In October, state-owned asset management company Vietnam Asset Management Company (VAMC) announced it would be acquiring $118 million of bad debt from Vietnam Bank for Agriculture & Rural Development, the country's largest lender by assets.
Agribank had a bad-debt ratio of 6.1 percent as of June 2012, according to the State Bank of Vietnam - the country's central bank. Lenders with bad debt ratios of 3 percent or more will be required to sell non-performing loans to VAMC, according to a government statement in May.
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Andreas Karall, chief investment officer of Asia Frontier Capital (Vietnam) - an investment management firm that runs a fund focusing on small to medium high growth companies in Vietnam - says he sees "enormous upside potential" in the new business cycle that has started in the country and is expected to last up to seven years.
In addition, he notes that the market offers attractive value with around one third of the over 700 listed Vietnamese stocks trading at a price to earnings ratio of between 6 and 7.
"Many of them have a dividend yield of more than 9 percent, and there are even some companies whose net cash position is almost as high as their market [capitalization]," Karall said in a press release announcing the launch of AFC Vietnam Fund earlier this month.
—By CNBC's Ansuya Harjani; Follow her on Twitter: