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HCM City (VNA) – Several of Vietnam’s key export sectors, such as textile-garment, leather-footwear, and electronics have become magnets for merger and acquisition (M&As) activities, posing a risk of leading enterprises in those sectors being purchased by foreign investors.

An advantage of Vietnam’s textile-garment industry is low labour costs, and it was also identified as one of six sectors on a list of supporting industry products prioritised for development.

The country has become the “footwear factory” of the world, while the domestic market boasts a population of more than 96 million.

Vietnam is also establishing itself as the world’s electronic manufacturing hub, with FDI continuing to flow into the sector over recent years.

Tran Phuong Lan, an official from the Vietnam Competition and Consumer Authority at the Ministry of Industry and Trade (MoIT), said that apart from existing development potential, opportunities created by bilateral and multilateral free trade agreements (FTAs) have also fuelled those industries’ development.

For example, she noted, under the EU-Vietnam FTA that took effect on August 1, 2020, 42.5 percent of import tariffs on textile-garment products were immediately eliminated, while those on leather-footwear items will be gradually cut to zero percent. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which came into force on December 30, 2018, abolished tariffs on Vietnam’s textile-garment products exported to other member countries.

A recent study of COVID-19’s impact on certain main industries in Vietnam noted that there have been signs of M&As surging in the textile-garment, footwear, and electronics sectors over the last three years.

In 2018, Japan’s Itochu Corporation spent 47 million USD on purchasing nearly 10 percent of shares in the Vietnam National Textile and Garment Group (Vinatex), raising its stake to almost 15 percent and becoming the second-largest shareholder, after MoIT.

Notable M&A deals last year included the one between the Taekwang MTC Vietnam Co. Ltd and the Jin Heoung Vina JSC in the leather-footwear industry, and the one between the Zenith Electronics LLC and Luxoft USA Inc. in the electronics industry.

Investors from the Republic of Korea, who have continually conducted large-scale M&A deals in Vietnam, also tend to select sectors with potential, like textile-garment, leather-footwear, and electronics.

Economic experts cited the experience of other countries as showing that to ensure effective M&A activities and protect the interests of all sides involved it is necessary to perfect related legal regulations, especially those on information transparency, and set up a regular consultative mechanism between the MoIT and the Ministry of Planning and Investment to develop an M&A database for key industries like textile-garment, leather-footwear, and electronics.

Vietnamese enterprises should proactively diversify technical solutions to keep information transparent, identify their targets in M&A deals, and analyse partners to avoid risks during negotiations.

In particular, experts noted, in M&As involving foreign firms, businesses should have a good grasp of market information and carefully assess foreign investors regardless of the deal’s value.

Nguyen Thi Tong, former Vice Chairwoman and former Secretary-General of the Vietnam Leather, Footwear and Handbag Association, recommended that as the leather-footwear and handbag sector is one of Vietnam’s five key export industries, businesses should make proactive moves to boost their capacity and cooperation via M&As within their sector, to secure sustainable development./.

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Representatives of Vietnam and the UK hand over notes confirming the date when the UKVFTA comes into force. Photo: VNA

Emily Hamblin, UK consul general in Ho Chi Minh City and trade director for Vietnam, said that May 1 is the next milestone to celebrate in the United Kingdom and Vietnam’s timeline of implementing the free trade deal (UVFTA), when the agreement will legally enter into force.

However, the benefits of it have already been in place for several months, being provisionally applied from January 1. Some 65 per cent of all tariffs have already been eliminated and this will increase to 99 per cent over the next six years. This equates to tariff savings of $134.65 million per year on Vietnamese exports to the UK by full implementation, and of $42.52 million per year on UK exports to Vietnam.

Among them, there are huge cooperation opportunities in the field of healthcare. Hamblin said that in an age of growing challenges from non-communicable diseases, and emerging threats from infectious diseases such as COVID-19, digital health has the potential to offer new solutions and alleviate pressure on overstretched health systems. Digital health technology can empower patients to actively participate in their care, improve clinical outcomes, and enhance operational efficiency.

Innovation and technology have touched many aspects of life in Vietnam and healthcare is no exception. In a concerted effort to embrace Industry 4.0, the Vietnamese government has committed to a national agenda that seeks to harness the potential of digital solutions across the healthcare system. This has set a solid foundation for digital transformation in Vietnam, and the UK shares many of the same aspirations.

“We seek to utilise digital innovation to expand equitable access to quality care, in line with United Nations Sustainable Development Goal 3 on good health and wellbeing. At the early stage of digital transformation, Vietnam has plenty of opportunities to avail of innovative solutions from the UK,” Hamblin stressed.

Meanwhile, Nitin Kapoor, chairman and general director of AstraZeneca Vietnam, said, “As AstraZeneca continually strives to put patients first, we appreciate the UVFTA that is helping to ensure continued access to our innovative and high-quality medicines for millions of Vietnamese patients.

