Vietnam, Germany Celebrating 30 Years of Diplomatic Relations

For “Vietnamese Days in the Federal Republic of Germany”, Vietnam Business Forum’ reporter Hoang Ha conducted an interview with Dr. Oliver Schnakenberg, Chargé d’Affaires, the Commercial Counsellor from the German Embassy in Hanoi about friendship relations between Germany and Vietnam as well as its prospects for the future.

In 1975 - half way between becoming an independent state and today – Vietnam established diplomatic relations with the Federal Republic of Germany. When we celebrate those 30 years we do not forget that there was friendship between Germans and Vietnamese before this. Many young Vietnamese went to study or to work in eastern German cities such as Dresden, Leipzig and Magdeburg from the early 1950s. In the 1960s anti-war demonstrators shouted “Ho-Ho-Ho Chi Minh” in the streets of western German cities like Frankfurt and then West-Berlin. Still, in those early years both Germany and Vietnam were divided and the political environment was not conducive to having normal relations between the peoples of both countries. All this changed with the end of the war in1975 and with German reunification in 1990.

Since then Germans and Vietnamese have seen an unprecedented development in their relations. It was doi moi, the reforms process, in particular, that gave a boost to political, economic and cultural relations. German Chancellors Kohl and Schroeder visited Vietnam in 1995, 2003 and 2004. Prime Minister Phan Van Khai paid an official visit to Germany in 2001, General Secretary Nong Duc Manh in 2004. Our bilateral trade, in the 1980s averaging 20 million Euros, exceeded 2 billion Euros in 2004. German companies like Mercedes Benz, Siemens and Metro invested and created new jobs. Meanwhile, Germany has become one of Vietnam’s largest donors in the field of development cooperation with projects totaling 900 million USD since 1990. Finally, a rising number of young Vietnamese are embracing the German language and more than 2,000 Vietnamese students attend German universities.

 

Chancellor Schroeder’s visits in 2003 and 2004 showed that on the governmental level there is consensus on a vast spectrum of political questions. For example, our leaders agreed on the necessity to reform the United Nations system including the Security Council. They launched initiatives to increase cooperation in education, science and technology and to embark on a dialogue on questions related to the rule of law. We are working on the agenda they set.

 

Respecting that it is up to the German voters to elect a new Parliament and determine who should form the next government, I have to refrain from any comments regarding the future policy of Germany. However, there is one exception. Traditionally, our parties share a broad consensus on most aspects of

German foreign policy. So, whoever will come out as winner of the elections will not change the policy with Vietnam. We will continue to appreciate your country as a cornerstone of peace and stability in the region. As before, we will feel committed to contributing to the social and economic development of Vietnam. Germany will remain a reliable and cooperative partner willing to support the reforms policy.

The strategic prospects to further develop our relations are very favorable. Germany has a lot to offer; its experience in transforming a planned economy into a market economy, a model how to reconciliate the market and social values. We are one of the world leaders in traditional industries like automobiles but also in new technologies like IT and bio-technology. Our renowned institutions of higher education can offer young intelligent Vietnamese excellent opportunities for qualification. On the other hand, Vietnam has the capability and the potential to become one of Germany’s most important partners in the region. There is especially one thing from which we Germans can learn, despite some setbacks, the Vietnamese do believe in progress for which they work hard. With this positive attitude, there is ample prospect for more cooperation.

 

 

Germany continues to be Vietnam’s biggest trade partner in Europe. Last year, exports and imports exceeded 2 billion Euro. While this 20  per cent increase deserves to be lauded, there is no reason to rest on our laurels. The structure of our bilateral trade still reflects Vietnam being an underdeveloped economy. Its exports consist of raw materials and products with little added value. Germany’s high tech, high quality and sometimes high price products still do not find enough customers in this country. And where they do, like in the case of automobiles, punitive taxes force the market to shrink. This situation needs to be reversed. With Vietnam embarking on a course of further integration into the global economy and opening up to more competition as a member of WTO, it has to identify its comparative advantages and promote them. Where it has none, Government should withdraw. German companies are prepared to engage in technology transfer that keeps more added value in the country. It is necessary that Vietnam creates more win/win- situations to allow technology partners to make a fair deal. Being among the frontrunners in China, German investors only very reluctantly open their pockets in Vietnam. Why? I have to assume that they do not consider the investment environment in Vietnam very attractive. Finally, investors look at facts and figures, sympathy only plays a marginal role. Despite all the improvements over the past years, Vietnam’s neighbors equally modernized their economies and the administrative and legal framework. So good is not good enough. However, there is reason for optimism. The new Investment Law due to be passed at the next session of the National Assembly would be a major breakthrough in leveling the playing field for foreign investors.

