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CPTPP a boost to M&A deals

Released at: 17:39, 25/12/2018

CPTPP a boost to M&A deals

Photo: Baker McKenzie

Mr. Yee Chung Seck, Head of Baker McKenzie's M&A practice, talks about M&As in Vietnam next year.

by Linh San

M&As in Vietnam are forecast to reach $4.1 billion in 2019, according to the recent Global Transactions Forecast Report from Baker McKenzie. Why do you think M&A deal numbers will rebound in 2019?

With the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) coming into force and the EU-Vietnam Free Trade Agreement (EVFTA) expected to be ratified next year, we anticipate increased interest and confidence from investors looking to invest in Vietnam, which will likely help boost investment and M&As in 2019.

Certain deals commenced or were announced late this year and are likely to be completed next year. We also see interest and anticipate potential acquisitions in diverse sectors, from renewable energy, technology, and real estate to consumer products and healthcare. Proposed revisions to investment and securities laws also suggest that foreign ownership limits and conditions are set to ease.

How will the ratification of the CPTPP affect FDI into Vietnam?

By joining the CPTPP, Vietnam commits to opening up its market, removing certain tariffs, and continuing to open up trade. We expect this will increase foreign investor confidence to invest in or expand their business in Vietnam.

The other CPTPP members see Vietnam - a market with over 95 million people - as having great potential for growth. Vietnam’s willingness to join the CPTPP is a message to the world that it is committed to opening its market to international trade and commerce. Its participation in the trade pact also demonstrates that it is willing to reform its regulatory regime in order to integrate into the global economy.

What should Vietnam do to attract more investors?

Vietnam must continue to embrace Industry 4.0 and prioritize making digital tools and services available to businesses. Likewise, it must continue to work on providing high-quality education and training to its workforce. One of Vietnam’s current advantages is its young and educated population, and it must focus on training this population in order to further differentiate itself from other countries competing for the same foreign investment.

From a legal/regulatory perspective, Vietnam should continue to cut regulatory red tape to lessen unnecessary burdens on both foreign and domestic investors. Furthermore, it should enhance transparency and the enforcement of its laws and procedures.

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