VietNamNet Bridge – Many foreign investors are contributing capital or buying stakes in Vietnamese enterprises.
Sekisui Chemical from Japan in early July signed a comprehensive cooperation agreement with Vietnam’s Thieu Nien Tien Phong Plastics. With a 25.3 percent stake, Sekisui will have a representative on the board of the directors of the company.
Sekisui chose Thieu Nien Tien Phong because of its large distribution network throughout Vietnam.
Industry observers said Sekisui will not only offer its products in the distribution network run by the Vietnamese partner, but will also ‘sell’ technology to the enterprise.
In other deals, a number of Vietnamese enterprises targeted foreign investors. These includ Cau Tre Food, VCM (building material manufacturer), Vinamilk (dairy producer) and Sabeco (brewer).
According to MPI, in the first half of the year, 2,500 deals of capital contribution or stake transfer were made with total value of $2.24 billion, almost double the same period of last year.
In HCMC, according to the city’s planning department, 915 cases of foreign investors registering to make capital contributions and buying stakes in Vietnamese enterprises were reported in the first half of the year, valued at $1.4 billion in total. The figure is almost double the $720 million in FDI from more than 430 new projects registered during the same time.
Analysts commented that there are two kinds of investments. Investors either make short-term investments and try to transfer the stakes later for profit, or make long-term investments.
In general, the investors who ‘surf for investment’ are mostly individuals or short-term investment funds, while institutional investors mostly target long-term investments for upgrading technology, expanding production and developing markets.
Siam City Cement (SCCC), for example, has spent hundreds of millions of dollars to acquire a 65 percent stake of Holcim Vietnam and it plans to pour $30-50 million in the next 6-12 months to upgrade the production capacity in Kien Giang, Ba Ria-Vung Tau, HCMC and Dong Nai.
Meanwhile, SCG, after buying a 100 percent stake of VCM, can increase its cement production capacity to 33.5 million tons.
An analyst said that the 2014 Investment Law, plus favorable conditions created by local authorities, all have helped boost capital contribution and stake transfer transactions.
The investors who want to contribute capital or buy stakes need to register deals with state management agencies.
In HCMC, the registration is allowed to be carried out via the internet. However, he warned that the increase in portfolio investment may lead to a decrease in direct investments through the development of new projects.