Mergers and Acquisition (M&A) activities in Vietnam have developed significantly, however there are some obstacles because of the lack of legal framework for M&A. Around this issue, Vietnam Business Forum had an interview with Mr Nguyen Minh Son, General Director of SVA Financial Group. Do Ngoc reports.
While domestic and foreign enterprises are facing many difficulties, SVA Financial Group has recently built up two new products. Is this a great opportunity of the Group in 2012?
As we know, the economic situation in 2011 is very gloomy. The statistics of VCCI revealed that the number of bankrupt enterprises reached 7,000, the forecast of the Ministry of Planning and Investment indicates that about 12,000 enterprises may go bankrupt in 2012. According to the statement of the State Bank of Vietnam, about 50 percent of banks are poorly ranked, with the possibility of bankruptcy, and need to be restructured. In 2012, Vietnam economy and finance could possibly face a lot of troubles. Because of these matters, entrepreneurs are forced to find new directions to survive and develop, but not all of them are successful. The SVA Financial Group is choosing its own way to integrate in the world; it actively extends its external relationships and builds up joint ventures with global financial organizations and banks. SVA Financial Group has introduced two new products in 2012: M&A and property pledges. I think that when the markets of shares, real estate and gold are difficult and instable, we must have a look back and carefully analyse the market situation, and take a global view to apply the experiences of developed countries in Vietnam. Aiming to attract foreign investment into Vietnam, we should clarify and publish our financial statements for validating the true value of Vietnamese products. M&A activities among enterprises are considered to be heating up by foreign and domestic analysts, and in my opinion, we should let these activities heat up, and when brilliant gems show up, then we will auction these brilliant products.
The field of M&A at this period could be considered a golden time of SVA. What is your prediction for the financial market in 2012 in Vietnam, as well as the future of SVA with these two new products?
For enterprises on the edge of bankruptcy, financial source seems to be a life buoy, they desire to ease this burden as fast as possible, or find someone who can share this burden with them. SVA - M&A will be a reliable link to support Vietnamese enterprises, furthermore, it will create an investment opportunity for investors, who want to invest in promising sectors, and certainly both sides will benefit, especially, it will make a transparent market, an overall trading market, which replaces the markets of shares, real estate and gold. These ideas are seriously implemented. I believe that investment attraction into Vietnam is very positive, financial resources from external investors will flow in, incomplete projects will again be implemented, and financial environment will certainly develop. These are the best elements to stabilize macroeconomic development.
In fact, many enterprises have sought their own ways to merge, but Vietnamese policy is still inadequate for the development of the M&A market. How do you see this problem?
Domestic enterprises have been finding a safe escape by cooperating with each other to develop. However it is just a theory, because finding a financial resource to implement projects is not easy when almost 50 percent of banks cannot grant loans in 2012. This year, M&A of enterprises will probably depend largely on foreign financial partners. It is noteworthy that the policy mechanism of Vietnam is still inadequate for the M&A market. Till now, no M&A company has been officially established in Vietnam. Lawmakers and departments of planning and investment replied to enterprises that there is no law promulgating this field. It is one of the obstacles hindering national economic development. Regarding the world, especially in the United States, the M&A market emerged as a wave from the 70s, and since then, it spread throughout the world because of its effectiveness. In the same time, regarding the M&A market of Vietnam, it is still something new not only to lawmakers, but also to domestic enterprises, which indicates that we are still on a spontaneous, unscientific business path. However I believe that M&A will become a strong trend in the future.
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