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EuroCham tips rise in M&As

The European Chamber of Commerce in Vietnam (EuroCham) expects the number of merger and acquisitions (M&As) in Vietnam to increase sharply this year.

EuroCham tips rise in M&As

It added that capital will come from foreign investors, who believe that M&A deals are the most effective way of entering Vietnam.

The total value of M&A in the seven months of 2016 reached $3.5 billion, up 28 per cent year-on-year. There were 341 deals worth $5.2 billion in 2015, which increased 23.1 per cent compared to 2014, according to the EuroCham report.

Deals will also boom in 2018, because foreign enterprises will approach Vietnam to take full advantage of the benefits from free trade agreements (FTAs) coming into effect in the years to come.

EU enterprises view the Law on Investment and the Law on Enterprises from 2014 as milestones in the development of a legal framework for M&As in Vietnam. The maximum shareholding of foreign investors in most public companies can now be 100 per cent.

“This is good news for investors buying shares in public companies in Vietnam,” a representative of EuroCham said. “We will follow the effect of these changes.”

EU businesses consider Vietnam an attractive destination for foreign direct investment (FDI) because the economy is opening up under commitments made to the WTO.

EuroCham also noted, however, that the Ministry of Planning and Investment has added 12 new sectors to the conditional investment and business list, which creates problems for EU enterprises.

Moreover, licensing procedures remain cumbersome and together with other obstacles make life difficult for foreign investors. In some cases, private enterprises must ask for local Department of Planning and Investment approval in M&A transactions. This is an unusual condition not found elsewhere.

In order to boost the number of M&A deals in Vietnam, EuroCham suggests the government cut the number of conditional businesses and consider removing the provision that foreign investors must apply for approval before conducting M&A transactions.

VN Economic Times