Vietnam Offers Appealing and Secure Investment Climate for German Enterprises

In the year 2023, Vietnam garnered an impressive US$36.6 billion of Foreign Direct Investment (FDI), setting a new benchmark with an unparalleled disbursement of FDI surpassing US$23 billion. “These figures underscore the significant impact of the Vietnamese government's investment environment reforms, resulting in Vietnam continuing to be an attractive destination for investment. Vietnam has long been recognized as an alluring investment hub, and this reputation remains steadfast,” said Mr. Marko Walde - Chief Representative of the Delegation of the German Industry and Commerce in Vietnam, Myanmar, Cambodia, and Laos cum Vice Chairman of German Business Association, in an interview with Vietnam Business Forum.

Can you highlight the key milestones and achievements in the Vietnam-Germany relationship over the past 50 years, particularly the contributions of the Delegation of German Industry and Commerce in Vietnam?

Vietnam and Germany have had a strong diplomatic relationship for nearly 50 years. Our Delegation of German Industry and Commerce has been actively present in Vietnam for the past 30 years, with the primary mission of fostering trade connections and supporting economic relations between the two countries. Our first office was established in Hanoi in 1994, and in 2005, we expanded with the opening of a second office in Ho Chi Minh City. Over the years, we have built important foundations and achieved significant milestones. In 1994, we had only one staff member in Hanoi, and now we have approximately 30 employees, indicating the continuous growth of our organization.

We have also expanded into various fields, engaging in diverse activities ranging from market development consulting, investment promotion to vocational training, and supporting Vietnamese labor entering the German job market. At present, Germany is Vietnam's largest trading partner within the European Union (EU), and Vietnam has emerged as one of Germany's significant trading partners in Southeast Asia. There are around 500 German businesses with 463 projects in Vietnam, generating nearly 50,000 jobs and making positive contributions to bilateral economic relations.

How would you assess Vietnam’s progress in administrative reform and business environment enhancement in 2023?

In 2023, the global economy faced significant challenges, and Vietnam was no exception. However, the Vietnamese government has taken many measures to boost the economy and continues to have policies to improve the investment and business environment here. For example, the State Bank of Vietnam has reduced the benchmark interest rates multiple times; The Immigration Law was amended, thereby allowing registration for electronic visas. Furthermore, a noteworthy development was the accelerated disbursement of public investments by the government, focusing on strategic infrastructure projects such as the North-South Expressway, coastal roads, inter-provincial routes and roads connecting ports, airport. This played a crucial role in enhancing infrastructure and promoting logistics, providing foreign investors with greater confidence in investing in Vietnam.

Additionally, at COP28 held last year, Prime Minister Pham Minh Chinh announced a Resource Mobilization Plan to implement the political declaration on establishing a Just Energy Transition Partnership (JETP) between Vietnam and the International Partnership Group (IPG). This marked a significant step following the commitment made at COP26 regarding carbon neutrality. The PDP8 is charting a new course in development, with a dedicated focus on renewable energy sources. The plan aims to boost renewable energy power capacity, targeting 48% of the total capacity (150,489 MW) by 2030, and an ambitious 65.8-71% of the expanded capacity range of 490,529-573,129 MW by 2050. Simultaneously, there's a significant reduction in the share of coal thermal power, dropping from 20% of the 2030 capacity to a visionary 0% by 2050. This strategic shift underscores a commitment to a sustainable and green energy future. This demonstrated Vietnam's commitment to sustainable development, and foreign investors are likely to recognize Vietnam's efforts in building an investment environment in line with global trends.

Statistics on the amount of FDI poured into Vietnam in recent years also highlight the country's strong appeal, with a total of US$36.6 billion. In 2023, Vietnam achieved a record-breaking disbursement of FDI, surpassing US$23 billion. These figures underscore the significant impact of the Vietnamese government's investment environment reforms, resulting in Vietnam continuing to be an attractive destination for investment. Vietnam has long been recognized as an alluring investment hub, and this reputation remains steadfast. In 2023, Vietnam was included in the list of 34 countries and territories that receive investment guarantee incentives from the German government. This recognition signifies that Vietnam not only offers an appealing investment climate but also a secure environment for German enterprises.

How do you foresee the potential for enhanced Vietnam-Germany cooperation in areas such as trade, investment, technology transfer, and human resource development? How can this partnership support Vietnam’s transition toward a green, digital, sustainable and circular economy?

We continue our efforts to fulfill our mission of supporting German businesses to succeed in Vietnam and vice versa, assisting Vietnamese enterprises in expanding their market presence in Germany.

Firstly, we will concentrate more on green development and technology transfer to advance towards sustainable and environmentally friendly production. This leads us to the second critical point, which is the high-quality training of skilled labor according to German standards. We have been engaged in this task for several years, and we aim to further intensify our efforts in the future.

The third objective is to empower Vietnamese businesses by enhancing their competitiveness through a workforce trained on modern technological machinery.

Fourthly, our mission extends beyond merely promoting the image of German businesses; we also strive to boost the competitive capabilities of Vietnamese enterprises by connecting them not only to the German market but also to the entire European market. This involves facilitating their participation in exhibitions and trade fairs in Germany, where we act as representatives, fostering more interactions and networking opportunities.

Lastly, we persist in our commitment to supporting Vietnam in improving its infrastructure, such as contributing to the construction of Ho Chi Minh City's Metro Line No.2 (Ben Thanh-Tham Luong), as well as participating in the development of several metro lines in Hanoi. We hope that in the times ahead, together we can create positive and sustainable values.

What policy recommendations would you propose to the Vietnamese government to facilitate the expansion of German businesses in Vietnam?

As previously mentioned, there exists considerable potential for collaboration, requiring joint efforts from both parties to achieve our common objectives. Concerning the Vietnamese government, it is hoped that a greater emphasis will be placed on the training of a high-quality workforce. This involves a more strategic collaboration with businesses to cultivate a workforce that aligns with the dynamic needs of the market.

Additionally, government ministries should actively support the enhancement of the competitive capabilities of Vietnamese businesses through training initiatives, advisory services, and facilitating engagements with international enterprises. Furthermore, it is recommended that the Vietnamese government intensify investments in comprehensive infrastructure development to bolster regional connectivity. This includes strengthening the linkages between industrial zones and key ports and airports across Vietnam.

Lastly, we anticipate Vietnam's commitment to improving and streamlining procedures related to land permits, labor licenses, and the reduction of unnecessary business procedures. Germany is well-known for its industrial production, and we also hope to see the development of more smart manufacturing plants in Vietnam, bringing technology to Vietnam and creating employment opportunities for the local population. I can mention some prominent companies in the industry such as Bosch, Mercedes-Benz Vietnam, KURZ and in the healthcare sector, STADA Pymepharco. They have already established manufacturing plants in Vietnam, expressing their vision for Vietnam to become a pivotal component in the global supply chain.

Thank you very much!

Source: Vietnam Business Forum