Vietnam’s investment environment is bright and open, according to a team of analysts.

The country’s level of market access is right on par with Singapore’s, said Oliver Massmann at a business gathering in Ho Chi Minh City on Tuesday.

Massmann serves as a partner at Duane Morris Vietnam and recently provided international law training to the Ministry of Justice.

The attorney further asserted that Vietnam’s limitations on market access were not significant when weighed against factors like the number of open sectors and the limit on foreign ownership. Foreign stakes in Vietnamese companies are capped at 30 percent.

“The retail sector continues to attract a great deal of attention despite ongoing concerns over legal restrictions,” he said, citing the pre-Tet shopping frenzy as proof. He said he was surprised to find that a large Metro supermarket in Hanoi was sold out of goods, early in the year.

In response to complaints about Vietnam’s stipulation that foreign investors pass an “economic needs test” before introducing new retail outlets, Massmann said that given the huge demand on the local market, it would not be difficult to produce those statistics and convince the authorities.

Investors should also keep their eyes on the cooking processing industry, he said, citing the country’s lack of seafood processing facilities.

“There is no doubt these are very positive sectors for foreign investors and they can gain profits in a short time,” he said.

Despite the market potential, Massmann noted that foreign investors should not be hasty. Before making any merger and acquisitions (M&A) decisions, they should do their due diligence in considering their target Vietnamese company, he said.

According to the European Chamber of Commerce in Vietnam, the organizer of Tuesday’s event, there has been a surge in M&A activities in the past five years and the business will be booming in 2011 and 2012. M&A deals have enabled foreign enterprises to gain good access to the Vietnamese market, the business group said in a statement.

Vietnam saw 345 M&A transactions valued at US$1.7 billion in 2010, up 65 percent over the previous year, Vietnam News Agency reported.

Denny Cowger, an attorney at Duane Morris Vietnam said that compared to 2004 with a total of 23 deals valued at $34 million, the past two years have seen the highest M&A growth in the country to date.

However, he said insufficient regulations have posed a hurdle to further M&A activity. Current laws do not outline clear procedures for investors and they have been waiting several years for official M&A legislation, he said.

Cowger also said that two Vietnamese companies have made the nation’s first outbound M&A deals. Military-run telecom group Viettel has invested in Bangladesh and Haiti while dairy giant Vinamilk now owns a 19.3 percent stake in a New Zealand company.

This outbound M&A trend is expected to continue in the future, the attorney said.