Many opportunities for breakthroughs in M&A activities

	Strong desire for M&A deals in real estate
	Foreign firms dominate Vietnam logistics market through recent M&As
	M&A market 2019: What are the opportunities for a breakthrough?

The retail sectorhas witnessed exciting M&A activities overthe last two years. Photo: Nguyen Hue

Strong growth

Speaking at the forum, Mr. Vu Dai Thang, Deputy Minister of Planning and Investment, said that overthe past 10 years, M&A activities have been continuously developed. In 2009, the total value of M&A deals reached only US$1.1 billion, by 2018, this figure reached US$10.2 billion, bringing the total value of transactions in the past decade to about $55 billion. This isa record intotal value, while the number of deals also increased rapidly, taking place in all business areas: private enterprises, foreign investment, state capital enterprises, attractingnot only theparticipation of domestic and foreign financial investors, but also of production, business and technology enterprises. The most active areas of M&A activities in recent times focused on market exploitation of more than 96 million people in Vietnam including consumer goods and real estate production, logistics, e-commerce and retail.

In the first 7 months of 2019, the total value of M&A deals in Vietnam reached nearly US$5.43 billion.There are some outstanding deals such asKorea SK Group spending US$1 billion to buy shares of VinGroup and KEB Korea Hana Bank, spending VND20,300 billion to buy a 15% stake of BIDV Bank. It is forecast that in 2019, M&A value may be nearly US$7.6 billion.

Opportunities

Commenting on the development of the M&A market, the speakers at the forum said that there are many opportunities for the M&A market with many impacts from positive economic growth, and strong integration and the gradually improving legal framework.

Specifically, with continuous efforts in improving the investment environment, Vietnam has managed a number of socio-economic achievements. The GDP growth rate in recent years has been maintained at a high level – 7% per year – while the macro economy continues to be stable and inflation has beencontrolled at a low level.The attraction of foreign investment achieved positive results and the number of newly established domestic enterprises continues to increase with the domestic private business community continuing to grow.

In addition, Vietnam is actively integratingdeeply and widely into the regional and global economy through a series of bilateral and multilateral free trade agreements, including new generation agreements such as the CPTPP and EVFTA, opening up large markets for import and export and investment capital,contributing to promoting national production and competition capacity.

In particular, the Government has also continued to restructure the economy, renovating the growth model in the direction of improving the efficiency and competitiveness of the economy, with a high focus on restructuring public investment, financial and banking systems and state-owned enterprises (SOEs).

Particularly for SOEs, there have been many solutions to promote equitization and selling capital in SOEs that do not need to hold dominant shares and contributed capital, even those that are doing business effectively. Particularly, in the period of more than three years since2016, the results of equitization of divestments in SOEs have reached over VND200 trillion, double the period of five years ago. Through this activity, many domestic and foreign investors have bought and owned shares of state-owned enterprises such as Vinamilk and Sabeco.

The promotion of equitization and divestment associated with the publicity and transparency of the equitization and divestment roadmap will create more and more attractive products for the M&A market, expanding opportunities for investors paying attention and studying investment opportunities, rebuy shares in state-owned enterprises.

At the same time, the Government has also accelerated the completion of mechanisms and policies to improve the business environment, promote the development of the private sector, and facilitate the full participation of private enterprisein all areas of the economy. Laws related to investment-business such as the Investment Law, Enterprise Law, Securities Law andConstruction Law,will soon be revised to remove problems and eliminate overlaps and reduce cost of market entry procedures and business costs of enterprises. A number of new laws will be developed and promulgated such as the Law on Support for Small and Medium Enterprises, Investment Laws in Public Private Partner Relations.This will create a more solid legal framework for the participation of the private sector in the areas of business investment.

In the near future, with new strategic directions, foreign investment will be shifted from quantity to quality. In addition, there will be some important orientations to improve the law on foreign investment in order to improve transparency, publicity, predictability and accountability for foreign investors, such as developing a list of investment restrictions, conditional investment for foreign investors and policies related to investment protection.

In addition, a number of new management models will also be piloted for innovative and creative industries to meet the needs of rapid change of theFourth Industrial Revolution,allowing foreign investors to own more than the prescribed level, but with voting rights limited in some sectors such as banking, telecommunications and transportation.

With the positive factors mentioned above, M&A activities in Vietnam have many opportunities to become an important investment attraction channel.

"However, in order to truly break out, Vietnam's M&A market expects strong changes from the process of issuing and enforcing policies to connecting activities, implementing deals and innovations,creativeness in buyers and sellers,” the Ministry of Planning and Investment’s leaders said.