Fine-tuned policies needed to unleash foreign investment in Vietnam’s M&A market

A survey by Corporate Investment and Mergers & Acquisitions Center also showed that one of the obstacles to M&A deals in Vietnam is the time consuming approval process.

Although the Vietnamese M&A market has been signaling a positive outlook, the country is still in need of revising its legal framework to eliminate obstacles and attract more quality investors, experts said.

 Real estate is expected to see more M&A deals this year.

According to Pham Duy Khuong, managing director of ASL Law firm, the M&A market is governed by laws on enterprises, foreign investment, land, and competition, among others. However, the current legal framework for the market has not kept up fully with changes in M&A structures and concepts, causing confusions and uncertainties among many investors.

Under the current regulations, Khuong said, most M&A transactions in Vietnam need to be approved by authorized agencies, which can take up to several months. Especially when the deal involves conditional business, the time of waiting will even be longer as it is carried out by many different agencies.

A survey by Corporate Investment and Mergers & Acquisitions Center also showed that one of the obstacles to M&A deals in Vietnam is the time consuming approval process.

In addition, the provisions of the Law on Competition stipulate M&A transactions that lead to a market share acquisition of 30-50% in a ‘relevant market’ must be notified to the Vietnam Competition Authority. Transactions leading to a combined market share of over 50% are prohibited, except in certain cases.

In fact, the implementation of these regulations is challenging for both businesses and authorities because it is difficult to determine what constitutes a ‘relevant market’ according to the law. Due to this ambiguity, investors must make their own decisions and determine if they have to go through a merger control process before proceeding.

This creates a potential risk that the parties involved might get penalties for legal violation, or that the transaction might be canceled, Khuong said.

Positive market

The M&A market in Vietnam this year will reach some US$7-7.5 billion, equivalents to  the value in the past two years, Vietnam Mergers & Acquisitions Forum (MAF)’s research group and Corporate Investment and Mergers & Acquisitions Center forecast.

 

Experts said that real estate will continue to be a big magnet for investors this year. In addition, industrial production, services, construction and construction materials are also major appealing sectors for M&A activities thanks to the relocation of production from abroad into Vietnam to take advantage of free trade agreements signed by Vietnam and to mitigate impacts of the US-China trade war.

Besides, the increasing domestic demand due to the rapid population growth and rapid urbanization will also have significant impacts on the attraction of M&A activities in services and consumer goods.

It is also forecast that the market will continue to be mostly represented by foreign investors this year, with big players from Singapore, South Korea, Japan and Thailand. However, domestic investors should become more and more prominent and more active in the battle fought for market share.

Vietnam reported huge M&A transactions involving overseas investors last year, buoyed by favorable policies on improving the country’s business environment, along with the potential coming from bilateral and multilateral free trade agreements.

Leading the largest M&A deals in the country last year were investors from South Korea, Hong Kong, Singapore and Japan, who poured aggressively in sectors such as consumer goods, retail, real estate, telecommunications, energy, infrastructure, pharmaceuticals, and education.

The top deals in the year included SK Group which, through its investment arm SK Southeast Asia Investment. decided to invest US$1 billion to acquire a 6.1% stake of conglomerate Vingroup, while becoming the largest foreign shareholder of Masan Group following an agreement worth US$470 million. Hanoitimes

Anh Hong

Merger may bring retail renaissance

Merger may bring retail renaissance

Vietnam’s largest conglomerate Vingroup has announced the sale of its retail and agricultural arms to Masan Group. 

Is the restaurant market still attractive?

Is the restaurant market still attractive?

A lot of restaurants have had to shut down, but Vietnam remains an attractive market in the eyes of many investors.

 
 

Other News

.
Financiers race to cash in on wind
Financiers race to cash in on wind
FEATUREicon  23/03/2020 

While Vietnam’s wind investors are in a race to reap incentives before the November 2021 deadline hits, concerns remain that a boom in solar power projects will lead to a reduction in capacities.

Motorbike embraced by roots of an old tree
Motorbike embraced by roots of an old tree
FEATUREicon  23/03/2020 

The image of an old motorbike entwined by the roots of an old tree in Tuong Binh Hiep Ward, Thu Dau Mot City, Binh Duong Province, has been widely shared on social media recently.

Down syndrome children show unconditional love
Down syndrome children show unconditional love
FEATUREicon  23/03/2020 

In Vietnam, there are no official organisations or schools that are specialised for children with Down syndrome, so they mostly depend on their families for care.

VN shrimp segment above water
VN shrimp segment above water
FEATUREicon  22/03/2020 

Despite the complexities of COVID-19, shrimp exporters and processors still see a bright future ahead thanks to new markets, and boosting exports to traditional markets which have cut imports from China.

