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Vietnam M&A Market In 2023: Seeing Opportunities In Challenges – Corporate and Company Law

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The Vietnam M&A market in 2023 will be filled with
challenges for investors, with a cautious mindset stemming from the
volatile market in Vietnam and internationally. Investors will be
more careful in identifying transactions and assets that can bring
assets and value to themselves in a more strategic direction,
rather than just short-term financial gain. This is both a
challenge and an opportunity for investors as well as legal
consulting organizations on M&A.

In the first 10 months of 2022, Vietnam M&A activities in Vietnam tended
to go down and basically returned to pre-pandemic levels, marking a
relatively bleak year for the M&A market in Vietnam.

During this period, the total value of M&A transactions
reached $5.7 billion, down about 35.3% over the same period last
year, while the number of transactions decreased to less than 350
transactions, equivalent to a 50% reduction compared to the same
period of nearly 700 transactions in 2021.

Regarding the cause, according to experts at the M&A Forum
in 2022, it is partly because investors’ psychology has become
more cautious with a strategic, global perspective, not just
short-term profits. The other part is due to the impact of global
tensions on the macro-economy, creating a cause for investors’
fear and anxiety, etc.

Mr. Masataka “Sam” Yoshida, Global Director of
Transnational M&A Services, RECOF Corporation, General
Director of RECOF Vietnam, discussed the impact of global economic
fluctuations, specifically on the relationship between Japan and
Vietnam as follows: “The depreciation of the yen against
the USD may have a short-term impact on Japanese investors, but on
the other hand, low-interest rates and the decrease in value of yen
are positive for other investors in different aspects and related
to Vietnam… Vietnam is an attractive point for Japanese investors
because of its young population. The average age difference between
Japan and Vietnam is 17 years, the middle class in Vietnam is
growing rapidly, especially since Vietnam is the country with the
fastest GDP growth in Southeast Asia. This makes Japanese companies
look at the positive and believe in the future. When investors
divest from Vietnam, Japanese investors will step in, but there is
still a need to monitor and study more features in relation to the
market. The time period (estimated) maybe 6 months.”

Sharing the same view about the positive prospect in
Vietnam’s M&A market, Mr. Kazuhiko Yoshimatsu, General
Director and Chief Representative of Tokyo Stock Exchange
(Singapore) said: “I have participated in many M&A
deals in Vietnam. I think the growth of Vietnam’s capital
market in the past 10 years is remarkable… With this trend and
support, I believe Japanese businesses will invest more in
Vietnam.”

Having similar opinions with experts and representatives of
entities participating in the M&A Forum 2022, Lawyer Pham Duy Khuong, Managing Director of
ASL LAW Firm, commented
:
“Almost everyone sees a decrease in Vietnam’s M&A
market in the last 6 months of 2022, difficult to predict in 2023.
If looking at how investment flows into Vietnam will be affected,
and from which country, it is difficult to determine which is the
main source of M&A. According to the
nationality of organizations investing in Vietnam, Vietnam is
attractive and suitable for investors, with regards to Japan,
Korea, and especially Singapore (difficult to classify where the
cash flow comes from, very many sources from China to Singapore and
then disbursed in many other countries). The US and EU are still
not too large of capital flows to Vietnam’s M&A
market.”

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M&A 2023: Seeing opportunities in challenges

Discussing the attraction of M&A investment in Vietnam in
2023 for more sustainable development in the coming time, Lawyer Pham Duy Khuong said: “To
speak specifically about Vietnam’s bright spot in attracting M&A capital is difficult, but there is a
trend that can be seen, that is, many Indian companies are still
looking for IT personnel from Vietnam. Vietnam has a potential
market of 100 million people, which is an attractive point for
investors. To attract more foreign capital, it is necessary to have both
stricter and more open regulations, which are related to the
transfer of profits and capital of investors abroad. Relating to
the banking system helps investors more convenient in account
management and payment when necessary.”

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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