European investment and the ICT industry transforming Vietnam

Could you share the achievements of European companies in the Vietnamese market over the last two decades?

As Co-Chairman of EuroCham Vietnam, hundreds of European companies have contributed to the socioeconomic development of Vietnam over the past 30 years of foreign direct investment (FDI) engagement between Europe and Vietnam. Investment and trade has spanned the full range of industry sectors contributing to the amazing GDP growth trajectory over that period, including information and communications technology (ICT), manufacturing/production, agriculture, tourism, transport, energy, education and healthcare to name a few.

As President of Ericsson Vietnam, Myanmar, Cambodia and Laos, I can share that European companies, such as Ericsson, Siemens and Alcatel, have contributed significantly to the socioeconomic development of Vietnam via the investments we have made in building the mobile networks (2G, 3G & 4G) since the beginning of the 1990s that have come to serve the telecommunications and Internet needs of millions of people across Vietnam. Today, Vietnam ranks in the top 17 countries globally in terms of number of Internet users. In fact, it can be said that Mobile Internet has been the engine of growth in Vietnam, providing the means by which people and companies have been able to communicate and deliver services to customers more efficiently and cost effectively, driving productivity improvements. Ericsson has 25 years of experience cooperating with major Vietnamese telecommunications operators, such as MobiFone, Viettel, VNPT Group and Vietnamobile. There is no doubt that the ICT industry will continue to support Vietnam’s development, especially as it promises to digitally transform most sectors, such as manufacturing (Industry 4.0), transport, agriculture, tourism, healthcare and education.

What are your views on Vietnam’s efforts to improve the business environment?

It’s a journey and I wish to applaud and congratulate the government for their vision and leadership in guiding the Vietnamese economy as it transitions to a more inclusive growth economy that provides increased prosperity for more people across the country, irrespective of whether they reside in urban areas or rural and mountainous environments. Again, ICT plays a lead role by providing the Mobile Internet access required to generate inclusive growth through equitable access to information and business opportunities. I have worked with the Vietnamese market for 22 years, and during that time I’ve witnessed a miracle in terms of socioeconomic development, with Vietnam enjoying 6.15 percent GDP growth per annum on average since the year 2000. And since 1993, when the first mobile networks were built, the percentage of Vietnam’s population living in poverty has decreased from 53 percent to less than three percent today, only 25 years later. It’s an amazing achievement. From a low-income nation, Vietnam has now transformed into a middle-income country and is continuing to develop a broader based economy across more industries than ever before. Today, Vietnam ranks in the top 10 countries exporting to the European Union, whilst the EU is Vietnam’s top export market, accounting for 20 percent of its exports.

I wish to also acknowledge the Vietnamese Prime Minister, His Excellency Mr. Nguyen Xuan Phuc, who has adopted numerous measures to improve the business environment. In May 2017, at a meeting with businesses and the Advisory Council for Administrative Procedures Reform (ACAPR) – of which EuroCham is an active consultative member – Prime Minister Phuc and the Council gave positive feedback on the opinions shared by foreign companies. The government demonstrated an open willingness to listen to varying opinions on recommended economic and regulatory reforms from the European business community operating in Vietnam, and we are very grateful for being given that opportunity.

In 2017 and early 2018, EuroCham also praised the Vietnamese Government, especially the Ministry of Foreign Affairs and the Ministry of Industry and Trade, for their efforts to accelerate negotiations on the EU-Vietnam Free Trade Agreement (EVFTA), which is expected to be ratified and become effective later this year. This will benefit Vietnamese companies exporting to the EU and European businesses investing in Vietnam.

EuroCham also appreciates the Vietnamese Government’s efforts in enhancing and nurturing a more transparent business environment, which has in turn increased the trust shared between European companies and their counterparts in Vietnam. We also praise the Ministry of Industry and Trade’s attempts to attract FDI to Vietnam with a more purposeful focus, aimed at directing investment to development opportunities that are identified as priority areas in advancing socioeconomic benefits to the people of Vietnam. These efforts focused on specific industry sectors and localities, helping to enhance the effectiveness as well as the quality of investment projects.

What challenges does Vietnam face in its efforts to enhance national and business competitiveness?

From a low-income nation, Vietnam has become a middle-income country - this is a praiseworthy achievement. However, the challenge now is to navigate the economy in such a way that enables Vietnam to transition to a high income economy whilst maintaining economic growth and ensuring social equality and sustainable development so that nobody is left behind,. Indeed, inclusive growth is the key objective for Vietnam moving forward.

To further develop the economy in an inclusive manner, we recommend less protectionism, especially across sectors such as wine and spirits, pharmaceuticals and the automobile industry. EuroCham trusts that the Vietnamese government will continue its positive and favorable journey towards creating policies and regulations that benefit EU and Vietnamese trade and investment. In this regard, I would like to mention Decree 54/2017/ND-CP pertaining to pharmaceutical distribution, Decree 116/2017/ND-CP referring to the import of automobiles, and excise taxes applied to alcoholic beverages.

Vietnam is increasingly creating a favorable legal framework for business activities to be conducted more efficiently and cost effectively. We are encouraged by this positive trend and are confident it will continue. EuroCham requests that sub-law documents are uniform in interpretation to prevent a gap in understanding between different localities and sectors. And policies need to continue to become more transparent, consistent and predictable. The signs are positive in this regard also.

What challenges face Vietnam in the context of the Fourth Industrial Revolution? What do you think Vietnam should do to cope with these challenges?

The core elements of Industry 4.0 include Cloud/Remote Robotics, Automation, Preventative Maintenance, Artificial Intelligence (AI), Virtual Reality and Big Data, enabled by secure and super reliable 5G IoT (Internet of Things) mobile network infrastructure.

EuroCham shares the same view as the Vietnamese government that Industry 4.0 (Fourth Industrial Revolution) will help Vietnam become more productive, increasing its labor productivity growth rate versus neighboring ASEAN markets such as Thailand and Malaysia. In this way, Vietnam will remain an attractive manufacturing market for European companies. To increase labor productivity, Vietnam needs to accelerate industry digitalization, adopting more ICT applications in production as well as other industries. In fact, the future of the ICT industry is to digitally transform all other industries, and the government has recognized this fact and embraced the concept by driving its own eGovernment initiative.

In the era of Industry 4.0, low-cost labor will no longer be Vietnam’s advantage. The key is to increase productivity in a high tech environment, and proactively upskill existing workers and educate students for the jobs of tomorrow. This will also aid the country in improving its innovation capacity, which is also an important initiative as Vietnam moves up the value chain and increasingly focuses on high-tech industries.

In a 5G IoT & Industry 4.0 environment, cybersecurity will become increasingly important, especially in relation to Smart Manufacturing where data security pertaining to Intellectual Property Rights becomes even more critical. Cybersecurity is also very important in the context of the digital transformation of other industries, such as transport (autonomous/driverless vehicles), healthcare (remote surgery) and with the increased use of drones across many applications. It becomes a matter of public safety and national security. European companies, particularly those involved in ICT, such as Ericsson, are committed to securing and safeguarding 4G and 5G IoT mobile networks, as trusted partners of Vietnam and its people. Indeed, European companies represent security, reliability, transparency, sustainability and innovation.

What slogan would you suggest to sum up 20 years of EuroCham’s operations in Vietnam?

Europe is Vietnam’s most trusted and long-term strategic partner focused on sustainable and inclusive growth for all Vietnamese people.