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Foreign investors given more access to SOEs
Foreign investors will be eligible to fully buy State-owned enterprises (SOEs) operating in the sectors not committed by Vietnam concerning for foreign investors’ business rights and approved by Prime Minister for being transferred and sold.
This is a new point in recently issued Decree 109/2008/ND-CP on the transferring and selling of State companies.
For sectors that Vietnam has made commitments for foreign investment, foreign investors are entitled to join their local partners to buy State companies’ stakes at ratio which is not exceed Vietnam’s committed level in that sector.
The decree also stipulates for the first time that intermediary financial institutions and individuals coming from institutions that got involved in SOEs’ evaluation and auctions would not be allowed to buy stakes in SOEs.
Replacing Decree 80/2005/ND-CP on transferring, selling, contracting and leasing State companies, the issuance of the new decree is expected to open wider doors for foreign enterprises to get involved in buying and selling enterprises and heat up the merger and acquisition (M&A) market in Vietnam .
In the past two years, the acquisition and merger activities in finance and banking sector have drawn keen interest from foreign investors.
In August alone, the French Societe-General bank bought of 15 percent stake in the Southeast Asian joint stock bank, while HSBC increased its stake in Techcombank to 20 percent and the Singaporean OCBC acquired 15 percent stake in VPBank.
TigerInvest’ website www.muabancongty.com showed that in the first half of 2008, 600 investment opportunities were offered on the website, in stead of 200 for the whole 2007.
According to experts, merger and acquisition is the shortest way for foreign investors to approach Vietnam ’s market and take advantage of Vietnamese partners’ distribution networks as well as their working staff. The activity also benefits the Vietnamese enterprises.
Head of the Foreign Investment Department under the Ministry of Planning and Investment (MPI) Phan Huu Thang forecasts that Vietnam will see a stronger M&A trend, especially in the context of integration and severe competition. Between 35-50 percent of Vietnamese enterprises will be merged in the next 6-10 years, Thang added.
MPI is working with related agencies to improve legal regulations for M&A activity, Thang added.
VNA
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