Economists are concerned that the growing number of merges and acquisitions (M&A) - the latest trend in the market as smaller companies learn to be lean and mean - will progress unabated, giving way to monopolies and anti-competitive behaviour.
According to First Asia Finance Group, a Hong Kong based financial advisor, more than half of the roughly 300,000 small and medium-sized enterprises (SMEs) currently in the market will either close or merge with other companies over the next six years due to stronger competition and the rich environment for M&A activity.
There have already been some major deals signed this year. The Dai-ichi Group acquired Bao Minh-CMG Life Insurance in a coup de main to quickly breach the Vietnamese market.
In addition, VinaCapital purchased a 70 per cent stake in both the Metropole Hotel and the Sai Gon Ommi earlier this year through its VinaLand fund. Executives say the fund is hunting for other high-end hotels to buy.
Don Lam, director of VinaCapital, said the recent wave of M&A in Viet Nam may be a necessary step to improve the efficiency of many poorly run companies and create better economies of scale.
M&A could also lead to improved brand recognition on a national and international scale, say experts, as companies use their combined strengths to reach more consumers.
"Mergers and acquisitions has also proven to be a new and important channel to attract foreign investment," said Nguyen Thi Bich Van, deputy director of the Ministry of Planning and Investment’s Foreign Investment Agency.
There are concerns, though, that if left unchecked M&A activity could lead to anti-competitive behaviour and the emergence of monopolies.
Legal regulations to ensure competition should, therefore, be streamlined, especially as Viet Nam opens its market under the WTO agreement to well-funded multinational corporations, says Nguyen Nhu Phat, deputy chairman of the State and Law Institute.
M&A activity is currently regulated under several laws - the Investment Law, Enterprise Law and Securities Law - which causes regulatory overlaps.
The Ministry of Trade’s Competition Administration Department will have to take a bigger role in preventing unwanted monopolies, says Phat. He also worries that regulators may be restricted given the department has three roles: administrator, investigator and executor.
Dinh Thi My Loan, director of the Competition Administration Department, says there are plans to streamline regulatory procedures for mergers and acquisitions. The department, though, will have to co-operate closely with the State Securities Commission, the Ministry of Planning and Investment.
Source: VNS
Showing posts with label SMEs. Show all posts
Showing posts with label SMEs. Show all posts
Wednesday, July 18, 2007
Friday, July 13, 2007
Land still largest barrier
According to a survey by the International Finance Corporation (IFC) on the acquisition of land by small- and medium-sized enterprises (SMEs) of Vietnam, of every four SMEs only one is directly allocated or able to lease land from the state.
Some 75% of developing SMEs say that the biggest hindrance for their development is land shortage.
It is estimated that in 2007, around 50,000 SMEs will be established. The increase of new enterprises has made the demand for land to build factories, offices, shops increase dramatically.
Most enterprises want to be allocated land from the state to be assured in production. However, the fund of land is limited and usually only big enterprises can directly access land allocated by local governments, mainly foreign-invested projects.
According to Nguyen Thi Chuyen, Chairwoman of the Minh Tam Pottery and Lacquare Cooperative, the land reserve for industrial zones is still large but SMEs are unable to implement long-term plans to use large areas of land in industrial zones. They mainly use land owned by their own families or hire small plots of land and thus, face limitations in expanding investment and production.
Dao Trung Chinh, Vice Head of the Land of the Ministry of Natural Resources and the Environment, also affirmed that private companies that wanted to have land often had to hire land from state-owned firms at high prices and for unspecified durations.
According to most SMEs, seeking land to serve production is the most complicated, most costly, time-consuming task among all the administrative formalities necessary to establish a new firm.
A survey of GTZ reveals that normally, to be allocated land from the state, enterprises must fulfill seven kinds of formalities which require around 230 days for completion and they have to go through many related state agencies.
The dissatisfaction of enterprises revealed in the survey regarding the land use right licencing process is quite high. Meanwhile, most enterprises complain of competent agencies’ sluggishness in this issue.
Recently, land registration centres have been established in almost all provinces and cities, contributing to reduce administrative formalities related to land. However, the time needed to fulfill those formalities remains long.
Besides access to land, the biggest worry for investors at present, particularly small- and medium-size ones which have enterprises located outside industrial zones, is the constant change of land-use plans of local governments.
