Vietnamese companies face threat of takeover by foreigners



HANOI: As economic uncertainties continue amid the Covid-19 pandemic, Vietnamese companies have become vulnerable to takeovers by foreign investors at low prices.

Instead of setting up new companies, foreign investors prefer to invest in or buy existing businesses, enabling them to hit the ground running in the lucrative market.


There has been a sharp increase in acquisitions in Vietnam, especially as cash flows dry up for local businesses. Government data shows that in the first four months of the year, the number of newly registered foreign direct investment projects decreased by nearly 10 per cent year-on-year, but the number of companies in which foreign investors acquired shares rose by 33 per cent.


There were more than 2,600 acquisitions for US$1.6 billion without any capital increase and 580 transactions in which the capital increased by US$900 million, reports the Vietnam Express.


Japan ranked first with acquisitions of US$743 million, followed by South Korea (US$356 million) and Singapore (US$333 million).


Ho Chi Minh City-based companies were the biggest targets, accounting for more than half of the transactions.


Stake acquisitions accounted for nearly 80 per cent of the registered FDI in HCMC in the four-month period.


Investors have been especially interested in manufacturing companies, which saw 822 deals worth more than US$1 billion, while wholesale, retail and automobile and motorcycle servicing, attracted US$500 million.


Planning and Investment Minister Nguyen Chi Dung said acquisitions would increase further, with promising businesses snapped up at cheap prices.


Vietnam Chamber of Commerce and Industry chairman Nguyen Tien Loc said foreign companies and investment funds were considering acquiring real estate, retail and other companies, many of which are facing difficulties and are even on the verge of bankruptcy.

Citing this, in a recent meeting, he petitioned Prime Minister Nguyen Xuan Phuc to temporarily stop acquisitions during the pandemic.



Source: New Straits Times

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