British pharmaceuticals like AstraZeneca can enjoy the increased protection and enforcement of intellectual property rights, internationalised standards and technical regulations, and enhanced transparency of policies on government procurement and reimbursement, which in turn will allow us to better serve local patients.”

Kapoor stressed that the UVFTA entering into force is especially meaningful when the UK and Vietnam are looking forward to another decade of bilateral strategic partnership, cooperating ever more closely in numerous areas, including healthcare, to strengthen the livelihoods and economic prosperity of the people.

Indeed, a number of UK healthcare investors have started to set up their presence in Vietnam. Last year London-based Real Capital London launched a $156 million Hong Anh Medical Campus project in Ho Chi Minh City. The facility will be a state-of-the-art healthcare system incorporating a 462-bed hospital, a medical training centre, a network of general practice clinics and pharmacies, and senior residencies and nursing homes, adding much needed facilities and services to Vietnam’s healthcare system.

The project is divided into four stages, with the final phase expected to be completed by 2030. The fund’s vision is to build a state-of-the-art medical campus under British standards, offering the highest standards of healthcare in Vietnam

As of present, British investors have poured $3.87 billion across over 400 projects in Vietnam and is the 15th-largest foreign investor in the country. Established British actors already here include financial services companies like HSBC, Standard Chartered Bank, and Prudential; Jardines in real estate; and healthcare companies such as AstraZeneca, GSK, and Reckitt.

In the past decade, Vietnam and the UK already enjoyed a strong growth cycle – with bilateral trade growing on average 12 per cent per year. The UVFTA is built upon that strong basis and is opening the doors to increase capital flow between the two nations, according to Hamblin.

She stressed that the UVFTA provides better market access for services, as Vietnam has committed to opening up markets beyond that set out within the World Trade Organization’s baseline, which delivers greater market access for UK service providers. These and other measures set out in the FTA represent real benefits for both businesses and consumers.

In the same vein, Kenneth Atkinson, executive chairman of Grant Thornton Vietnam and a board member of Britcham Vietnam, said that the UVFTA is one of the first signed and entered into by the UK, after leaving the European Union last year. The agreement reflects the importance both the UK and Vietnamese government place on the strategic partnership and the growing importance of the bilateral relationship.

Atkinson expected that a reduction in regulatory barriers and red tape will attract UK investors to Vietnam, particularly in the healthcare space.

In a previous working session with Binh Phuoc Province’s leaders in last December, the then PM Nguyen Xuan Phuc delegated the provincial People’s Committee to implement the project under the public–private partnership (PPP) mode.

He also asked the Ministry of Planning and Investment in coordination with the Ministries of Finance, and Transport to allocate financial resources collected from the State budget in the Mid-term public investment plan for the 2021-25 period.

On March 18, the governments of HCMC and its neighboring province of Binh Phuoc had a working session on the construction project of HCMC-Thu Dau Mot-Chon Thanh expressway. On this occasion, the two sides agreed to establish a steering committee for the project.

Accordingly, the HCMC-Thu Dau Mot-Chon Thanh expressway is about 70 km long with 6-8 lanes, connecting HCMC and the Southern provinces of Binh Duong and Binh Phuoc. The stretch in HCMC is 1.5km long, expected to link up to Ring Road No.2 at Go Dua Intersection in Thu Duc City. The section running through Binh Duong Province is 57km long while the section running through Binh Phuoc Province is 11.5km long.

The project costing VND36,000 billion (US$1.55 billion), including around VND17,000 billion (SU$736.5 million) coming from the State budget will be kicked off before 2030.

Binh Phuoc Province will take responsibility for carrying out the project; organizing working sessions on investment modes, capital resources, building the overall plan for the project with ministries, departments and localities.

Hanoi (VNA) – China will work with Mekong countries to continue to promote the development of the Lancang-Mekong Cooperation (LMC) towards creating a new model of regional cooperation, and building a new highland of development and prosperity, Chinese State Councillor and Foreign Minister Wang Yi was quoted as saying on April 13 by Xinhua News Agency.

Xinhua News Agency also quoted the Chinese official as saying that the LMC mechanism had brought tangible benefits to the people of all LMC countries.

The six LMC countries absorbed resources from all sides, focused on pragmatic cooperation and reached fruitful results. They also did a lot to benefit the people and carried out regional governance and maintained peace and stability of the region.

Wang said that China is speeding up efforts to foster a new development paradigm, and the LMC is facing new opportunities.

The six LMC countries should adhere to the spirit of partnership to jointly seek ways for development; adhere to interconnection to build an engine for development; adhere to innovation to foster momentum for development; and put people’s livelihood first to consolidate the foundation for development, he said.

Xinhua also quoted Myo Thant Pe, Myanmar Ambassador to China, as saying that all countries would continue to cooperate closely with China, push forward mechanism construction and deepen pragmatic cooperation to better benefit all the people./.

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