EVFTA creates “ideal” time to grow with Vietnam
Vietnam Economic News’ My Phung spoke with Torben Minko, Co-Chairman of the German Business Association.
How do you think the Covid-19 pandemic has affected Vietnam as a destination for German businesses?
Although the pandemic has definitely had a dramatic impact on the world, overall, we are relieved to see that Vietnam is an exception to the global trend. It is remarkable to look at the numbers and see that despite the pandemic situation, the Vietnamese economy is still growing. The implementation of the EVFTA could not have come at a more important time. In a world where normal business operations have been suspended because of Covid-19 and global economic growth is under threat, the EVFTA will help to jumpstart trade and investment between our countries.
Experts have predicted a wave of factories moving from China to Vietnam. Do you see this happening with German investors, too? Yes, it is already happening with the China+1 strategy that manufacturing businesses in particular have chosen. As tech-giants have already started to shift their productions from China to Vietnam, it is very likely that this trend will continue and include more sectors.
In what areas do you see EVFTA making a marked difference for German companies’ interest and operations in Vietnam?
The EVFTA represents a strong vote of confidence in Vietnam by the European Union. The fact that this is just the second free trade agreement signed with an ASEAN member state (after Singapore) shows the high regard in which the EU holds Vietnam, its positive record of reform, and its strategic importance in Asia. The government of Vietnam has made strong progress in creating a more competitive, attractive, and business-friendly trade and investment environment. From the German side, the buyers of electronics and metal products will increase their operations in Vietnam. Vietnam’s emerging manufacturing industry will attract more machinery and appliance companies with sales and knowledge transfer activities. Finally, Vietnam will become an even more inviting destination for investments, e.g. in the fields of automotive and textile supplies as well as electronics manufacturing and IT development.
Now that the EVFTA has taken effect, what should policymakers do, in your opinion, to facilitate businesses of both countries overcoming challenges and taking advantage of opportunities?
This positive FDI (foreign direct investment) trend is a vote of confidence in Vietnam’s current investment climate as well as its future growth potential. In particular, with the EVFTA now in force, we anticipate European and in particular, German FDI, will continue to rise as more companies look to invest in this open and fast-growing market. The rules governing acquisition by foreign investors with equity interests in domestic Vietnamese entities have liberalized significantly in recent years. Of course, despite this significant progress, there are still areas for improvement, like the legal framework.
Could you share with us some of the steps the GBA has taken to help its members deal with the pandemic’s impacts and get going again?
We’ve organized online events and webinars for our members and worked closely with other German institutions, first and foremost the German Embassy in Hanoi to keep our members informed. As the travel ban hit many people unexpectedly, we faced the situation of numerous people, Germans and Vietnamese that are employed in our members’ organizations, getting stuck in Europe for months. Our biggest contribution here was joining forces with AHK Vietnam in jointly organizing two relocation flights to bring urgently needed experts and their family members into Vietnam.
After more than two decades, what is the GBA’s future orientation in Vietnam?
As of today, with more than 320 members, we are the biggest European business community. We hope to stay attractive and relevant to the German business community and to make a real difference with our work. We aim to merge with AHK Vietnam to become a Chamber of Commerce, as decided by our members in 2015 and stated in the Strategic Action Plan between Germany and Vietnam in 2019.
GBA celebrated its 25th anniversary on November 21, 2020 in Ho Chi Minh City. We are already looking forward to celebrating 30 years in Vietnam and are proud and grateful to have a ring-side seat to witness the great development strides being taken by Vietnam.
VietNam Economic News