Nguyen Thai Phien - Senior director of Corporate Finance, Novaland Group
We are accelerating to promote M&A. Novaland has just closed an agreement to purchase a 286-hectare project in the southern province of Dong Nai, worth roughly $1 billion. We are aiming to build this project into a tourism ecosystem, which will benefit our customers in a synchronised fashion.
M&A is one of the fastest approaches to access new capital and increase our foothold in the market, especially when the land is “shrinking”.
However, there are still major issues in a dealmaking process, particularly in the real estate sector. The first one is complex legal documents on real estate, and the implementation of the project.
Secondly, the State Bank of Vietnam is tightening its loan activities for risk areas. For example in reducing the rate of short-term deposits used for medium- and long-term loans, which will seriously impede developers.
On the other hand, the market’s reaction to news about M&A deals might be favourable or unfavourable depending on whether other participants think the acquirer took too much debt from the target company.
Seck Yee Chung - Partner, Baker McKenzie
There are numerous examples of adaptation and growth potential. This includes factories that switch to producing personal protective equipment instead of garments. Also, there is growth in the export of electronic products and furniture, as bolstered by work-from-home and connectivity trends. Agriculture exports have also risen.
Vietnam also sees continued investment in the renewable energy sector, as driven and enabled by the government’s policy and plans to develop this sector. Education remains attractive too, as this has always been a focus of Vietnamese parents.
The digital economy is another bright spot. There is accelerated adoption of e-commerce and related online-enabled services such as financial and payment ones.
This in turn has compelled the need to develop, and sparked investors’ interest in the logistics and warehousing sector to keep pace with e-commerce and the fulfilment of orders and delivery of products.
It is also very encouraging to see Vietnam enter into and implement its international free trade agreements.
Pham Duy Khuong - Managing partner, ASL LAW
One of the main factors that has obstructed Vietnamese M&A transactions is the legal framework.
Currently, we have many sectors that only accept domestic investors and restrict the participation of foreign counterparts.
The second barrier comes from unclear provisions of the Law on Competition. Terms such as “relevant market” are very general and not well defined, causing many deals between large investors to be halted.
In the coming time, I think that M&A activities in tourism real estate shall be boosted because this area is facing financial difficulties.
Other sectors such as retail, pharmacy, healthcare, online education, and fintech are all potential fields that need finance when growing.
In addition, the energy sector is also interesting for many foreign investors, especially from Japan, Hong Kong, and China.
Vietnam is one of the few nations in Southeast Asia to record positive economic growth in 2020, and the stringent disease control measures have led many to consider Vietnam a safe investment destination.
Tran Ngoc Han - Senior associate, Russin & Vecchi Vietnam
In order to enhance the investment environment, the National Assembly passed the new Law on Enterprises which will also come into effect in January. It will complete the legal framework on corporate governance and help Vietnam reach international standards and common practices.
It has also abolished several unnecessary administrative procedures and strengthened the protection of investors. This improves management efficiency and minimises costs, especially in corporate reorganisations.
In addition, the government has issued a series of resolutions aimed at bolstering economic stability, improving the business environment, and enhancing national competitiveness. It is another signal confirming the government’s efforts to enhance investment here.
The government has provided support to investors and businesses by reducing administrative burdens. Besides that, Vietnam has continued to benefit from general US and European trends of moving production out of China. This will yield Vietnam more opportunities to attract investors.