SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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(Name of Registrant as Specified in Its Charter)
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
(Name of Person(s) Filing Proxy Statement)
TEMPLETON VIETNAM OPPORTUNITIES FUND, INC.
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1. WHEN YOU LAUNCHED THE FUND, YOU OBVIOUSLY HAD HOPES THAT THE VIETNAMESE
GOVERNMENT WOULD OPEN A STOCK MARKET. THAT HASN'T HAPPENED. TO WHAT DO
YOU ATTRIBUTE THE DELAY, AND DO YOU SEE ANY PROSPECT OF AN EQUITY
MARKET OPENING ANYTIME SOON? SOME THINK THIS MAY NOT HAPPEN FOR ANOTHER
FOUR YEARS, IF THEN. DO YOU AGREE? AND I'D LIKE TO HEAR YOUR THOUGHTS
ON THE VIETNAMESE ECONOMY.
When we launched the Fund, we did rely on Vietnamese government
official statements saying that they had plans to open a stock market
by 1996. We attribute the delay to changes in government plans
regarding how they want to develop their capital market. As indicated
in the proxy statement, we believe that "a variety of publicly traded
securities of Vietnam companies will not be available to the Fund for
some time to come." Regarding the Vietnamese economy, it is humming
along and there is a substantial amount of investment being made in the
country. However, they have a long way to catch up with some of their
neighboring countries.
2. ONE OF MY COLLEAGUES RECALLS YOU BEING QUOTED IN THE EARLY 1990'S AS
EXPRESSING SKEPTICISM ABOUT THE WHOLE IDEA OF THE VIETNAMESE
SANCTIONING A STOCK MARKET. IS HIS RECOLLECTION ACCURATE?
He could have been accurate in his recollection. I don't remember. In
the early 1990's, it certainly seemed a long way off.
3. YOU NOW WANT TO CHANGE THE CHARACTER OF THE FUND QUITE DRAMATICALLY,
LETTING IT INVEST DIRECTLY AND LEND TO VIETNAMESE COMPANIES, AS WELL AS
BECOME INVOLVED IN THE LOCAL REAL ESTATE MARKET. DO YOU THINK
SHAREHOLDERS AND THE SEC WILL GO ALONG WITH YOUR WISHES?
We think that shareholders in the Fund have a long term belief in the
viability of Vietnamese investments and we have explained our thinking
on this in the proxy statement. Our Fund is unlike any other Vietnamese
fund since it is SEC registered and listed on the New York Stock
Exchange. The shareholders are well aware of what has happened in
Vietnam and they (not the SEC) must approve the proposals.
4. WHAT KIND OF OPPORTUNITIES DO YOU SEE IN DIRECT INVESTING, LENDING AND
REAL ESTATE? OTHER FUNDS, INCLUDING BETA VIETNAM, TO NAME ONE, HAVE HAD
DIFFICULTY INVESTING THEIR ASSETS IN THE OUNTRY. GIVEN YOUR
WELL-EARNED REPUTATION FOR INSISTENCE ON OPEN ACCOUNTING AND
SHAREHOLDER PROTECTION, WHY DO YOU THINK YOU CAN FIND ENOUGH
INVESTMENTS THAT WILL SATISFY YOUR HIGH STANDARDS?
It is not going to be easy but these changes will significantly improve
the Fund's chances of more promptly getting invested. We are only
interested in co-investing with reputable partners who are willing to
put up a substantial portion of the investment themselves. You are
absolutely right that our insistence on open accounting and shareholder
protection means that the going is rough. No one knows for sure that
the job can be done in the deadline facing us in 1997 but we are
certainly going to try very hard to meet it while not compromising
quality.
5. COMPANIES IN INDIA HAVE GONE TO THE GDR MARKET TO WOO FOREIGN
INVESTORS. DO YOU SEE THE SAME OR SIMILAR HAPPENING IN VIETNAM? ALREADY
ONE AUSTRALIAN-OWNED VIETNAMESE MINING CONCERN HAS LISTED SHARES IN
TORONTO AND AN AIR CONDITIONING MAKER IN HO CHI MINH CITY HAS ISSUED
CONVERTIBLE DEBT. ARE MORE OF SUCH DEALS LIKELY, AND WILL THEY PROVIDE
OPPORTUNITIES FOR THE FUND?
