Short cutting 101

The leather-footwear industry is among the key export sectors attracting M&As in recent years (Photo: VNA)

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./.

Vietnamese companies have been stepping up investment to boost rice exports to Europe – however, it remains a challenging task penetrate the market efficiently.

Bui Thanh Son – Minister of Foreign Affairs

Vietnam has been and will continue to be a reliable friend and partner, an active and responsible member of the United Nations and the international community.

Every year, landmines, explosive remnants of war, and improvised explosive devices claim nearly 10,000 casualties, mostly civilians and children in conflict areas such as Afghanistan, Libya, and Yemen, but also alarmingly in places like Cambodia, Laos, and Vietnam, where wars ended decades ago.

It is a stark reminder that the wounds cut deep in the aftermath of wars and create long-lasting, destabilising effects to post-conflict peacebuilding and sustainable peace. It reminds us that peace cannot be sustained if the legacy of wars is not addressed.

Indeed, the international community has come together to address this challenge. Actions taken by member states, the United Nations system, particularly the United Nations Mine Action Services, international organisations, non-governmental organisations (NGOs), and other stakeholders have proven critical in mitigating dangers and addressing multiple challenges caused by explosive remnants of war.

The Security Council, with the adoption of its landmark Resolution 2365 on mine action in 2017, has also stressed the importance of ensuring that peacekeeping operations are equipped, informed, and trained to reduce such threats. All efforts have contributed meaningfully to post-conflict reconstruction and reconciliation efforts. However, much remains to be done. The greatest challenge, as always, is a matter of political will. Regrettably, mine action has not been accorded the level and span of attention it deserves. The contaminated areas are vast and the number of victims in need of assistance is overwhelming. The resources allocated are dwarfed by the complexity and magnitude of the problem.

Decades of wars in Vietnam have caused untold sorrow and left destructive, lingering effects. To this day, almost one-fifth of Vietnam’s land areas are still contaminated by unexploded ordnances. Clearance efforts, if continued at the current speed and resources, will take another hundred years to complete, seriously hindering our sustainable development.

Clearance must also be complemented by victim assistance, awareness-raising, and risk education at all levels, and importantly, the creation of sustainable livelihoods so that the fruits of peace are durable and meaningful. Mine action, after all, is about protecting and caring for our people and our communities, especially the most vulnerable.

This holistic approach we take involves all stakeholders. Leading the efforts are our experienced and competent military engineers, effectively supported by national and international partners.

Cooperation in mine clearance, including between former foes, like Vietnam and the US, has proven valuable in healing the wounds of war.

At the international level, mine action requires a whole-of-system, coherent, and long-term approach. Stronger partnerships are vital for better delivery and sustainable results. This means enhanced support and increased resources to all stakeholders, from national governments and regional organisations, like the ASEAN Regional Mine Action Centre, to NGOs, and those working on the ground. Adequate and regular financing, technological assistance to help clearance and decontamination, capacity building, knowledge, and experience sharing to those affected must be stepped up.

Finally, the United Nations and especially the Security Council should build on the Resolution 2365 and expand efforts to ensure the safety of its peacekeepers, protect civilians, and sustain peace. The council should mainstream mine action in its relevant agenda items and country-specific discussions.

Sustaining peace is hard, and even harder when we work alone. Vietnam has repeatedly called for an inclusive approach transpiring all parts of the peace spectrum and involving all stakeholders. Peace can only be sustained when a comprehensive and holistic approach is adopted. In this regard, as a key initiative during our chairmanship of the council, the president of Vietnam will convene a high-level open debate on enhancing measures for conflict prevention and resolution on April 19. We will spare no effort to forge a stronger partnership for sustainable peace.

The Golden Bridge in the central city of Da Nang has topped a list of the new wonders of the world by the UK’s Daily Mail newspaper.

Customers buy MEATDeli pork, a branded chilled meat product of Masan Group. The company shares hit the maximum daily gain of 7 per cent yesterday, supporting the market’s trend. — Photo courtesy of Masan MEATLife

Shares settled higher on Wednesday, reversing their morning course on recoveries of materials and banking stocks.

The benchmark VN-Index on the Ho Chi Minh Stock Exchange (HoSE) closed Wednesday’s trade at 1,255.87 points, up 7.54 points, or 0.6 per cent. The index fell 0.37 per cent in the morning trade after losing 0.33 per cent on Tuesday.

The market’s liquidity remained high as nearly 862 million shares were traded on the southern bourse, worth over VND19.3 trillion.

The index might continue to be weighed by correction pressure in the next few sessions before returning to its short-term rally, Bao Viet Securities Company’s stock analyst Tran Xuan Bach said.

“In general, the index is still expected to gain points, heading to resistance territory of 1,275 – 1,300 points in the near term,” Bach said, adding that local cash flows remain the key momentum to support the market.

The rally returned on gains of large-cap stocks in banking and materials sectors.

The VN30-Index, tracking 30 large-cap stocks on HoSE, climbed 1.05 per cent to 1,290.77 points. Twenty of the 30 biggest stocks in VN30 basket rose while nine stocks declined and one ended flat.

Hoa Phat Group (HPG) contributed the most to the market, up 5.79 per cent. Followed by Masan Group Corporation (MSN) with shares hitting the maximum daily gain of 7 per cent to VND100,700.

Other stocks listed in top five influencing the market’s rally were Vietcombank (VCB), real estate developer No Va Land Investment Group Corporation (NVL) and Vietinbank (CTG).

PetroVietnam Gas JSC (GAS), Mobile World Investment Corporation (MWG), FPT Corporation (FPT) and Vietjet Aviation JSC (VJC) also posted positive performance.

Meanwhile, losses in Vinhomes JSC (VHM), Vingroup JSC (VIC), Viet Nam Dairy Products JSC (Vinamilk, VNM) and Viet Nam Rubber Group JSC (GVR) capped the market’s gain.

VHM shares posted the biggest losses in market capitalisation, down 1.95 per cent.

Bach recommended investors keep stock proportion in their portfolio at 65 – 80 per cent. Investors with high cash ratio might consider opening long positions to increase stock proportion in correcting sessions.

On the Ha Noi Stock Exchange (HNX), the HNX-Index also edged higher on Wednesday, up nearly 0.9 per cent to 294.83 points. The HNX30-Index increased 1.13 per cent to 446.69 points.

During the session, domestic investors poured nearly VND2.7 trillion into the northern market, equivalent to a trading value of over 167 million shares.

However, foreign investors returned to net sell on both exchanges with a value of over VND1 trillion on HoSE and a net value of VND15.26 billion on HNX. — VNS