German companies increasingly drawn to Vietnam

08:48 | 29/07/2019 MUTRAP Corner

(VEN) - According to the AHK World Business Outlook 2019 released by the Delegate of the German Industry and Commerce in Vietnam (GIC/AHK Vietnam), Vietnam’s participation in a number of free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) has attracted German investors to the Vietnamese market. According to the outlook, German companies have high expectations of economic development in the medium term.

german companies increasingly drawn to vietnam

Attractiveness

As many as 77 percent of German companies in Vietnam said their business situation was better this year, much higher than the 61 percent average of Southeast Asian countries. Last year, only 56 percent had a positive view of their performance in Vietnam. Some 72 percent of surveyed companies were optimistic about their business development within the next 12 months, based on the results of the economy, investment and social development in 2018. In addition, Vietnam received confidence from German companies in economic development within the next 12 months, with 67 percent of firms optimistic.

The outlook also revealed that 55 percent of German companies in Vietnam intend to expand their activities in the country, higher than the 44 percent average of Southeast Asian countries and of last year’s figure of 52 percent.

Marko Walde, chief representative of GIC/AHK Vietnam, said that in recent years, the Vietnamese government has shown goodwill in creating favorable conditions for foreign investors. In addition, Vietnam’s participation in a number of free trade agreements such as the CPTPP and the EVFTA is expected to boost the country’s economy. These factors have made foreign investors in general and German ones in particular optimistic about the country’s economic development in the medium term.

German companies also hope the EVFTA will improve Vietnam’s legal and economic policy framework, Walde said.

german companies increasingly drawn to vietnam

Improving competitiveness

According to GIC/AHK Vietnam, Germany and Vietnam have excellent economic relations and the German enjoys an outstanding reputation in Vietnam which is really unique in the ASEAN region.

However, one of the concerns is how to support domestic businesses in order to enhance their competitiveness and ensure sustainable development, because they are seen as a backbone of the Vietnamese economy. Accordingly, building and developing domestic support industries and typical industrial clusters with advantages according to various regions can help promote collaboration among domestic and foreign businesses. They can easily develop together by taking advantage of experience and technological exchanges.

Building a fruitful and creative startup ecosystem as well as providing financial, educational and environmental assistances will give domestic startups and small- and medium-sized enterprises the ability to reach foreign investors and modern technologies.

Walde said many German companies are looking ahead to doing business in the long term, over the next 20-30 years, and they need an encouraging business and investment environment. Specifically, German companies are seeking a nationwide, practice-oriented vocational training system in Vietnam, he said.

According to Walde, previous German investment projects in Vietnam focused on garment and textile, and iron and steel sectors. Recently, additional companies have been investing in electricity and electronics industries.

Vietnam should pay more attention to human resource development to meet the needs of German companies, Walde said, adding that Vietnamese businesses need to make greater efforts to improve their competitiveness. These factors will enhance the confidence of foreign businesses, especially German companies in long-term business in Vietnam.

Nguyen Huong