The Impact of the Amendment to Vietnam's Investment Law and the Latest Information on the industry

In the wake of the new variant of COVID-19 and the digitalization of Vietnam's healthcare, wholesale and retail industries is expected to accelerate.

August 2021 , by Avebria Cicera

YCP Solidiance co-hosted the "Live Webinar on M&A in Vietnam: The Practical Impact of the Amendment to Vietnam's Investment Law and the Latest Industry News" with The Bank of Yokohama and Nishimura & Asahi. Yukako Matsuka, our Southeast Asia Director, served as moderator alongside Taro Hirosawa, Satoshi Hiramatsu, and Shiro Muto from Nishimura & Asahi as speakers. The seminar provided concrete and practical information for Japanese companies considering M&A in Vietnam, as many companies struggle to gather M&A information in the region due to the effects of the new variant of COVID-19.  

The Forefront of Healthcare in Vietnam  

Vietnam's healthcare system relies heavily on public healthcare institutions, with 89% of hospitals being public. However, in response to staff shortages and hospital independence policies, private hospitals are entering the market as public hospitals become more privatized and digitized. Private hospitals are also intensifying their digitalization efforts to gain an edge over public hospitals. As a result, M&A activities in the country's healthcare sector have seen an increase in investments in private hospitals since 2017.  

The Vietnamese government hopes that digitization will help reduce costs and improve efficiency in the healthcare system. The Ministry of Health has launched policies regulating an extensive database of electronic medical records, a hospital management system, and an electronic health statistics system to promote a "smart healthcare system" that uses cutting-edge technology to upgrade healthcare services.  

In addition, the awareness of users is also changing. Traditionally, patients were concentrated in public hospitals. Today, changes in demographic and epidemiological characteristics and increased awareness and knowledge of treatment and prevention have led to a significant increase in demand for more medical services of higher quality.  

Nowadays, resource and funding constraints, management complexity, and data interoperability are the three main barriers to digitalization. However, the introduction of digitalization is expected to accelerate as the new variant of COVID-19 has increased the need for health care record systems to handle vaccination records and online appointment system. 


The Changing Retail and Wholesale Industry  

The new variant of COVID-19 is accelerating the changes that have been occurring in the retail and wholesale industries. As a response to changing consumer behavior, foreign capital inflows have resulted in significant consolidation and restructure in the country’s major players. Today, Vietnam's modern retail market has expanded greatly, led by supermarkets and convenience stores.  

From 2015 to 2016, foreign companies have been active in large-scale mergers and acquisitions, and the leading Western-capitalized significant retailers have become part of Thai-capitalized companies. In contrast, from 2018 onwards, the Vietnamese-capitalized VinGroup has been leading M&A in the retail market.  

VinGroup sold its agricultural and retail businesses (VinCommerce and VinEco) to Masan. The major food manufacturer was steering away from real estate to manufacturing and vertically integrating its food supply chain. In recent years, the company has been focusing on the mobility business, with AI and electric vehicles being the keywords.  

Masan Group has expanded its business through aggressive mergers and acquisitions, starting from its ancestral food processing business to banking, mining, beverages, feed, animal feed, meat processing, and retail. The company has been receiving foreign investment at every juncture, with Alibaba most recently investing in the group's retail business.  

VinGroup has also entered the B2B e-commerce platform business, which Telio had been leading. The wave of digitalization is spreading to traditional retailers as well.  

Digitalization and Omni-channelization are likely to accelerate rapidly due to the impact of the new variant of COVID-19, bringing forth the need for last-mile delivery and cold chain to increase further in the future.  

Source: YCP Solidiance’s Research and Analysis 

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