The key factors shaping Vietnam's M&A market for 2025

According to Cong Ai, the mid to long-term prospects of Vietnam's merger and acquisition (M&A) market remain strong and are shaped by three key drivers. The first driver is the robust macro fundamentals. Vietnam's GDP is forecast to grow above 6 per cent in both 2024 and 2025. Exports grew 15.4 per cent on-year in the first nine months of 2024. Inflation is expected to remain stable at 3.5 per cent in both 2024 and 2025. Foreign investment is projected to grow 8-9 per cent on-year in 2025. Lastly, green credit grew 22 per cent annually on average between 2017-23.

Another key driver is tech-focused policies and tech-savvy consumers. The National Digital Transformation Programme has set a target of 30 per cent of the GDP to come from the digital economy by 2030. Meanwhile, tech-savvy consumers with increasing income are boosting e-commerce, enjoying a 30.4 per cent compound annual growth rate (CAGR) from 2018 to 2023), with a solid forecast of 20.6 per cent CAGR for 2024 to 2028.

Vietnam's infrastructure developments, such as the $16-billion Long Thanh International Airport near Ho Chi Minh City; the $67-billion North-South Railway connecting Hanoi–Ho Chi Minh City and the construction of 3,000km of highway worth $8 billion planned for 2025, are the final key factor.

Cong Ai predicts Vietnam's M&A market will blossom next year. The number of deals is expected to increase in the key sectors of technology and real estate due to the government's supportive policies.

"Investment patterns are shifting towards technology and tech-enabled services, which are projected to account for a significant share of M&A transactions in 2025. This trend is driven by government initiatives and proactive reforms, including tax incentives for high-tech industries and optimised foreign investment processes that have reduced obstacles for international investors," he added.

Additionally, the real estate market is likely to gain momentum as the corporate bond market eases, coinciding with the enforcement of the new Land Law. This new legislation will clarify land pricing methodologies and introduce updated regulations on land use, bringing greater transparency to the market. As the sector gradually recovers, domestic demand is expected to strengthen with both investors and consumers regaining confidence.

"However, the M&A market is expected to experience headwinds and challenges from four key risks," said Cong Ai.

"First, huge US spending under the new administration may sustain inflation pressure and keep high-interest rate, increasing capital costs. Second, protectionist policies in the US may weaken Vietnam’s exports. Third, conflicts in Ukraine and the Middle East may disrupt trade, energy flows, and economic stability, pressuring investors to remain in defensive mode. Fourth, a sluggish real estate recovery may constrain consumer spending and investment, dampening economic growth."

Vietnam M&A Forum 2024 reveals new opportunities The 2024 Vietnam M&A Forum, themed 'A Blossoming Market', is taking place at JW Marriott Hotel & Suites Saigon in Ho Chi Minh City on November 27.

Home firms make M&A presence felt In the first nine months of 2024, Vietnam’s mergers and acquisitions (M&A) market recorded notable achievements, with deal value surging by 45.9 per cent on-year, despite an 11.6 per cent decline in transaction volume.

Vietnam’s M&A market expected to rebound next year As Vietnam sets a high target for economic growth in 2024, mergers and acquisitions are projected to rebound on the back of growing foreign interest.