Mainland China, Hong Kong and Taiwan have leapt to become the leading investors in acquiring stake of Vietnamese firms in 2018.
Chinese investors have acquired stake in local real estate firms
|
Among the total, mainland Chinese investors made 1,029 deals worth more than US$800 million, rising sharply against 800 projects worth US$487 million in 2017.
The rise of investment from Hong Kong and Taiwan was even more impressive, with 127 deals worth US$1.28 billion of Hong Kong investors and 81 deals worth more than US$1.33 trillion of Taiwanese investors, compared with only US$138 million and US$358 million in 2017, respectively.
Not only investors from China, the indirect investment inflow of investors from other countries to Vietnamese firms through stake acquisitions was also positive in 2018.
According to FIA’s data, though new foreign direct investment (FDI) approvals in Vietnam this year reported a decline over last year, there was a surge in foreign indirect investment inflows.
Specifically, from early this year to December 20, foreign investors conducted nearly 6,500 transactions to contribute funds and acquire shares in local firms, with a combined value of US$9.89 billion, up a staggering 59.8 percent from 2017.
Meanwhile, the country issued investment certificates for over 3,000 new FDI projects, with total registered capital of nearly US$18 billion in the period, down 15.5 percent year-on-year. FDI investors also registered an additional US$7.59 billion for nearly 1,200 other operational projects in the period, marking a fall of 7.59 percent against 2017.
Rising trend on the cards
Experts forecast that foreign investors will continue pouring into Vietnamese firms next year, given the country’s stable macro-economy, hastened administrative reforms and improved investment climate as well as new-generation free trade agreements on the horizon.
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 the acquisition of local firms’ stake.
Vietnam’s rapid integration into the world economy is bringing new opportunities for the country’s M&A market, given macro-economic recovery and 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.
In addition, revised laws, such as the Enterprise Law and the Investment Law, have also created a better and more conducive business environment for stake acquisition deals in the country, Massmann said, predicting the trend will continue next year.
According to the National Financial Supervisory Commission, foreign investment flow to Vietnam through stake acquisition 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. Through merger and acquisition, foreign investors avoid cumbersome and time-consuming investment license procedures and can spend time for learning and researching the market.
To fully capture the benefits from the trade agreements in foreign investment attraction, including acquisition deals, experts said that additional regulatory reforms, continued domestic investment and improvements in manufacturing and labor standards are needed.
Besides, the country and local enterprises should also make efforts to overcome other current obstacles, which include the foreign ownership limit, financial transparency and value appraisal.
