Japanese investors will boom their M&A into Vietnam after Covid-19

The wave of Japanese companies conducting investment procedures in Vietnam is expected to increase sharply when the isolation barrier is removed.

At the recent Vietnam M&A Forum 2020, Mr. Masataka Sam Yoshida, Global Director of Transnational Mergers and Acquisitions Services, RECOF Corporation, said that the trend of Japanese M&A companies entering Vietnam will be vibrant in the post-period. Covid-19.

According to Mr. Masataka Sam Yoshida, the first basis to promote the investment wave in Vietnam is that Japanese companies need new markets to expand as most sectors in Japan have hit the ceiling. Nearly a third of the population is over 65 years old, making the average age of Japanese people 48.4 years old, nearly 20 years older than Vietnamese, the population declining by 276,000 per year.

The second factor is the M&A growth strategy supported by the abundant money in Japan accumulated over the past 20 years, more than 2,345 billion USD, existing in the form of bank deposits with 0% interest rates. The pressure to reinvest this amount of shareholders makes 2019 a record with more than 4,000 transactions in all types of M&A.

Based on the number of transactions in 2020 to the end of October, Vietnam is the 5th destination in the world in terms of number of transactions (21 transactions). In particular, considering the recent growth rate of M&A transactions between Vietnam and Japan, Vietnam might start to compete with the UK at No. 2.

Nhà máy sản xuất điều hòa của thương hiệu Nhật Bản tại Việt Nam.Ảnh: Daikin.

Factory manufacturing Japanese brand air conditioner in Vietnam Photo: Daikin.

Mr. Masataka Sam Yoshida explained, from the Japanese point of view, there are about 5,500 Japanese companies in this country, so it is too late to join. Regarding Myanmar, there are only less than 400 Japanese companies and conservative Japanese investors still have to wait to consider the appropriate time.

Meanwhile, Vietnam has about 2,000 Japanese companies, classified in the group of safe and potential destinations. Therefore, when the barrier to quarantine and limit the pandemic into Vietnam is lifted, a large wave of Japanese companies waiting to conduct investment procedures will emerge strongly.

The M&A trend of Japanese investors in Southeast Asia, in which Vietnam achieved the highest number of deals with 33 deals in 2019, 1.5 times higher than the previous year. This is a concrete testament to the Japanese companies’ interest in Vietnam.

Considering the ranking of countries by transaction value, in the past, due to the small size of enterprises, Vietnam has never been in the top three countries. But in 2019, the transaction value in Vietnam reached 389 million USD, 2.8 times more than in 2017 and ranked in the top 3 for the first time, with a very small difference compared to the country standing in position. Indonesia (valued at $ 415 million) was second.

Most recently, in the first 10 months of 2020, there were 21 announced M&A transactions between Japan and Vietnam, second only to Singapore. Despite a 25% decrease year-on-year due to the impact of the epidemic, considering the total number of outbound transactions in Japan decreased by 33% during this period, Vietnam’s 25% decline shows that it is still positive. than other countries.

In terms of transaction value, Vietnam ranked second with 282 million USD. Vietnam even occupies a higher position than 2019 in the transaction value ranking.

“The interest from Japanese investors to Vietnam is huge even during the pandemic. The slowdown in investment activities is only a matter of time and the M&A market will be active again when the hurdle. quarantine has been removed, “said Masataka Sam Yoshida.

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