Vietnam’s M&A market sees new chance in upcoming trade deals
Updated at Wednesday, 28 Nov 2018, 08:45
The Hanoitimes - Many foreign investors are showing increasing interest in Vietnam and want to enter the market through M&A.
Besides stable macro-economy, hastened administrative reforms and improved investment climate, new-generation free trade agreements on the horizon will be also a supportive factor, contributing to luring more foreign investors into Vietnam through merger and acquisition (M&A) in 2019, experts said.
According to Oliver Massmann, general director of Duane Morris Vietnam, many foreign investors are showing increasing interest in Vietnam and want to enter the market through M&A.
Deal between Sabeco and ThaiBev was the most typical in Vietnam’s M&A market
Vietnam’s rapid integration into the world economy is bringing new opportunities for the country’s M&A market, given by macro-economic recovery, policy reforms to broaden foreign investment and the conclusion of trade agreements negotiations, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), Massmann said.
According to Massmann, if foreign investors come to Vietnam to participate in production and business activities, they can have access to major markets, which are CPTPP and EVFTA member countries.
In the past few years, there have been many projects of foreign investors from the US, Japan and the EU that have been implemented in Vietnam in order to seize business opportunities from the deals, Massmann said, adding the trend will continue next year.
In addition, he said, revised laws, such as the Enterprise Law and the Investment Law, have also created a better and more conducive business environment for M&A activities in the country.
The forecast is also reinforced according to a survey of 1,189 business leaders across the 21 Asia-Pacific Economic Cooperation (APEC) economies released recently by PricewaterhouseCoopers. The survey found that the biggest foreign investment winners across APEC will be Vietnam, China, the US, Australia and Thailand, with Vietnam holding the top position for the second consecutive year.
Dinh Thi Quynh Van, General Director of PwC Vietnam, said: “With major trade deals like the CPTPP, EVFTA and ASEAN-Hong Kong FTA on the horizon, Vietnam has the potential to attract even more investment and generate new cross-border business opportunities.”
According to the survey, 51 percent of business leaders are planning to raise levels of investment over the next year, up from 43 percent two years ago.
More reforms proposed
According to the National Financial Supervisory Commission, foreign investment flows to Vietnam through M&A is a trend. The government’s finance watchdog explained that foreign investors prefer this investment form as it can help them rapidly step in the Vietnamese market to seize business opportunities. The advantage of this investment form is that investors do not have to apply and wait for investment licenses. In addition, they can start working immediately without having to spend time for learning and researching the market.
According to the latest report from the Vietnam Foreign Investment Agency under the Ministry of Planning and Investment, while Vietnam saw 2,714 new FDI projects licensed in the eleven months of this year with total registered capital of US$15.78 billion, down some 20 per cent year-on-year, it received 5,882 deals from foreign investors to either contribute capital or acquire stake in Vietnamese firms through M&A in the period, surging sharply by 44.4 per cent year-on-year. Currently, Thailand, Korea, Japan and Singapore are top investors in Vietnam’s M&A market.
To fully capture the benefits from the trade agreements in foreign investment attraction, including M&A deals, PwC Vietnam’s Van said that additional regulatory reforms, continued domestic investment and improvements in manufacturing and labor standards are needed.
Besides, experts suggested, the country and local enterprises should also make efforts to overcome other current obstacles, which include the the foreign ownership limit, financial transparency and value appraisal.