Vietnam eyes regional investors

The Mergers and Acquisitions market in Vietnam will grow by up to 40 per cent annually in coming years, and the government expects foreign direct investment into Vietnam to hit US$20 billion this year.

The country’s largest foreign investor right now is Taiwan, followed by South Korea, Singapore and Japan.

Vietnam is hoping to regain investors’ confidence this year.

This comes after the country’s woes last year that saw three rating downgrades and two currency devaluations.

PwC Vietnam partner Stephen Gaskill said: “The constant devaluation of the (Vietnamese) dong means that when you get your money out, it’s not going to be worth as much as when you first made your investment.

“And that’s certainly concerning people on how you can hedge against those sorts of risks”.

However, some analysts say despite the troubles that the country is facing right now, the government is working to resolve these issues.

“Over the short term, there is a little bit of an imbalance there, that one needs to fix,” Mr Gaskill said.

“And we think the government is very aware of that and they are working on it right now. So we will see what the new directions are.”

In fact, the Vietnamese government forecasts the country’s Gross Domestic Product to rise by a strong 7.5 per cent this year.

Hanoi IE Singapore International Operations Group centre director Raymond Lui said: “I think we are very positive on Vietnam for 2011 — the key growth drivers are there.

“Investments continue to come in, and the local consumption is strong, because the fundamentals are intact”.

Mr Lui said two key trends in Vietnam are its rapid urban development and the growth of the middle class.

He added that these drivers would support local consumption. For example, Singapore’s supermarket retailer NTUC FairPrice is making headway in South Vietnam.

Analysts also believe that companies in Vietnam will have difficulty seeking new funding avenues on the back of its recent troubles.

As such, they are likely to welcome private equity investors with open arms.

Top four investment sectors in Vietnam as of December last year are manufacturing, followed by property, hotel & restaurant and construction.- Channel News Asia

Tags: Vietnam M&A