Vietnam’s M&A market forecast to make strong bounce

tue MInH

Mergers and acquisitions (M&A) in Vietnam is forecast to recover to reach USD4.5 - 5 billion by 2021 before strongly bouncing to reach USD7 billion in 2022.

“The M&A market in Vietnam has developed strongly with thousands of transactions totalling nearly USD50 billion over the past decade. However, the global Covid-19 pandemic has seriously affected international trade and investment activities. The value of M&A deals in Vietnam in 2020 is expected to decline, estimated at USD3.5 billion, equal to 48.6 percent of 2019”, said Mr. Tran Quoc Phuong, Deputy Minister of Planning and Investment Phuong at the M&A Forum 2020.

In the first half of 2020, (foreign direct investment) FDI into developed economies plunged 75 percent compared to 2019 while FDI into developing countries slid by 16 percent. In particular, the total value of cross-border M&A transactions stood at only USD319 billion. Of this, developed economies that account for 80 percent of global M&A transactions saw a 21 percent decline.

However, according to the Mergers & Acquisitions Forum (MAF) research of the CMAC, Vietnam’s M&A market is least affected by the pandemic compared to other countries in Southeast Asia.

The Corporate Investment and Mergers & Acquisitions Centre (CMAC) said in the period June 2019 – October 2020, main industries attracting M&A deals are real estate, finance - banking, industry, retail, logistics, agriculture, health, and construction. The market continues to be led by foreign investors from countries such as Japan, Korea, Thailand and Singapore.

The latest report by the Euromonitor Market Research Group on M&A index has rated Vietnam as the market with the most dynamic and potential M&A activity globally this year.

Vietnam ranks second out of 50 economies in the mergers

Ho Chi Minh City, Vietnam

and acquisitions environment attractiveness index. The country’s score is only behind the U.S.’s for both years with 102 in 2020 and 94.6 in 2021. In terms of the fastest increase in the scores, Vietnam was the fifth in the world behind Singapore, Ireland, the Philippines, and Qatar.

Vietnam has numerous charms for foreign investors, being the only country in the region to produce positive growth this year. In addition, the country’s free trade agreements namely the Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP), EU - Vietnam Free Trade Agreement (EVFTA) and EU - Vietnam Investment Protection (EVIPA) also make Vietnam more attractive for foreign investors.