In an exclusive interview with Tuoi Tre (Youth) newspaper, Berggruen emphasized that Vietnam needs to develop a unique fund model tailored to its culture, economy, and governance system to keep pace with its rapid development.

According to the American billionaire, having an investment fund helps secure capital for improving infrastructure, among other development purposes, and reduces the wealth gap.

Berggruen cited two successful investment fund models as references. The first is Singapore's sovereign wealth funds, which have significantly contributed to the nation’s prosperity.

These funds are professionally and independently managed, investing wherever they see potential -- whether in Singapore itself, including infrastructure, or in opportunities abroad, he said.

The goal is to grow the fund value, providing financial resources for the national budget.

Currently, the sovereign wealth fund is Singapore's largest budget contributor, allowing the government to maintain low tax rates.

As a result, Singaporeans enjoy high-quality public services, including education, healthcare, security, and housing, while facing lower tax burdens than many other nations.

The second example is Australia’s superannuation fund, a savings plan introduced 20 years ago by former Australian Prime Minister Paul Keating. It has been fundamental in transforming Australia’s economy and society.

Designed to ensure financial security for all citizens, the fund helped improve living standards and reduce income inequality. It is set up to begin with every Australian entering the workforce.

As per the Australian government, "the super begins when you start working, and your employer begins to pay a percentage of your salary or wages into your super fund. Your employer pays your super on top of your wages."

Over the years, through the power of compound interest and strategic investments, including infrastructure projects both domestically and internationally, the fund has grown substantially.

Initially, the contribution per Australian employee was three percent of their salary, and over time, it has increased to 12 percent.

Despite relatively small contributions, the accumulated value of the fund is remarkable.

The total assets of these funds now surpass Australia’s GDP, making the country one of the wealthiest in terms of median assets per capita, even surpassing the United States.

The core of this model is the principle of ‘pre-distribution’ instead of redistribution, meaning that savings contributions are tax-exempt as long as they are only withdrawn upon retirement.

This system enables citizens to actively participate in economic growth while reducing inequality.

After three decades, the fund has created immense value, providing substantial financial security for Australian households.

Berggruen suggested that Vietnam develop a customized model suited to its economic and governance structures.

He said the fund could be called ‘Vietnam Rise,’ ‘Rise Vietnam Fund’ or ‘Prosper Vietnam Fund.’

He thought of establishing a professionally managed sovereign wealth fund that invests in high-yield sectors, including infrastructure, domestically and internationally.

He also proposed that Vietnam require newly established local businesses to allocate 10-20 percent of their equity to the sovereign wealth fund.

In exchange, these businesses could receive tax incentives.

Alternatively, he suggested Vietnam implement a savings program similar to Australia’s but adapted to suit the country’s informal economy.

Australia’s wealth stems from its savings plans. Its superannuation funds are the savings plans that invest in stocks and economic growth, accelerating economic expansion. Singapore has done the same.

Vietnamese people have a strong culture of saving, which means substantial capital could be channeled into the economy through these savings plans or sovereign wealth funds, Berggruen explained.

To implement an effective investment fund model, Berggruen emphasized the need for Vietnam to conduct thorough research and leverage domestic and international financial experts.

A crucial factor for success is ensuring public trust and consensus through clear and transparent communication about the fund's operations and benefits.

Additionally, technology, such as digital identity systems, could enhance transparency and accuracy in fund allocation, ensuring that all citizens can monitor and benefit from the national investment fund.

Like other countries in the region, Vietnam’s government and private sector must collaborate closely to establish a successful investment fund. The most effective sovereign wealth funds worldwide thrive due to strong public-private partnerships.

When asked about challenges Vietnam may face when it starts a new investment fund, Berggruen said: “Well, anything ambitious and new is a challenge. I would say that the first thing is to design the right model for Vietnam, a creative, intellectual challenge.

“Then the country has to make sure the personnel who genuinely want to work for the collective good and the united prosperity of the Vietnamese people are on this project.

“During implementation, mistakes may arise, but we must be ready to adjust and not give up. There will always be challenges, but if you don’t try, you will not have a chance.

“You can create the Vietnam model of universal basic capital, the Vietnam model of pre-distribution, which would economically empower everyone and make everyone a participant in the economy."

Source: Tuoitre News