According to Truong Thai Son, Deputy General Director of the Hoang Quan Real Estate Company, land-use plans are not good because the registration system and grassroots information (social-economic, natural resources, development forecast information) for making decisions on planning are insufficient. The making of land-use plans is sometimes based on the orientations of the upper level and inaccurate reports from the lower level, which make land-use plans frequently change, causing difficulties for production plans of enterprises.
In addition, the planning process doesn’t witness the participation of enterprises and people.
According to Mr. Son, in Vietnam the need for intermediate services on land for production is a fact but the market scale is not large enough to encourage the appearance of professional service providers. At present, an enterprise that seeks land for production often thinks of going to the local government to submit its project and ask for land allocation, not to land brokerage agencies.
More than 50% of SMEs of Vietnam in IFC’s survey said that it was very difficult to find a suitable plot of land on the secondary market. Up to 66% of SMEs that have been successful in seeking land have been so thanks to their personal relations. This shows that the improvement of information infrastructure can have positive impacts on the information balance of the land market.
One thing needed to improve the transparency of the market is the efforts of the local government in creating and making public the land reserved for production. Moreover, local government and management boards of industrial zones also have to permit the construction of industrial zones with small plots of land suitable for small- and medium-sized enterprises, instead of only those for big enterprises.
Source: VNE
Some 75% of developing SMEs say that the biggest hindrance for their development is land shortage.
It is estimated that in 2007, around 50,000 SMEs will be established. The increase of new enterprises has made the demand for land to build factories, offices, shops increase dramatically.
Most enterprises want to be allocated land from the state to be assured in production. However, the fund of land is limited and usually only big enterprises can directly access land allocated by local governments, mainly foreign-invested projects.
According to Nguyen Thi Chuyen, Chairwoman of the Minh Tam Pottery and Lacquare Cooperative, the land reserve for industrial zones is still large but SMEs are unable to implement long-term plans to use large areas of land in industrial zones. They mainly use land owned by their own families or hire small plots of land and thus, face limitations in expanding investment and production.
Dao Trung Chinh, Vice Head of the Land of the Ministry of Natural Resources and the Environment, also affirmed that private companies that wanted to have land often had to hire land from state-owned firms at high prices and for unspecified durations.
According to most SMEs, seeking land to serve production is the most complicated, most costly, time-consuming task among all the administrative formalities necessary to establish a new firm.
A survey of GTZ reveals that normally, to be allocated land from the state, enterprises must fulfill seven kinds of formalities which require around 230 days for completion and they have to go through many related state agencies.
The dissatisfaction of enterprises revealed in the survey regarding the land use right licencing process is quite high. Meanwhile, most enterprises complain of competent agencies’ sluggishness in this issue.
Recently, land registration centres have been established in almost all provinces and cities, contributing to reduce administrative formalities related to land. However, the time needed to fulfill those formalities remains long.
Besides access to land, the biggest worry for investors at present, particularly small- and medium-size ones which have enterprises located outside industrial zones, is the constant change of land-use plans of local governments.
According to Truong Thai Son, Deputy General Director of the Hoang Quan Real Estate Company, land-use plans are not good because the registration system and grassroots information (social-economic, natural resources, development forecast information) for making decisions on planning are insufficient. The making of land-use plans is sometimes based on the orientations of the upper level and inaccurate reports from the lower level, which make land-use plans frequently change, causing difficulties for production plans of enterprises.
In addition, the planning process doesn’t witness the participation of enterprises and people.
According to Mr. Son, in Vietnam the need for intermediate services on land for production is a fact but the market scale is not large enough to encourage the appearance of professional service providers. At present, an enterprise that seeks land for production often thinks of going to the local government to submit its project and ask for land allocation, not to land brokerage agencies.
More than 50% of SMEs of Vietnam in IFC’s survey said that it was very difficult to find a suitable plot of land on the secondary market. Up to 66% of SMEs that have been successful in seeking land have been so thanks to their personal relations. This shows that the improvement of information infrastructure can have positive impacts on the information balance of the land market.
One thing needed to improve the transparency of the market is the efforts of the local government in creating and making public the land reserved for production. Moreover, local government and management boards of industrial zones also have to permit the construction of industrial zones with small plots of land suitable for small- and medium-sized enterprises, instead of only those for big enterprises.
Source: VNE
Saturday, June 23, 2007
Small- and medium-size businesses upbeat about economy
Small- and medium-size Vietnamese enterprises (SMEs) are optimistic about the national economy and the opportunities to be brought about by good economic performance, a Hong Kong and Shanghai Banking Corporation HSBC survey has found.
