More and more Vietnamese brands bought by foreign companies

An analyst commented that it was a ‘tragedy’ that Vietnam had to sell Sabeco, a powerful brewer, to a foreign company. 

“Vietnamese businesses can’t run large corporations. What they can do is create brands and then sell the brands to foreigners,” he said.

“They try to fatten the goose to sell the goose for a good price. Wise businesses will continue to raise the goose so that it lays golden eggs,” he commented.

“If the trend continues, Vietnam will no longer have strong brands,” he warned.

In reply, many economists said M&As and hostile takeovers are common in a market economy. 

The participants at the Vietnam International Economic Integration Forum 2017 voiced their concern about the big gap in scale between Vietnamese and foreign businesses’ capitalization value, which allows foreign investors to buy Vietnamese businesses.

The average capitalization value of 30 Vietnamese corporations is estimated at US$3 billion, just equal to one-fifth of Singapore (US$15 billion), and one-third of Thai and Indonesia corporations. 

As such, even if the state wants Vietnamese investors to buy the shares it divests, it would be impossible because of the weak financial capability of Vietnamese investors.

VinaCapital’s deputy CEO Pham Minh Loan said that it will take a Singaporean investor only three years to be able to buy a Vietnamese large company.

According to MOF (Ministry of Finance), by December 20, 2017, agencies had approved the equitization plans of 45 SOEs with total value of VND213.747 trillion and state capital value of VND88.39 trillion.

CIEM’s (Central Institute of Economic Management) head Nguyen Dinh Cung said the companies” worries about losing Vietnamese brands is just a lame excuse for their procrastination, which slows down equitization.

“Foreign investors won’t be foolish enough to buy good Vietnamese brands which bring high profits and then eliminate the brands,” Cung said.

Meanwhile, lawyers, citing current laws, affirmed that the concern about the loss of Vietnamese brands seems to be exaggerated. 

They said after divestment, the state will still hold a high stake to veto unreasonable business policies. In the case of Sabeco, for example, the State still holds a 36% stake.

With the Enterprise Law, even when foreign owners hold a controlling stake, they do not have the right to make unilateral decisions.