I don't see Vietnamese related companies going to the GDR market
because that market normally requires a domestic stock market listing
and the GDR is a proxy for the domestic listing. However, we do see a
number of Vietnamese related companies listing on stock markets all
over the world including Canada and Australia where the listing rules
allow listings of companies without a long track record. We, however,
will not compromise our investment discipline simply because there is a
Vietnamese company listing. We have not invested in the Canadian
company you mentioned and will not invest in the convertible debt you
referred to because we feel that they do not currently offer the
returns commensurate with the risks.
6. ASSUMING SHAREHOLDERS AND THE SEC APPROVE OF YOUR PROPOSED CHANGES,
ARE YOU PREPARED TO INVEST IN JOINT VENTURES IN VIETNAM?
Yes, we will invest in joint ventures.
7. HOW WILL THE PROPOSED CHANGES AFFECT THE RISK PROFILE OF THE FUND? ONE
COULD ARGUE THAT IT WOULD COME TO RESEMBLE MORE A VENTURE-CAPITAL
OUTFIT THAN A TRADITIONAL CLOSED-END FUND. WHAT KIND OF EXPERIENCE DO
YOU HAVE IN THIS KIND OF DIRECT INVESTING? WILL YOU HAVE TO BEEF UP
YOUR STAFF?
On the question of risk, as the prospectus made clear and I know you
appreciate, all investments in Vietnam companies involve a high degree
of risk and are speculative in nature. Starting from this premise, if
you refer to risk as commonly understood, I would say that since we
will evaluate the investments in the same way as we would listed
investments, similar risk factors would apply. There are also specific
risks associated with direct equity investments, which are discussed in
the Fund's prospectus, and risks associated with lending and with real
estate investments, which are discussed in the proxy statement. Would
it come to resemble a venture capital fund? No, it would not since we
would not be investing in venture-capital projects. The criteria we
apply before considering a project include :
(1) an experienced operator/manager firm with a proven track
record
(2) a clearly defined and scheduled exit mechanism
(3) full government licensing in place.
Regarding the experience we have had, we have now been in Vietnam for
about two years with a team working very hard on these projects and we
have already beefed up our staff to handle this work.
8. THE FUND IS NOW TRADING AT AROUND 18% BELOW NAV. SOME MONEY MANAGERS
ARE BETTING THAT EVEN IF THE PROPOSED CHANGES GO THROUGH, YOU WILL
STILL BE UNABLE TO HAVE 65% OF THE FUND INVESTED IN "VIETNAM
COMPANIES", AS DEFINED IN THE PROSPECTUS, BY OCTOBER 1, 1997. IN THAT
CASE, WOULD YOU BE OBLIGED TO LIQUIDATE THE FUND? OR WOULD YOU TRY TO
CHANGE IT INTO A TRADITIONAL ASIA FUND?
It remains to be seen if we will be able to get 65% invested by October
1, 1997 after the changes go through. As I stated, we will certainly
try. If we are not successful in getting the Fund 65% invested then the
directors and shareholders will decide which alternative will be
followed. As the prospectus indicates, if by October 1, 1997 at least
65% of the value of the Fund's total assets are not invested in
securities of Vietnam companies, management of the Fund will call a
shareholder's meeting to vote on a proposal either to modify the Fund's
investment policies or to liquidate the Fund's assets. I cannot predict
now what our recommendation will be.
9. FINALLY, WHAT HAS THIS EXPERIENCE TAUGHT YOU ABOUT THE CHANGING WAYS OF
EMERGING MARKET INVESTING? IF ANYONE HAS SEEN IT ALL, YOU ARE PROBABLY
THE ONE. BUT HERE IS ONE AVENUE THAT HASN'T OPENED UP THE WAY YOU
EXPECTED. IN HINDSIGHT, WHAT WOULD YOU HAVE DONE DIFFERENTLY?
Vietnam has borne out our experience that emerging markets do not all
behave in the same way and according to any predictable schedule. We
knew from the beginning that there was no stock market in Vietnam and
two years ago we expected one to be set up sooner than now appears
likely. Things have not developed as quickly as we had anticipated.
With time and patience I continue to be hopeful that they will.
