M&A deals in 2018 and 2019 have focused on the consumer goods production and real estate sectors (Photo: VNA)Hanoi (VNA) – The Government and relevant partieshave been recommended to take strong actions to facilitate mergers andacquisitions (M&As) amidst certain challenges posed by both external andinternal factors.
The value of M&A deals in Vietnam may hit6.7 billion USD in 2019, equivalent to 88.16 percent of the figure last year,according to organisers of the Vietnam M&A Forum 2019.
Meanwhile, foreign investors spent 2.82 billionUSD on purchasing shares of domestic companies in the first seventh months of2019, data of the Foreign Investment Agency under the Ministry of Planning andInvestment show.
Economists said there have been several signs ofstagnation in the Vietnamese M&A market.
However, the recent policy moves are expected toopen up big opportunities for Vietnam to attract more foreign investment,including through M&As. They include draft amendments and supplements tothe Law on Investment, the Law on Enterprises and the Law on Securities; aresolution on foreign investment attraction set to be issued for the first timeby the Politburo; and the signing of new-generation free trade agreements likethe Comprehensive and Progressive Agreement for Trans-Pacific Partnership(CPTPP) and the deal with the EU (EVFTA).
Michael DC Choi, Deputy Director of the KoreaM&A Centre at the Korea Trade-Investment Promotion Agency, said many banksand investors from the Republic of Korea are planning to invest in Vietnamdirectly as well as through M&As. Therefore, the M&A capital flow fromthe country into Vietnam is likely to increase in the time ahead.
Apart from advantages, the local M&A marketis also facing challenges posed by external and internal factors, he said,pointing to the trade policy changes of the US and China, problems in theequitisation of and divestment of State capital from State-owned enterprises(SOEs), the low quality of local businesses, and the size of the economy notattractive enough.
The fact that policy barriers relating toforeign investment, real estate and SOE equitisation haven’t been removed hasalso affected M&A deals.
Echoing this, Dang Xuan Minh, Director Generalof the AVM Vietnam – an organiser of the Vietnam M&A Forum 2019, said thetoo big State ownership at SOEs has hampered investors. The lack oftransparency in businesses’ financial reports, the time-consuming M&Aprocess, and firms’ overestimation of their value are also problems.
To help the local M&A market thrive in thetime ahead, insiders recommended the Government and relevant parties to makestronger changes to further improve the investment and business climate andfacilitate the domestic and foreign capital flow into this field.
They also called on the State to divest itscapital from SOEs more strongly while promoting the participation of privatefirms in M&As. -VNA
VNA
