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M&A legal system needs completely overhauled
Government officials, entrepreneurs, economists and consultants all voiced agreement in the need to create a separate piece of legislation for Mergers & Acquisitions (M&A) activities to ensure the interests of both businesses and State managers in the field.
At the first symposium on M&A entitled “M&A Vietnam 2009: experiences and opportunities” in Hanoi on June 11, Deputy Minister of Planning and Investment Nguyen Bich Dat said “what we need to do now is to develop complete policies and a law on M&A” while a legal foundation for this activity was stipulated in a number of laws and sub-laws.
Director of the Dragon Capital Investment Fund, Dominic Scriven, said that the lack of protocol exclusively for M&A and specific regulations on the right to ownership and a formula for capital contributions was hindering the speed of implementation and effectiveness of M&A deals.
Directly involved in a large number of M&A deals, Executive Director of the Hong Duc VILAF Company Tran Anh Duc expressed his concerns about the interpretation of many M&A–related regulations in the Competition Law, as they are unclear and could cause difficulties for investors and limit the laws being used effectively.
Sharing the view on the need to create a law specifically for M&A, Professor Pham Duy Nghia from the Hanoi National University also urged agencies to come up with mechanisms to help enforce the law to better protect public interests and help investors become more proactive when conducting M&A deals.
At the symposium, Deputy Minister Dat said that M&A allowed strong businesses to quickly expand their scope of operations, increase their market share and have access to and own, advanced technological solutions in a shorter space of time. This has also helped small-sized and struggling businesses to avoid bankruptcy and overcome current difficulties in the market.
However, he alerted the participants of the risk of unhealthy competition in this market and confirmed that his ministry will create more advantageous conditions and support local and overseas businesses, including M&A activities.
The statistics provided show that more than 90 M&A deals worth over 1.7 billion USD were agreed in 2007, 60 more than the 2006 figure. In 2008, M&A experienced a slowdown due to the economic decline, with nearly 40 deals going through at a total value of 350 million USD.
Though many difficulties and challenges still lie ahead, domestic and foreign experts still see the M&A market in Vietnam as attractive and say it offers many opportunities for investors.
Tran Anh Duc said he believed that the global crisis “cannot prevent foreign investors’ interests in Vietnam ” while Dominic Scriven regarded the global crisis as a key motivation behind M&A activities in Vietnam .
According to the M&A Network’s Executive Director Nguyen Tri Thanh, M&A deals in Vietnam will continue to focus on real estate during 2009-2010.
Experts have forecast that between 30-50 percent of Vietnamese businesses will merge or be merged with other partners in the next 5 to 10 years.
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