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Vietnam: Decree on Mergers and Acquisitions Being Drafted

(May 2, 2008) It was reported on May 2, 2008, that Vietnam's Ministry of Planning and Investment (MPI) is drafting a decree on foreign-related mergers and acquisitions (M&A). The aim of the draft proposal is “to ensure effective M&A, build a strict legal corridor and improve local awareness about the issue,” as well as “to improve the quality of foreign direct investment (FDI) and create favourable conditions for domestic and foreign enterprises to buy back shares.” To that end, the legislation will prescribe the legal procedures for M&A as well as a ceiling for foreign ownership in business transactions, Ngo Cong Thanh, head of the MPI's Foreign Investment Department Service Section, was quoted as saying. Through share sales and purchases and mergers with domestic and foreign enterprises, Vietnamese businesses have adopted measures to increase capacity to deal with the competitive pressure generated by international economic integration. Nevertheless, Thanh noted, although it is a growing trend that may rise along with the increasing number of foreign enterprises in Vietnam, at present FDI from M&A only constitutes about five percent of the total FDI in the country. (Decree on Foreign-related M&A in the Pipeline Drafted, ASEM CONNECT, May 2, 2008, available at http://asemconnectvietnam.gov.vn/NewsDetail.aspx?hoinhap=1&type=1&subId=50&
Newsid=9117
.)