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Jun 08, 2022 / 14:56

Over 90% of German companies plan to expand investment in Vietnam: AHK

Political stability, availability of skilled workers in technical and non-technical fields, and adequate transport and logistics infrastructure are factors attracting German companies to Vietnam.

Nearly 93% of German companies will continue to invest in Vietnam and over 64% expect their businesses to develop better in the next 12 months.

 Chief Representative of AHK Vietnam Marko Walde (mid) at the launch of the survey. Photo: Nguyen Tung

The figures were revealed in a survey conducted by the German Chambers of Commerce Abroad, Delegations, and Representative Offices (AHK) from March-April, 2022.

According to the survey launched today [June 8], German businesses have expressed more confidence in their business development and held a positive view of Vietnam’s economic growth than they did in the fall of 2021.

Chief Representative of AHK Vietnam Marko Walde attributed the positive sentiment to Vietnam’s border reopening as well as the Government’s drastic and timely policies, noting they have created a boost for post-pandemic economic recovery.

The survey also suggested over 46% of German businesses plan to recruit more employees in the coming year. Respondents demonstrated that the most important factors for their trade and investment decisions in Vietnam are political stability, availability of skilled workers in technical and non-technical fields, and adequate transport, and logistics infrastructure.

“In addition, Vietnam’s participation in free trade agreements (FTAs) has put the country in favorable conditions to attract foreign direct investment (FDI) flows,” he said.

It is estimated that 73% of German companies believe that the implementation of the EVFTA from August 1, 2020, increases their competitiveness in Vietnam.

Walde added German companies place significance on the availability of skilled labor in technical fields (58.3%), quality of education in technical fields (58.3%), and tariff trade barriers (56.5%).

Opportunities and challenges

The AHK Representative noted over 450 German companies are operating in Vietnam and creating 50,000 jobs, in turn contributing positively to bilateral economic cooperation.

“Although German enterprises show resilience in the post-pandemic recovery, they are facing risks and challenges caused by global uncertainties that make them more concerned about their business development in the coming year,” Walde said.

Amid severe Covid-19 impacts and disruption of the global supply chains, Walde stressed investment diversification has become one of the top priorities for German companies.

“Instead of focusing on a certain market or investment destination, German companies are expanding their supply chains, and 95% are eyeing Southeast Asia, with Vietnam and Thailand being prime candidates,” he added.

At present, Walde expected Vietnam to hold a key role in the global trade movement.

“Out of the 10 ASEAN members, Vietnam is among four taking part in the CPTPP [along with Brunei, Malaysia, and Singapore], and Singapore are the only two having a free trade agreement with the EU,” he said.

Walde also highlighted the importance of Vietnam as a production hub, factoring in the fact that foreign investors are allowed to establish wholly-foreign-owned ventures, a hard-working and dedicated workforce, and the close connection in terms of economy, culture, and society between Vietnam and Germany.

To further push for investment capital from Germany to Vietnam, Walde called for the country to continue promoting the supply chain network and high-quality workforce that are capable to meet investors’ demands.

Transport and energy infrastructure are also fields that need more investment from the Government, he added, calling for the country to soon set up a network of renewables and serve as the foundation for Vietnam’s sustainable development in the future.

The AHK World Business Outlook is based on a regular survey of member companies of the German Chamber of Commerce Abroad, Delegations, and Representative Offices (AHKs). In spring 2022, it collected feedback from more than 4,200 German companies, branches, and subsidiaries worldwide, as well as those with close ties to Germany.

The survey has become a barometer of the business confidence among German companies and a key indicator of the German business situation, confidence, and economic expectation.

Participants from Vietnam: 46.4% of the responding companies are from the service sector, 39.3% are from the industry and construction sector, and another 14.3% are trading companies.

In June, Hanoi attracted US$46.2 million in FDI, including 38 new projects with registered capital of $7.7 million, 22 projects injected with additional funds of $7 million, and foreign investors contributed $31.6 million to purchase stake in 31 projects.

During the six-month period, the city attracted a total of $767.1 million, up 30.6% year-on-year.