55% of German Firms Plan to Expand Investment in Vietnam

This data is released by Mr. Marko Walde, Chief Representative of the German Industry and Commerce in Vietnam at the press conference on the AHK World Business Outlook 2019 in Hanoi, which surveyed German businesses in Vietnam. The survey was conducted by 140 offices of the German Chambers of Industry and Commerce in 92 countries.

As many as 77% of German businesses in Vietnam said their business situation was better this year, much higher than in 2018 and higher than the average of Southeast Asian countries of 61%. 72% of German businesses were asked to give positive comments about business development in the next 12 months.

Remarking on German investor confidence in Vietnam, Ms. Dao Thu Trang, Manager of Communications and External Relations, the German Industry and Commerce in Vietnam, said that up to 55% of German companies in Vietnam intend to expand their activities in Vietnam, higher than an average of 44% in Southeast Asia. The rate was 52% in 2018. Compared to other countries in the region, Vietnam always gets special attention of German businesses. 59% of the surveyed businesses plan to increase employment in Vietnam in 2019 and 2020, higher than 56% in 2018. They expect the European Union - Vietnam Free Trade Agreement (EVFTA) will improve the legal and economic regulatory framework in Vietnam.

She added, 51% of respondents consider conditions regarding the economic policy framework the greatest risk for their businesses in Vietnam in the next 12 months. Other factors such as a shortage of skilled workers (44%), rising employment costs (31%) or trade barriers (28%) also raise concerns over business situations in the medium term in Vietnam.

However, other important factors that contribute to the development of businesses from the perspective of the German enterprise are domestic market demand, the stability of the political system, the source of high-quality labor and regional demand. In addition, the historical connectivity between Germany and Vietnam as well as their fine image to the two peoples and over 120,000 German-speaking Vietnamese - the special and unique factor in comparison with other Southeast Asian countries are also helping factors.

According to Mr. Marko Walde, one of concerns to German investors in Vietnam is support solutions for domestic enterprises to improve their competitiveness and sustainable development because they are seen as the backbone of the Vietnamese economy. Therefore, building and developing domestic supporting industries, typical industrial clusters with advantages according to various regions can help create cooperation opportunities among domestic and foreign businesses for experience sharing, technology transfer and mutual development. In fact, foreign-invested companies are contributing up to 73% of the country’s total exports and more than 50% of the total industrial output, compared to very limited contribution of domestic businesses.

Moreover, the highly practical vocational education and training system has helped Vietnam build up young skilled, professional workers. This is a factor of Vietnam’s competitive advantage and long-term sustainable development.

Last but not least, establishing a healthy, creative startup ecosystem, and providing financial, training and environmental supports for startup companies and small and medium-sized enterprises (SMEs) to access investors, technology and technique are important, said Mr. Marko Walde.

Thu Ha