In the context of the Fourth Industrial Revolution and global investment shift, an appropriate M&A development strategy is an important tool for businesses in the current context and the years to come.
Vietnam is considered as a dynamic destination for M&A activities as it attracts a huge FDI flow and foreign investors.
Statistics shows that in the past 20 years there have been more than 4,000 M&A deals with a total value of nearly $50 billion in Vietnam, which makes the country rank 3rd in Southeast Asia in terms of M&A value.
Regarding the forecast of the recovery model of the M&A market in the period 2021 - 2022, investors and researchers have given different forecasts on the value of the Vietnamese M&A market. Although most forecasts show cautions about the market in 2021, they also indicate a lot of growth potential.
Specifically, 42% of respondents predict the market value will be at $3-4 billion, while 26% are more optimistic when forecasting the value at $4-5 billion. Meanwhile, 24% of respondents were more cautious with the prediction of M&A value at only $3 billion. Only 8% believe that the M&A value in Vietnam will exceed $5 billion in 2021.
The Merger & Acquisition and Corporate Investment forecasts that value of M&A deals in Vietnam for 2021 will be $4.5 to $5 billion, and the market will recover to the average level for the period 2014 - 2017.
In order for the market to reach a new level, stronger moves of the Government, ministries and branches in supporting businesses and investors are really essential. The year 2021 has marked the event that Vietnam successfully completed the 13th National Congress of the Communist Party of Vietnam (CPV), and the beginning of a new government in Vietnam.
Investors said that they expected this event to be a driving force for stronger divestment and equitization. It is also expected that mechanism and policies will be strongly reformed and more consistent with international practices.
Typically, if the Government drastically makes a few big divestments, the M&A value in 2021 may be at a much higher level than forecast. In the case of favorable political conditions, economic environment, along with the recovery of the global economy, the investment opportunities that were hindered in the period of 2019 - 2021 will be able to “explode” in 2022.
The M&A market may see a recovery in the V-shaped model or the flying bird model with the 2022 value of M&A in Vietnam possibly reaching $7 billion. In particular, consumer goods, retail, real estate, industrial production, agriculture, etc. will still be the focus of M&A activities in the period of 2021 - 2022.
According to Mr. Masataka “Sam” Yoshida - Global Director of Transnational Merger and Acquisition Services RECOF Corporation - General Director of RECOF Vietnam, telecommunications, energy, infrastructure, pharmaceuticals, and education are expected to contribute significantly to M&A activities in Vietnam in the current period and in the near future.
Regarding partners, investors from Asia such as Korea, Japan, Thailand and Singapore will continue to dominate; in which private corporations will still be the driving force contributing to the recovery of the M&A market in 2021 and the following years.
Mr. Nicolas Audier - President of the European Chamber of Commerce in Vietnam (EuroCham) said that the EU-Vietnam Free Trade Agreement (EVFTA) will indirectly create a lever to promote M&A transactions.
M&A activities in Vietnam are expected to recover from mid-2021. The positive reviews of international organizations are objective, based on the results and success that Vietnam achieved in the period of 2016 - 2019 and 2020.
Deputy Minister of Planning and Investment Tran Quoc Phuong said that in 2020, the Ministry of Planning and Investment presided over drafting and submitting to the Government and the National Assembly for approval the Enterprise Law, Investment Law, and Investment Law on public-private partnership (PPP) model with many reforms in market entry procedures, creating favorable conditions for businesses in investment and doing business including M&A activities.
For the first time, the list of industries that limit market access for foreign investors will be promulgated by the Government on the opt-out basis.
According to Deputy Minister Tran Quoc Phuong, these are important reforms, helping foreign investors have the same market access as domestic ones for all industries and sectors not on the list.
However, in order to "rise up in a new normal state", businesses and investors need to innovate their development thinking, turn challenges into opportunities, and make good use of the achievements of the 4th Industrial Revolution.
"Enterprises and investors need to grasp the trend of global investment movement, increase the mobilization and efficient use of resources. An appropriate M&A strategy is an important tool for businesses in the current context and the following years" - Deputy Minister Tran Quoc Phuong added.
According to the Law on Investment, the Government commits to strictly comply with the promulgation of the list according to the principle of exclusion. For example, for industries that foreign investors are not allowed to invest in,what restrictions, what form, what rights and the rate of ownership will be clearly stated.
In support of the Decree guiding the implementation of the Securities Law, there are clear provisions on foreign ownership limits. Although this has been mentioned a lot, it is much clearer and meets the expectation of businesses that are waiting for more specific categories than before. Besides, the new Investment Law also adds fields of investment incentives.
Facing the impact of the epidemic and global trade tensions, Vietnam has well controlled the epidemic and implemented a dual goal that has created confidence in Vietnam's M&A market in particular and the economy in general.
Experts and businesses all acknowledge that Vietnam will have many favorable conditions to attract investors to return to the market, especially performing the M&A in the coming time.