Hanoi-based FDI companies optimistic over Vietnam’s economic prospects
Companies have seen their business situation on the uptrend recently, amid Vietnam's positive economic performance, and expect to continue to bet on staying for the long term.
Foreign-invested companies shared with The Hanoi Times their firm belief in the bright prospects of Vietnam’s economy and the plan for the future after a problematic Covid-19 period.
President of Samsung Vietnam Choi Joo Ho:
Thanks to the comprehensive support from the Vietnamese Government and local administrations, Samsung Vietnam has now overcome difficulties caused by the Covid-19 pandemic and recorded revenue of US$74.2 billion in 2021, up 14% year on year, while exports also rose by 16% to $65.5 billion.
Following this strong result, Samsung Vietnam continued to gain positive outcomes in the first six months of 2022, with exports of $34.3 billion, up 18%. This year, we expect the export turnover to hit $69 billion.
Meanwhile, Samsung remains committed to further expanding investment in Vietnam. In 2022, we have injected an additional fund of $1.2 billion into Samsung Electro-Mechanics Vietnam in the northern province of Thai Nguyen. This would take the total investment capital in Vietnam to over $21.5 billion by the end of 2022.
We highly appreciated the efforts of the Vietnamese Government not only in the Covid-19 response and socio-economic recovery but also in creating a favorable business environment amid growing global uncertainties.
Samsung considers Vietnam a strategic partner as we complement each other for mutual benefit. In the coming time, we stand firm on our strategy in Vietnam and expect to increase investment capital in the country further.
CEO of Sakuko Vietnam Cao Thi Dung:
After the pandemic, Sakuko Vietnam, like other companies, is on the road to recovery. Our goal is to evolve constantly and get back to the best shape as soon as possible. For example, in the retail segment, Sakuko Vietnam has restructured its operations to optimize expenses and resources better.
As we went through a difficult period of the pandemic, we understand more than ever the urgency of going digital.
E-commerce in Vietnam is developing quickly, with many customers changing their shopping habits from brick-and-mortar stores to online websites or apps. This is evident as the online operation was vital for businesses’ survival during the lockdown period.
As we emerge from this challenging period, we have embarked on digitalization, considering it a key priority to get closer to customers and improve our competitiveness.
On the road to recovery, other small and medium-sized enterprises and we hope to receive support from Hanoi's authorities to improve the business environment and further reduce the costs of inputs such as electricity, water and petroleum products.
Chief Representative of Delegation of German Industry and Commerce in Vietnam Marko Walde:
Optimistic over Vietnam’s economic prospects
With all the challenges at the beginning, such as the fight against Covid-19, the Vietnamese government tried to find a good balance between protecting citizens' health and striving to boost economic growth further, leading to remarkable results. In Q2 2022, Hanoi's GRDP grew to 9.5% and is expected to increase by 7-7.5% this year, while Vietnam's GDP is expected to increase by 7%, according to the World Bank. Recently, although the increase in CPI and inflation after the epidemic was relatively high, the Vietnamese government can keep them under control and adjust fiscal policies to ease inflationary pressure.
German companies in Hanoi and Vietnam are confident about their business development and have positive expectations for economic growth. According to our AHK World Business Outlook Survey Spring 2022, almost 93% of German companies will continue to invest in Vietnam, and more than 64% expect better business performance in the next 12 months.
German companies are looking for an investment location, especially for their production, and are asking for a more sustainable and green energy source. To promote sustainable development, along with the Vietnamese government's current emphasis on providing possibilities and incentives for sustainable enterprises, it has prioritized and set a long-term goal to create a green energy strategy and alternatives. For example, the Vietnam Green Growth Strategy (VGGS) aims to accelerate economic restructuring by efficiently using natural resources and reducing greenhouse gas emissions with innovative technology.
The EVFTA showed Vietnam’s commitment to protecting people’s fundamental rights at work and in the environment. It is an excellent foundation for Vietnam and would make Vietnam more attractive as an investment location, not to mention the vast market with a population of over 100 million and an average wage that is around one-fifth in comparison to China.
To further facilitate investment capital from Germany to Vietnam, since 2013, AHK Vietnam has been assisting German companies in establishing a comparable, quality-assured German Dual Vocational Education and Training (VET) program in Vietnam based on the German – DIHK standards. This initiative aims to impart practical skills that meet the businesses’ desired hiring and production requirements.
Furthermore, German enterprises will also have to welcome higher standards coming from Western Europe or North America, including the ESG or Supply Chain Due Diligent Act. This act aims to improve human rights protection in global supply chains by 2023 and, prevent child labor, forced labor, and prohibition of substances harmful to humans and the environment. Anti-discrimination, living wages and decent working hours are also at the heart of the Act. The law also requires German businesses to develop an effective and appropriate risk management mechanism for their supply chains and integrate it into all-important production and business cycles. Since September 2022, AHK Vietnam has implemented a project to support German enterprises and their partners in Vietnam in applying this law.
This is key for Vietnamese companies to be aware of these requirements if they are to become a part of the supply chains of German companies in the future.
General Director of Panasonic Appliances Vietnam Masato Sasaki:
Planning for further investment
The Covid-19 pandemic has impacted foreign investment activities in Vietnam, but the economy is now on the recovery path, and we expect rising demand for household appliances from Vietnam and abroad. In this context, we are planning for the future development plan.
However, the company is facing numerous issues, such as rising costs of input material and transportation, volatile exchange rates, and changes in customers' shopping habits.
Panasonic Appliances expect further investment activities but would remain cautious before making any decision.
To support business development, we call for the Government to continue simplifying investment procedures, cutting taxes, strengthening the resilience of supply chains, and further attracting foreign investment.
The Government should focus on ensuring high-quality R&D personnel in the IT sector and household appliances development, creating favorable conditions for foreigners entering the country and providing houses for workers.
General Manager of Pan Pacific Hanoi Kurt Otto Wehinger:
During the second and third quarters of 2022, the hotel’s business increased considerably, mainly boosted by domestic travel. Hiring several highly competent professionals to complete our management team has stabilized the operation. We have several plans to expand and change some facilities to better serve the local community and our guests. The business outlook for October and November is very positive, and we expect a strong finish for 2022.
The hotel industry suffers from an acute shortage of qualified staff, compounded by several new hotels and serviced apartments opening in Hanoi in 2023. We have employed young, enthusiastic people to join a comprehensive training program to remain competitive and continue to provide our high-class services. This, under the guidance of our long-time professional managers, allowed us to open several restaurants that were closed during the pandemic. We also opened our rooms as occupancy increased over the last month.
It is good to know, therefore, that the Vietnam National Administration of Tourism has three additional targeted segments, namely medical, sports, and MICE tourism, possibly the most exciting for our business. I believe there is also great potential in Hanoi’s leisure market, which is somewhat lacking.
Over the last two years, the pandemic has devastated our business, and even in October, international tourist arrivals are short of expectations. Luckily, the domestic market came to our rescue in 2022, and local businesses and leisure guests are vital for this year and beyond.
On-going training of hospitality staff and comparable salaries to other industries and a necessary part of the industry, as our hotel services, will be compared to those of other countries, like Thailand and the Philippines, which are our direct competitors in leisure and MICE travels.
Necessary actions beyond Hanoi's authorities include more accessible visa entry procedures, the addition of international air carriers, and the resumption of all routes by Vietnam air to the levels of 2019.
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