of clarity, I suggest Indonesia to stay in our further analysis as the second biggest economy in our research.
4. Fintech — highly competitive industry in India
India, Indonesia & Vietnam — all of them are fast-growing markets in terms of a lot of spheres, however India stands out when we're talking about the fintech industry. There are plenty of startups there, and at least 14 of them are unicorns, according to The Centre for Finance, Technology & Entrepreneurship. You can choose any financial sphere and you'll likely find a proper Indian product for your needs. Unlike a lot of startups in Indonesia that won't be translated to English and will be aimed only at domestic users, Indian startups can be easily used by both Indians and foreigners who are interested in investing in this fast-growing market
5. Inflexible legislation in Indonesia for foreigners
We need to take into account low financial literacy and the number of solvent population which is pretty low in Indonesia and Vietnam. That's why when we choose which market we would like to test for our idea, we need to check if foreigners can easily use different financial tools in each market. According to the Indonesia Investments organization, for an individual (as opposed to corporate) foreign investor who does not have a KITAS and Indonesian tax number (NPWP) it is very difficult, perhaps even impossible, to open a securities account in Indonesia. It brings additional difficulties for people when they decide if they would like to invest their funds in this market or not
6. Vietnamese stocks — hidden jam for foreign long-term investments
We can see that the Vietnamese GDP shows extraordinary stability compared to all markets in the region. Moreover, the market capitalization of domestic companies has shown significant growth for the last 15 years, and at the moment of this research, there are no prerequisites that the investment climate may change. According to a recent article in Bloomberg, JPMorgan Chase & Co. and HSBC Holdings Plc are among the banks expecting Vietnam’s $269 billion stock market to win an upgrade from FTSE Russell later this year, with the nation targeting inclusion by 2025. The securities regulator is pushing hard to fulfill the criteria, according to Chairwoman Vu Thi Chan Phuong. Moreover, if you Google investments in the Vietnamese stock market, you get a lot of ads from global brokers that may not suggest the Vietnamese stocks, and you won't see any local application that you used to see as an individual investor in other countries
IDEA
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Discover the Hidden Gems of Vietnam's Stock Market — Your Gateway to Wealth
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FINANCE
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The long way of making the fintech startup profitable
As it was mentioned in the Countries & Competitors section, we need to take into account low financial literacy and the number of solvent population which is pretty low in Vietnam (according to different sources, it's around 10% in the big cities), that's why during the first year we'll test the subscription model. From our side, we don't need to charge people for all the transactions they make through the app, however each month we need to ask for a small fee to maintain and develop the system. It helps us to keep all possible fees absolutely clear for new users and highlight this fact in our marketing campaigns to attract more subscribers to our app, especially among low financial literacy population
More details regarding our growth during the first year after the launch can be found here:
As far as you can see, we charge different fees from Vietnamese people and from foreigners who may be interested in Asian stocks. Let's find out which foreign countries may be included in our marketing campaigns related to foreign subscribers on the example of searches for the most popular Vietnamese bank + the word "stock"
We are going to target people from Canada, USA and Australia for attracting foreign customers
As you can see, in our Profit and Loss Forecast, we need to gain certain amount of subscribers to reach the operational profit in 2030:
If you look closely at our Profit and Loss Forecast, you'll see that the marketing budget hasn't been properly indicated there.
Overall, according to our estimations, we should burn at least -$2,618,680.97 to get any positive net income in 2030, however it's pretty obvious that the expenses will be much higher due to the necessary collaboration with the government structures, with the Ho Chi Minh Exchange & with the local banks who should provide us with the primary access to the equities.
In addition, we understand that we suggest the product which sounds very unfamiliar to the potential Vietnamese users and very risky to the foreign clients. We'll have to spend a huge amount of money to persuade them otherwise, that's why we can forecast that at least additional $2,500,000 will be spent on the marketing activities.
That's why we expect that the real costs can range up to $5,000,000 to achieve any operating profit margin in 2030 due to the reasons above, so it'll be at least x2 higher then the expenses in our original P&L model.
Another $5,000,000 we would like to keep as an additional safety cushion for unexpected expenses (e.g. from the government structures), for possible expansions to another countries, or for R&D and developing new financial products.
Overall, according to our estimations, we should burn at least -$2,618,680.97 to get any positive net income in 2030, however it's pretty obvious that the expenses will be much higher due to the necessary collaboration with the government structures, with the Ho Chi Minh Exchange & with the local banks who should provide us with the primary access to the equities.
In addition, we understand that we suggest the product which sounds very unfamiliar to the potential Vietnamese users and very risky to the foreign clients. We'll have to spend a huge amount of money to persuade them otherwise, that's why we can forecast that at least additional $2,500,000 will be spent on the marketing activities.
That's why we expect that the real costs can range up to $5,000,000 to achieve any operating profit margin in 2030 due to the reasons above, so it'll be at least x2 higher then the expenses in our original P&L model.
Another $5,000,000 we would like to keep as an additional safety cushion for unexpected expenses (e.g. from the government structures), for possible expansions to another countries, or for R&D and developing new financial products.
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