Invest in Vietnam: COVID-19 and M&A Market Potential
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Invest in Vietnam: COVID-19 and M&A Market Potential

Vietnam is developing into an attractive M&A market for investors – despite the decline in the global M&A market due to corona virus. This is the result of new laws that facilitate business investments, additional free trade agreements and currently one of the most effective COVID-19 disease control programmes.

The prolonged COVID-19 pandemic, together with border closures in many countries from the end of 2019 up to now, has caused a sharp decline in the global M&A market. According to statistics from a recent report by the Corporate Investment, Mergers and Acquisitions Centre (CMAC), the total value of M&A worldwide decreased by 52% in the first 6 months of 2020, compared to the same period last year. Although the Vietnamese market is also significantly affected, effective prevention and control strategies mean that Vietnam is seen as a safe and attractive investment destination for foreign investors. This could be an opportunity for Vietnam’s M&A market in the post-COVID period, say the Ecovis advisers in Vietnam.

Are you interested in investing in Vietnam? Talk to us, we can support you.
Vu Manh Quynh, Managing Partner, ECOVIS Orient Counsel/ECOVIS Vietnam Law, Ho Chi Minh City, Vietnam

The M&A market in Vietnam is expected to grow significantly in 2021 for several reasons.

1. Legal System

New laws on corporate investment (e.g., investment law, enterprise law, securities law) came into effect at the beginning of 2021. These have expanded the market for foreign investors and simplified administrative procedures.
Free trade agreements have been signed recently, such as CPTPP, EVFTA and EVIPA and RCEP (see info box Vietnamese Free Trade Agreements). The agreements bring about new regulations that will promote and facilitate M&A activities.

2. Demand for Foreign Investors and Enterprises

There will be increased demand for mergers and acquisitions due to backlogged transactions that could not be completed in 2020.
The changing trend in investment share in the market which focuses, for example, on the healthcare industry, consumer goods or e-commerce. These sectors are expected to become the focal point of M&A in 2021.
State divestment deals are being accelerated.
Most businesses and investors need to change their strategies or restructure the company to overcome the negative impacts of COVID-19.
To cut out the procedures of business establishment, finding premises and recruiting, enterprises tend to invest by buying shares or making capital contributions to existing businesses, instead of starting new businesses.

Vietnamese Free Trade Agreements (Selection)
CPTPP: Comprehensive and Progressive Agreement for Trans-Pacific Partnership
RCEP: Regional Comprehensive Economic Partnership
EVFTA: EU-Vietnam Free Trade Agreement
EVIPA: EU-Vietnam Investment Protection Agreement

For further information please contact:

Vu Manh Quynh, Managing Partner, ECOVIS Orient Counsel/ECOVIS Vietnam Law, Ho Chi Minh City, Vietnam

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