German Businesses: Commitments for Long-term Investment in Vietnam

“55% of German companies in Vietnam intend to expand their activities in Vietnam and 59% assume an increase in employment,” said Mr. Marko Walde, Chief Representative, Delegation of German Industry and Commerce Vietnam in an interview with Vietnam Business Forum. Thu Ha reports.

How do you evaluate the efforts of Vietnam in administrative reform, improvement of business and investment environment?

We have experienced the improvement of Vietnamese administrative reform, business and investment environment as well as in the global economic integration in 2019. It would result in the economic growth of Vietnam as well as in the increasing FDI here. Last year, the implementation of the next generation FDI Strategy and Vision for 2020-2030 as well as the eight proposed breakthrough reforms would be the highlights and attract German FDI to Vietnam and sustain the country’s rapid economic development and competitiveness. The most important reforms that we would give the priority are the concrete policies that increase FDI linkages and spillover effects, the targeted supplier development programs, effective environment for local companies to develop and improve their competitiveness. Last but not least, creating and implementing an integrated national skills development plan to accelerate Vietnam’s transition from low to skilled labour should have the first priority of those.

Moreover, Vietnam and the EU have officially signed the Free Trade Agreement (EVFTA) and Investment Protection Agreement (EVIPA) in June 2019 which might improve the economic policy in Vietnam in the long run, when they come into effect. This could improve the overall business environment with trade facilitation and increased investment in Vietnam. The elimination of bilateral tariffs and export taxes, together with the reduction of non-tariff barriers affecting the cross-border exchanges of goods and services, are expected to boost bilateral trade considerably and to create new opportunities emerge to access markets across a range of sectors, covering goods, services, and investment for German and European companies in Vietnam.

How have these efforts facilitated German businesses in Vietnam?

The result of our survey AHK World Business Outlook conducted in 2019 showed that German investment intention grows further in Vietnam in 2020. 55% of German companies in Vietnam intend to expand their activities in Vietnam and 59% assume an increase in employment. Thanks to EVFTA and EVIPA, German investors have a positive expectation of their business situation in 2020 and in the middle term.

2019 was a great year for German-Vietnamese business relations. According to the MPI Vietnam, Germany has until November 2019 nearly US$2.1 billion and 349 FDI projects, nevertheless statistics do not show the real situation in Vietnam as they are based on the original countries that the capital flow out. Many long-term investors such as Bosch or Siemens poured their investment capital into Vietnam from the subsidiaries in Singapore or Malaysia. German FDI at the moment really enjoys a great reputation in Vietnam and is welcomed by the government as well as by the local businesses here. In the 11 months of 2019, there are 33 German FDI projects with the investment value of US$99 million in several sectors, from trading, consulting services to the chemical production. There are some huge projects in manufacturing and in green and clean energy sectors using German technologies and know-how in Vietnam. German FDI projects expanded in Vietnam, not only in production but also in R&D centers, training and technical centers in many provinces in Vietnam, showing their commitments for long-term investment in Vietnam, creating the win-win situation as well as the valued added for local businesses.

What recommendations would you like to deliver to the Vietnamese government for a better business climate?

 From our point of view, for the long run Vietnam should establish a stable and reliable legal framework and economic policy to support businesses, local and international ones. Moreover, Vietnam should develop a practical oriented dual vocational training and education system in order to gain high skilled labor force. Local enterprises need to improve competitiveness as well as the management and leadership skills when Vietnam integrates deeply and widely into global economy. Based on our AHK World Business Outlook Survey, German investors concede that the inconsistent economic policy as well as the shortage of skilled labor are burdens for their growth in Vietnam. Regarding the renewable energy, especially offshore wind energy, we would recommend creating relevant political mechanisms and strategy as well as a separate PPA for offshore wind farm development in order to secure investor confidence in Vietnam and to attract more German FDI in this sector.

Thank you very much!