Legal changes to revive dealmaking activities

Vietnam should make efforts to accelerate its legal reforms to facilitate more transactions in Vietnam's M&A market.

At the first panel of VIR's Vietnam M&A Forum on November 27, Seck Yee Chung, partner of Baker McKenzie, pointed out the hard work by Vietnam's legislators with the major changes involving the Land Law, the Law on Real Estate Business, and the Law on Housing. In addition, the Law on Telecommunications rules that foreign investors can fully own data centre companies.

In addition, Vietnam has entered into a wide variety of treaties like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU-Vietnam Free Trade Agreement (EVFTA), among others. Investors ought to be mindful of any market access restrictions and conditions actually being lower for online games and the economic needs test (ENT) for retail.

"However, my sense is that they might take some time to reform the regulations," Chung said.

In particular, the Vietnamese government has a long-standing agenda to equitise state-owned enterprises (SOEs), perhaps having them listed, and maybe at some point there could be divestments. All of these efforts are to try to modernise the companies, to unlock value, and to move out of sectors where it's really not necessary for the state to be so directly involved.

"One of the eye-catching deals is the divestment of state shares in Sabeco many years ago. Having said that, I do believe that there are challenges around this initiative. Perhaps it also has a lot to do with the companies themselves. I do believe it takes time because it's not that easy to try to modernise a business as well as to train the management and the team," Chung said.

Maybe some of these SOEs could have quite diversified businesses. It takes a lot of time and energy to get them organised, to get them streamlined, to get them ready for listing, and to get them prepared for strategic investments. That's why there are not so many stories about the whole equitisation process.

"The only thing that the business community can ask is that Vietnam just has to put in continued efforts and hard work to make the necessary reforms with this agenda," Chung said.

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