Foreign buyers seek bargains, but investment prospects rosy

More than 2,600 equity acquisitions took place without increasing the chartered capital of companies worth US$1.6 billion, while only 580 transactions contributed US$0.9 billion to domestic companies.

These figures have prompted concerns that Vietnamese firms under pressure from the repercussions of the Covid-19 pandemic may be vulnerable to foreign buyers seeking good deals.

Many governments, among them Australia’s and Germany’s, have warned of the similar risks, moving to limit or closely monitor foreigners’ efforts to buy domestic companies amid the pandemic.

In early May, Japan introduced new rules restricting foreign investment, forcing foreign investors to report in advance when they plan to buy a more than one percent stake in more than half of the listed companies in the country (the previous threshold was 10 percent).

The Vietnam Chamber of Commerce and Industry (VCCI) even proposed temporary suspension of merger and acquisition (M&A) deals during the pandemic to limit foreign takeovers of Vietnamese enterprises.

Vietnam is nonetheless hoping that this trend can be offset by greater foreign investment in the context of the US-China trade war. Deputy Minister of Planning and Investment Vu Dai Thang noted that manufacturers have already moved or are planning to move their factories from China to Southeast Asian countries, including Vietnam.

FIA Director Do Nhat Hoang said the Ministry of Planning and Investment is eying potential investment waves from foreign countries, including China.

FIA worked with associations and major investors to discuss bailout packages and solutions, while the ministry is coordinating with other ministries and sectors to improve the Law on Investment and the Law on Enterprises to attract foreign investment in the near future, Hoang said.

VCCI Chairman, Dr. Vu Tien Loc said attracting investment shifted from other countries is an important task. This is a very good opportunity for Vietnamese enterprises to approach investment flows, including high-tech investment, from developed countries.