 

 

Lufthansa has been operating for 15 years in Vietnam. In that time, we have continually increased commitment and the number of flights per week over that time, and since 2003, we have operated 3 flights per week to Frankfurt and since last year to Munich via Bangkok. In my opinion, Vietnam is a very dynamic and rapidly developing market. With a population as big as Germany the future potential is very big, even if it may still take a long time to mobilize. We are particularly happy with the liberalization efforts in the air traffic sector and that the Vietnamese government believes in the future of this important branch. Mobility is a key factor in economic development and is therefore essential for Vietnam as it continues to grow and develop.

For potential investors from Germany, we believe that being both stable and reliable in the decision making process and open chances for investors by helping them to overcome administrative difficulties will certainly smooth the path. Also, an easier Visa procedure would definitely help, attracting investors and specially tourists from Germany.

 

In the 17 years that DHL has been operating in Vietnam, we have noticed that the Vietnamese business and investment environment has progressively opened up as the market has matured. The Vietnamese Government continues to open the doors and to increase its support for businesses operating here, recognizing the importance of foreign investment to the development of the nation. Giant steps have been made towards overcoming obstacles such as excessive bureaucracy in the past few years. As Vietnam moves toward WTO accession, continuing these reforms and these efforts is crucial.

 

Vietnam’s accession into WTO will bring about liberalization of key sectors, which will certainly broaden and deepen the economy, creating new business opportunities for local and international companies alike. Entry into the WTO will also lead to increased trade. Increased trade means increased shipments, both intra Asia and internationally. DHL is able to capitalize on this growth, with our extensive international network that links more than 220 countries and territories worldwide, and our expertise in express, air and ocean freight, overland transport and logistics solutions, as well as in depth understanding of local market.

In order to make the environment more attractive for foreign investors in general and for German investors in particular, in my opinion, Vietnamese Government is heading in the right direction in improving the investment climate in Vietnam for investors from Germany and around the world. Certainly, the administrative reforms that are required for WTO entry are to the benefits of foreign investors, with moves to increase transparency and accountability, streamline operations and increase efficiency for importers and exporters.

 

The Asia Pacific market, including Vietnam, has become increasingly important to DHL, and the region is our fastest growing market to date, registering strong double-digit growth in recent years on the back of robust intra-Asia volumes. We will continue to invest in the region to ensure that we are ready to capture growth.

The reforms of Vietnam since the late 1980s has been facilitating the initial stages of the transition to a market oriented economy, and helps to secure strong macroeconomic performance and to attract large foeign direct investment (FDI) inflows, especially from Asia. Due to this fact Vietnam surely will accelerate socio-economic growth, improve considerably living standards and this will generate increasing demand for the products and services which in turn means potential market for Siemens. Vietnam long ago has been considered by Siemens as one of the countries having a huge potential of industrial development, especially in telecommunication and power sector, and Siemens is very exporienced in these field.

As a foreign investor, we see that Vietnamese Government is undertaking great efforts to improve legal and business environment which will facilitate the success of investment and open more investment’s and co-operation’s opportunities for foreign enterprises in the countries.

My experience in Vietnam is still very limited. I see that the Government is undertaking great efforts to improve legal and business environment which will facilitate the success of investment in the country. We can see a more friendly market environment during the next years due to WTO accession, unified enterprise law, the commitment of Vietnamese authorities and Government to attract more FDI and the already started liberalization of the telecom and power market. The government should creat good policies and regulations to secure a fair and sufficient competitive environment in Vietnam.

Siemens has a long-term commitment with Vietnam. This commitment includes a higher share of localization of our businesses in Vietnam. We will invest in production facilities in the nearer future and thereby offer our customers competitive systems and solutions. We will also continuously invest in developing the competencies of our staff to meet the future requirements.