On 19 November 2020, the Seminar “Changes in legal framework and influences on M&A market in Vietnam” was hosted by Vietnam International Arbitration Center (VIAC), Vietnam Mediation Center (VMC) and supported by the European Chamber of Commerce (EuroCham) and Vietnam Business Lawyers Club (VBLC) at Sai Gon Hotel, Ho Chi Minh City.
In the opening remarks, Mr. Chau Viet Bac – Vice Secretary General of VIAC said, “The process of international economic integration, together with positive changes in the improvement of the investment and business environment, are creating many development opportunities for the merger and acquisition market (M&A) in Vietnam. Recently, with many major global impacts such as the COVID-19 pandemic, the EVFTA Agreement and changes in legal regulations in Vietnam, the M&A market is expected to become more active in the near future. As M&A is a complex activity and involves in many fields, a large number of disputes have arisen. Therefore, besides learning and building a solid foundation on transaction execution steps, it is advisable that enterprises pay more attention to legal issues in order to enhance its negotiation power”.
Mr. Justin Gisz – Member of EuroCham’s Legal Sector Committee, participated in the seminar as a panelist and presented about the growth of the M&A market in the context of the European Union – Vietnam Free Trade Agreement (EVFTA). In his speech, he emphasized that: “The legal factors should be paid attention to as these are the decisive ones for the facilitation of M&A transactions, especially for transactions involving foreign elements. European investors highly appreciate the investment opportunities in Vietnam and look forward to enjoying favorable regimes to further promote M&A activities”.
“Thanks to the EVFTA with many beneficial commitments, the Vietnamese M&A market is likely to witness a gradual growth in the future. For example, it is clearly stated in the Agreement that the JV percentage of maritime transport service will increase from 49% to 70%; JV percentage of internal waterways transport will increase from 49% to 51% (for Mode 3) and no restrictions for Mode 1, etc.”, he added.
Moreover, Mr. Gisz mentioned a number of recommendations in the M&A Chapter of EuroCham’s Whitebook 2020 for smoothing the M&A market in Vietnam, which are:
- Continue to reduce the number of ‘conditional’ business sectors.
- Abolish altogether the Economic Needs Test (ENT) requirement for the establishment by foreign-invested retail distributors of new retail outlets
- Abolish M&A approvals altogether.
- Reduce discretionary decision-making powers of local licensing authorities.
- Improve clarity and consistency of M&A transactional implementation procedures.
- Reduce overall degree of State control over flows of foreign currency into and out of Vietnam.
- Facilitate faster and smoother processing of the tax clearance procedures necessary for implementing M&A transactions and the transfer of purchase prices.
- Revisit merger control notification thresholds under Decree 35/2020/ND-CP on implementing the Law on competition.