Fund management firm Mekong Capital has released analysis on the investment environment of Vietnam towards 2015 that identifies opportunities in consumer goods manufacturing, retail and education.

The growing number of middle (231-690 USD) and upper income families would result in more consumer spending than GDP growth figures would indicate, according to Mekong Capital.

The firm says the rapid transformation of Vietnamese families into higher income classes will continue, and the urban upper class will increase from 7 percent of the urban population in 2010 to 12 percent by 2015. The middle class will go up from the current 52 percent to 69 percent in 2015.

As Vietnamese families move up the class structure, their spending patterns shift dramatically. This will fuel the growth in demand for consumer durables such as appliances, consumer electronics and home furnishings, which will offer chances for investments.

More retail sales will follow growing consumer demand, while organised retail chains (modern trade) will grow from 20 percent of the retail market in 2010 to around 31.2 percent by 2015.

Retail therefore will provide one of the fastest growing and most inherently scalable investment areas in this country.

Mekong Capital anticipates that the largest retail chains here will grow from around 125 outlets at present to around 500 outlets by 2015.

On education, it sees that Viet Nam will be at the forefront of the privatisation of education in Asia with total education spending burgeoning from 7.9 percent of GDP in 2010 to 12 percent in 2015, from 7.5 billion to 20.4 billion USD.

This growth will be driven by increasing market penetration of private language-training schools (mainly English language for school age children), and an increasing number of families that have the means to afford premium-quality private schools.

Meanwhile, the country has relatively liberal regulations on private investment in education, as well as foreign ownership of education companies, so there'll be opportunities to invest in an increasing number of private education service providers.

Consumer loans represented only 11.9 percent of 2009's GDP, much lower than 22.1 percent in China and 30.9 per cent in Thailand. Banks will increasingly attempt to increase their net interest margin by shifting their loan portfolio towards higher yielding consumer loans, especially mortgage lending.

Mortgage lending will drive growth in the housing market, benefiting housing development companies and township development companies.

Consumer finance businesses, such as vehicle finance or mortgage origination, will also flourish in this environment, and will be attractive acquisition targets for banks.

On electricity, the country has had barely sufficient investment in electricity generation due in part to a regulatory environment which has made it unattractive for private investors. As a result, demand sometimes exceeds supply, especially when the hydro-power plants are not operating regularly due to low water reservoir levels, leading to increasing blackouts.

The development of the power generation capacity will also require a concurrent expansion and modernization of the distribution system, which is generally outdated and inefficient.

On the equity market, the report said it was held down by a combination of high interest rate, foreign investor concerns over the risk of currency devaluation, relatively low liquidity and negative coverage in the international financial media./.