Hello everyone. Thank you for joining me. Today I'm very lucky, I have Andreas Vogel Sanger who runs a Vietnam dedicated fund. I’ve been following some of his writings and a little while ago, he compared it to Amazon.com and so Vietnam is the amazon.com of Asia. And I thought that was very interesting and he made some very valid points. So instead of me explaining what he said to you, I’m very lucky to have Andreas explaining his topic of Vietnam. Hello Andrea's and can you please tell us a little bit about yourself and why you think Vietnam is the amazon.com of Asia.
Hi, Malika. Thank you very much for having me on today in one of your podcasts. Well, my name is Andreas Vogel Sanger. I'm from Switzerland. I started my career in the eighties working for various hedge funds, investment banks, and private banks. And eventually I chosen the entrepreneurial route and I started together as two other partners, the AFC Vietnam fund. That was back in December, 2013, and we were all very excited about Vietnam at the time, and they actually still are. As you mentioned in one of our reasons reports, we compared Vietnam to amazon.com - it's certainly amazon.com is one of everybody Starling in the portfolios, in the Stockport portfolios, over many, many clients given its phenomenal performance over the last few years. But there was almost no way around that then having, having that included in your portfolios. And we wanted to make that comparison with Vietnam, that Vietnam slowly but surely is appearing on the radar of many, many investors, but also manufacturers. So Vietnam is uniquely positioned or what is manufacturing shift, which is happening.
So there are several reasons. So one of them, why Vietnam is so attractive is in these manufacturing shift is labor costs and education, but also all these free trade agreements with Vietnam, basically successfully negotiated. And of course it's a young population, 50% of the whole population, which is around a hundred million people is below 30 years old.
So, yes. I said the let's start with this example, affordable labor force. The salaries are still far below China, and that's obviously why a lot of Chinese manufacturers are looking for alternatives. Given that the salaries went up quite a significantly over the last few years in Vietnam, definitely fixed the box when they’re looking at the cheapest places to manufacturer. But also education - what we always see them do is every four years of study by the look at education around the globe, they look at 15 year olds has STEM in reading the science and mathematics and Vietnam actually, the forums or the overall score is on the same level as Switzerland or Australia.
So it's very much in on the level of the Western economies where there's a high GDP per capita and where they spend a lot of money on education. Vietnam on the other hand is one of these outliers. I mean, they are on the same level in terms of education, but their GDP per capita is significantly lower. It's around 1,500 US dollars. So, pretty low in comparison to countries like Singapore or something. But also I mentioned free trade agreements. Free trade agreements it is something which Vietnam did an outstanding job. They are part of all these major free trade agreements. One of them is the RCEP, which just was recently signed and RCEP is the regional, comprehensive economic partnership agreement, which basically combines certain percent of world manufacturers, so many countries, but the really quite powerful. They're also part of ASEAN, which is an important area, but then they negotiated agreements just also recently with the UK. That has just been signed. They are also they also successfully negotiated the free trade agreement base Europe.
So, especially if you look at Europe, it’s a very important free trade agreement and, has also certain responsibilities if you look at it more closer, because the first one of the first time such a free trade agreement also had some ESG criteria built in some probations in terms of it can environmental, social, and economic probations. So all combining around property protection rights, labor rights, sustainable development and, that really forces Vietnam to increase their, level of how they produce their goods in order to export to countries, like, for example, within Europe. Many of these products have to have a so-called CE Mark and the CE Mark basically confirms that these products fulfil certain wave requirements relevant to your European directives, such as for example, how harmonize performance and safety standards. But also, for example, wood furnitures, they often need to have an FSC certification, which ensures that the wood products came from responsibly managed forest and provide environmental and social economic benefits.
So Vietnam definitely will accelerate in terms of ESG criteria massively, but there's still a lot to do. But Vietnam is ready to adapt to these new standards. But we are obviously a fund which invests in financial markets, so we do invest in listed equities in Vietnam, and they are still very, fairly valued or inexpensive actually, especially if you compare that to the region. So the BNI is the main index in Vietnam, it's the Vietnam index. It trades at the P of around 17.6 times, and if a compared at the Singapore around 21 times, Malaysia 23, Thailand almost 25, and then we have Philippines and Indonesia, which are trading around 28 times. So Vietnam is still fairly inexpensive is 17 and a half times. And if you look at the segment where we mainly invest in, which is a small and mid cap segment, And they are where we find the piece around 13 time. Our portfolio which we put together as an average of around 8.6 times, and that looks fairly attractive and we are fairly comfortable with we stack compensation or that portfolio. So we really think Vietnam will have a long way to go. It's it's still a smaller economy. If you look at the overall market cap, for example, it's around 250 to 300 million versus Thailand, which is already at six, 700 million. So it's still a small, but growing very, very rapidly.
So I would say yes, as a country, as an economy. It's it's now finally coming up in social media, in depressed people write about it. It gains an importance. Especially as I said, because it's it's successfully negotiated these various free trade agreements. The labor costs are still attractive. Valuations on the stock market are still inexpensive and the population of a hundred million is well educated way above the average education if you look around the region.
Thank you so much, Andreas. That was very, very enlightening. And I think it'll persuade a lot of people to look towards Vietnam. Thank you for joining me.
Thank you very much for having me today.