Keeping calm and carrying on: Vietnam sets a coronavirus example
Keeping calm and carrying on: Vietnam sets a coronavirus example
FEATUREicon  21/03/2020 

As much of the western world descends into a COVID-19-induced panic, nations in close proximity to China have remained relatively calm. 

When reform becomes quiet
When reform becomes quiet
FEATUREicon  17/03/2020 

While the movement of reducing administrative procedures and simplifying business conditions in 2018 was described as a ‘big wave’, the activities were just ‘small ripples’ in 2019.

How Vietnam sacrifices economy to protect its people?
How Vietnam sacrifices economy to protect its people?
FEATUREicon  16/03/2020 

Taking tough measures for the safety of people has become the government's top priority.

The credibility of cooperation
The credibility of cooperation
FEATUREicon  15/03/2020 

It may not be hard to discern that through the EU’s defiance towards Italy’s desperate calls for aid and America’s freshly-imposed barriers on its European allies, inter-state cooperation has been lacking in the fight against COVID-19.

Encouraging signs in real estate arena
Encouraging signs in real estate arena
FEATUREicon  13/03/2020 

Despite the COVID-19 outbreak piling pressure on the toughest segments of the real estate market in hospitality, retail, and industrial property, positive signs have also been unearthed.  

The EVFTA’s grand impacts on Vietnam’s industrial sector
The EVFTA’s grand impacts on Vietnam’s industrial sector
FEATUREicon  14/03/2020 

The EU-Vietnam Free Trade Agreement and Investment Protection Agreement raise many hopes for all of Vietnam’s economic sectors. 

Duong opens new chapter for Vietnamese boxing
Duong opens new chapter for Vietnamese boxing
FEATUREicon  14/03/2020 

Vietnam has waited more than three decades to see a Vietnamese fighter qualify for an Olympics and Nguyen Van Duong ended the drought after he secured a Tokyo Olympic slot at the Asia/Oceania Olympic boxing qualifying tournament.

Tailwinds expected via foreign-funded activities
Tailwinds expected via foreign-funded activities
FEATUREicon  13/03/2020 

Exchange-traded fund providers are offering more choices to foreign investors, at a time when portfolio rebalancing and global uncertainties could leave them high and dry.

VN pharma landscape set for shake-up
VN pharma landscape set for shake-up
FEATUREicon  12/03/2020 

Facing significant expansion from multinational corporations, Vietnamese drug giants took a hit in 2019 despite new strategies, signalling an uninspiring outlook for future growth.  

Head in the clouds, Vietnamese engineer reaches for the stars
Head in the clouds, Vietnamese engineer reaches for the stars
FEATUREicon  14/03/2020 

Three mice died and a few hearts sank. It was March, 2015 in Hyderabad, India. When the vital signs went down, Pham Gia Vinh and his team knew the mice would die.

The change of thinking and action in foreign investment cooperation
The change of thinking and action in foreign investment cooperation
FEATUREicon  10/03/2020 

The Politburo has issued Resolution No.50/NQ-TW on August 20, 2019, outlining directions to perfect institutions and policies to improve foreign investment efficiency and cooperation until 2030.

Rules of origin pose questions for sectors jostling for position
Rules of origin pose questions for sectors jostling for position
FEATUREicon  08/03/2020 

Although the free trade agreement between the EU and Vietnam will offer great opportunities for wood investors and exporters, its rules of origin may not provide a big boon to local textile and garment businesses.

Game changer for the energy arena
Game changer for the energy arena
FEATUREicon  07/03/2020 

Vietnam has recently created several favourable policies, including the Politburo’s Resolution No.55-NQ/TW on the orientation of Vietnam’s national energy development strategy to 2030 with a vision towards 2045.

American painter tells colourful stories of Vietnam
American painter tells colourful stories of Vietnam
FEATUREicon  07/03/2020 

After being impressed by the Vietnamese people living in northern Virginia in the US in the early 1990s, Charles Daniel Hambleton, a native of the state, visited Vietnam for the first time.

Your guide to every 2020 V.League 1 club
Your guide to every 2020 V.League 1 club
FEATUREicon  07/03/2020 

The 2020 V.League 1 season is almost upon us and (coronavirus permitting) matches will kick off coming week.

Expat football fans find taste of home with V.League
Expat football fans find taste of home with V.League
FEATUREicon  07/03/2020 

There’s nothing quite like a day out to watch live football. 

 
 
 
Leave your comment on an article

OR QUICK LOGIN