Vietnam is emerging as a promising market for merger and acquisition
(M&A) deals that target Vietnamese companies.
This year’s M&A activities in
the country’s consumer goods sector should happen more strongly than last year,
said Tran Phuong Lan, head of the Competition Policy Board, Vietnam Competition
Authority.
“First, this is a very potent
market thanks to Vietnam’s young population and increasing income level,” she
told the second ASEAN competition conference in Ho Chi Minh City September
13-14, titled "Merger and Acquisition: impacts on ASEAN".
The second reason was Vietnamese
consumer goods manufacturers were facing many difficulties because of high
interest rates.
“Thirdly, as markets develop,
it’s natural that enterprises need to build core competencies and invest in
human resources. Shortage of both capital and development experiences forced
the domestic consumer goods producers to look for investors.”
She said between 2009 and 2011 in
the financial services sector, except for M&A deals among securities firms,
there were no real M&A deals in banking by foreign banks. This was because
of regulatory barriers on foreign ownership in banks, no Vietnamese banks were
bought via M&A.
However, the Vietnamese
government’s 2011-2015 programme on restructuring the system of credit
institutions encourages and facilitates all voluntary M&A and takeovers by
credit institutions in order to increase economies of scale and the
competitiveness.
“Therefore, it’s clear that in
the coming time, there would be more voluntary mergers among banks,” said Lan.
Late August, Hanoi-based Habubank
was merged into Saigon Hanoi Bank. Early this year, First Commercial Bank and
Tin Nghia Bank voluntary united with Saigon Commercial Bank under the name of
Saigon Commercial Bank.
According to Vietnam’s Ministry
of Industry and Trade, over the past three years, M&A in the country has
strongly developed. In 2009, there were 295 M&A deals with a total value of
$1.14 billion. The figures rose (CHECK NUMBERS--THE FIGURES DECLINED, AND DID
NOT RISE ) to 245 deals and $1.75 billion in 2010, and 266 cases and $6.25
billion last year. In the first three months of this year, there were more than
60 deals, valued at nearly $2 billion.
The ASEAN competition conference
was an open forum for officials and representatives of competition management
agencies in the ASEAN member countries, as well as the US, Australia, Japan,
South Korea, New Zealand and local businesses to exchange information.
Addressing the meeting, Vietnam’s
Vice Minister of Industry and Trade Tran Tuan Anh said M&A would help
businesses and investors restructure, expand and develop their operations with
higher efficiency and competitiveness, which in turn would bring more benefits
to investors and contribute to economic recovery and growth.
Rose Webb from the Australian
Competition and Consumer Commission said through M&A, there could be a
reallocation of resources from relatively inefficient to relatively efficient
firms.
However, some mergers may not
benefit the economy, she said.
“When two firms merge, the
resulting entity may gain its market power or increase its already existing
market power. This can lead to higher prices, fewer or lower quality goods and
services, and less innovation. If a merger lessens competition, it’s likely to
lead to less efficient outcomes and have a detrimental effect on consumer
welfare.”
Dr. Alan Phan, president of Viasa
Fund, Vietnam, and a consultant on emerging markets for some multinationals,
told the conference that ASEAN countries spent $23 billion on M&A last year
and projected to increase to $34 billion this year.
The Vietnamese-American offered
some predictions on M&A activities during the next 10 years in the region.
He said the unified law or protocol or directive aiming at M&A deals among
the regional countries would not be completed until at least 2025. Until then,
M&A activities would continue at the existing pace. There would be more
M&A deals between non-ASEAN and ASEAN companies than among ASEAN companies
themselves.
He added Vietnam would see
increased M&A activities because of pricing of distressed properties.
Tuong Thuy | vir.com.vn
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