The survey on SME’s beliefs was conducted by Acorn Marketing and Research Consultancy of 501 Vietnamese SMEs in the first quarter of 2007.
The aim of the survey was to find out the viewpoints and thinking of SMEs on the prospects of Vietnam’s national economy.
The survey was conducted at the same time as HSBC’s survey of Asia-Pacific businesses carried out by A.C. Nielson.
This is the biggest survey in Asia, involving the participation of 1,800 SMEs in nine countries and territories: Hong Kong, China, Taiwan, Singapore, India, the Republic of Korea, Malaysia, Indonesia and Australia.
The 501 Vietnamese companies were asked about their viewpoints on the national economy, investment and recruitment plans, as well as about trade prospects with China, the rest of Asia and the world.
Thomas Tobin, Chief Executive Officer of HSBC in Vietnam, said that most of the polled enterprises said they were very upbeat about the national economy and the international trade volume. They said they were ready to make further investment and recruit more staffs.
In general, Vietnamese SMEs said they were optimistic about economic performance for the next six months. 76% of them said that the economic growth rate would reach more than 8%. HCM City-based enterprises prove to be more optimistic about the national economy than enterprises in other localities.
In the international survey, Indian SMEs prove to be the most optimistic, followed by Singaporean, Chinese and Indonesian.
74% of Vietnamese SMEs revealed that they had investment plans for the next six months. No enterprise said it would shut down or cut production.
Indonesian enterprises are most optimistic about business development, followed by China, Australia and Singapore. The majority of Hong Kong businesses do not have investment plans, while 27% have investment plans and 11% plan to cut production this year.
With the optimism about the national economy, some 70% of Vietnamese SMEs said that they would recruit more staffs in 2007.
Chinese SMEs were the most optimistic in employment, followed by Indonesian, Indian and Singaporean. Most Hong Kong businesses (73%) do not have personnel adjustment plans for this year. However, 13% of the polled enterprises said that they planned to raise their workforces by less than 10%, and 11% of enterprises plan to raise their workforces by over 10%. Only a few enterprises said that they would cut staffs.
Vietnamese enterprises all expect a growth in trade volume with China, the rest of Asia and the world over the next six months.
Source: VNA
The survey on SME’s beliefs was conducted by Acorn Marketing and Research Consultancy of 501 Vietnamese SMEs in the first quarter of 2007.
The aim of the survey was to find out the viewpoints and thinking of SMEs on the prospects of Vietnam’s national economy.
The survey was conducted at the same time as HSBC’s survey of Asia-Pacific businesses carried out by A.C. Nielson.
This is the biggest survey in Asia, involving the participation of 1,800 SMEs in nine countries and territories: Hong Kong, China, Taiwan, Singapore, India, the Republic of Korea, Malaysia, Indonesia and Australia.
The 501 Vietnamese companies were asked about their viewpoints on the national economy, investment and recruitment plans, as well as about trade prospects with China, the rest of Asia and the world.
Thomas Tobin, Chief Executive Officer of HSBC in Vietnam, said that most of the polled enterprises said they were very upbeat about the national economy and the international trade volume. They said they were ready to make further investment and recruit more staffs.
In general, Vietnamese SMEs said they were optimistic about economic performance for the next six months. 76% of them said that the economic growth rate would reach more than 8%. HCM City-based enterprises prove to be more optimistic about the national economy than enterprises in other localities.
In the international survey, Indian SMEs prove to be the most optimistic, followed by Singaporean, Chinese and Indonesian.
74% of Vietnamese SMEs revealed that they had investment plans for the next six months. No enterprise said it would shut down or cut production.
Indonesian enterprises are most optimistic about business development, followed by China, Australia and Singapore. The majority of Hong Kong businesses do not have investment plans, while 27% have investment plans and 11% plan to cut production this year.
With the optimism about the national economy, some 70% of Vietnamese SMEs said that they would recruit more staffs in 2007.
Chinese SMEs were the most optimistic in employment, followed by Indonesian, Indian and Singaporean. Most Hong Kong businesses (73%) do not have personnel adjustment plans for this year. However, 13% of the polled enterprises said that they planned to raise their workforces by less than 10%, and 11% of enterprises plan to raise their workforces by over 10%. Only a few enterprises said that they would cut staffs.
Vietnamese enterprises all expect a growth in trade volume with China, the rest of Asia and the world over the next six months.
Source: VNA
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