Vieät Nam News speaks with Marko Walde, the chief rep­re­sen­ta­tive of AHK Vieät Nam / Ger­man In­dus­try and Com­merce Vieät Nam, about in­vest­ment flows from Ger­many into Vieät Nam and trade be­tween the two na­tions.

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Eco­nomic ties be­tween Vieät Nam and Ger­many are likely to in­crease with the new EU-VN FTA, pre­dicts Ger­man in­dus­try rep­re­sen­ta­tive Marko Walde.

Tell us about the trade rela tions be­tween Vieät Nam and Ger­many. What are the ma­jor items traded by the two coun­tries and how do you see fu­ture prospects?

Ger­many con­sid­ers Vieät Nam an im­por­tant part­ner in ASEAN. Trade and eco­nomic ex­changes be­tween the two coun­tries grew to US$7.7 bil­lion in 2013 (18 per cent higher than in 2012), with Viet­namese ex­ports to Ger­many grow­ing by 15 per cent. Top prod­ucts ex­ported from Ger­many are ma­chin­ery, trans­port equip­ment, phar­ma­ceu­ti­cal prod­ucts, chem­i­cal prod­ucts, and ve­hi­cles. Ma­jor items im­ported to Ger­many are tele­phones, tex­tiles, footwear, and seafood. We are very op­ti­mistic when look­ing at the fu­ture with the sign­ing of the Free Trade Agree­ment be­tween EU and Vieät Nam.

What are the most at­trac­tive sec­tors for in­vest­ment in Vieät Nam for Ger­man in­vestors?

Ger­man for­eign di­rect in­vest­ment (FDI) in Vieät Nam sur­passed $1 bil­lion. [There are] more than 270 Ger­man com­pa­nies in Vieät Nam, which are cre­at­ing jobs. The most at­trac­tive sec­tors are man­u­fac­tur­ing, tech­nol­ogy, IT, con­struc­tion, ed­u­ca­tion, and fi­nance.

Ger­many is also keen to invest in hi-tech in­dus­tries and sec­tors like ru­ral de­vel­op­ment, green tech­nolo­gies, re­new­able en­er­gies, and smart en­gi­neer­ing so­lu­tions as well as in ed­u­ca­tion and train­ing.

The Viet­namese con­sumer mar­ket is highly promis­ing, yet Ger­man whole­saler Metro sold its business to a Thai company. What do you think of this?

The Viet­namese mar­ket has big po­ten­tial. That is why Metro has been in­vest­ing in­ten­sively in this mar­ket for the past 12 years. The whole­saler has de­vel­oped a mod­ern sup­ply chain, pro­vid­ing di­rect mar­ket ac­cess for lo­cal farm­ers and pro­duc­ers and en­sur­ing sup­ply for tra­di­tional traders, with up to 90 per cent of goods be­ing lo­cally pro­duced. The company de­cided to trans­fer its business in Vieät Nam as the company be­lieves that the new owner will be able to build on the ex­ist­ing core com­pe­ten­cies and is will­ing to com­mit to fur­ther ex­pan­sion, thus tak­ing the business to the next level in a man­ner that Metro was not plan­ning in the mid-term per­spec­tive due to a repri­ori­ti­sa­tion of ob­jec­tives.

Some fear that the Metro sell­off shows Ger­man in­vestors ’ re­luc­tance to invest in Vieät Nam, es­pe­cially its re­tail mar­ket. Does it have a ba­sis in truth?

I be­lieve that Metro in Vieät Nam is a suc­cess story. They have be­come the largest in­ter­na­tional player in the sec­tor and have built 19 stores across 14 ci­ties with nearly 1 mil­lion cus­tomers. The decision to invest or to exit is quite nor­mal for any business, es­pe­cially in the re­tail sec­tor, which is char­ac­terised world­wide by ac­qui­si­tions and re­or­gan­i­sa­tions, es­pe­cially in dy­namic and emerg­ing mar­kets. At the same time we have many other Ger­man in­vestors in var­i­ous in­dus­tries that con­tinue to strengthen and ex­pand their ex­ist­ing in­vest­ments in Vieät Nam mas­sively.

What are the big­gest ob­sta­cles that Ger­man com­pa­nies face when in­vest­ing in Vieät Nam? Have th­ese af­fected in­vest­ment flows into the coun­try?

Ac­cord­ing to our survey of Ger­man in­vestors in Vieät Nam in May 2014, lack of skilled labour, com­plex gov­ern­ment poli­cies, and bu­reau­cracy re­main the most sig­nif­i­cant hur­dles for an en­gage­ment in Vieät Nam. Other sig­nif­i­cant fac­tors are im­port trade bar­ri­ers (63 per cent), the ex­is­tence of cor­rup­tion (63 per cent), in­fla­tion (50 per cent), and the tax bur­den (46 per cent).

Po­ten­tial in­vestors need to take into ac­count long- winded ap­proval pro­ce­dures. Un­for­tu­nately, Vieät Nam is still far from a one- stop- shop ( one ap­proval cov­er­ing the whole project), and re­cent for­eign-fi­nanced projects have been de­layed due to bu­reau­cracy, some­times for years.

What should the Viet­namese gov­ern­ment do to at­tract more Ger­man FDI and de­velop bi­lat­eral trade?

Vieät Nam should cre­ate a new in­vest­ment in­cen­tive model that re­wards in­vestors and com­pa­nies who are look­ing for sus­tain­able growth and a long-term com­mit­ment. In terms of the fu­ture, Ger­many has the tech­nolo­gies, re­sources, and ex­pe­ri­ence to de­liver thriv­ing ser­vices, in­dus­tries, and so­cio- eco­nomic im­prove­ment.

Ger­man com­pa­nies need a cli­mate of mu­tual trust, a re­li­able le­gal frame­work for in­vest­ment, and a trans­par­ent decision-mak­ing process from Viet­namese au­thor­i­ties.

One of the most im­por­tant is­sues is to im­prove the qual­i­fi­ca­tion of the work­force to meet the de­mand of Ger­man com­pa­nies and to meet Ger­man stan­dards. To­gether with Ger­man in­vestors in Vieät Nam, Ger­man In­dus­try and Com­merce Vieät Nam is now launch­ing a Ger­man-Viet­namese vo­ca­tional train­ing pro­gramme with Ger­man qual­i­fi­ca­tion stan­dards and giv­ing stu­dents prac­tice and ex­pe­ri­ence on the job in or­der to set a base for a bet­ter trained and qual­i­fied work­force.

From Novem­ber 20 to 22 the 14th Asia- Pa­cific Con­fer­ence

of Ger­man Busi­nesses will be held in HCM City with many Ger­man com­pa­nies par­tic­i­pat­ing. Can you tell us some­thing about it?

The con­fer­ence has been or­gan­ised bi- an­nu­ally in Asia since 1986 and has evolved into the largest Ger­man net­work­ing event in the re­gion, at­tract­ing po­lit­i­cal as well as business lead­ers. The economies in the Asi­aPa­cific re­gion com­bined are play­ing an ever more im­por­tant role in global trade, as is their share in world pop­u­la­tion and GDP. Dur­ing the two-day con­fer­ence, some 750 par­tic­i­pants will have am­ple op­por­tu­ni­ties to speak, lis­ten, net­work, and con­tem­plate con­cepts and so­lu­tions for a sus­tain­able fu­ture. This year’s con­fer­ence theme is “Un­der­stand­ing Trends and Per­spec­tives. ” The 14th edi­tion of the Asia Pa­cific Con­fer­ence of Ger­man Business 2014 will fo­cus on in­dus­tries and trends of the fu­ture, where co- op­er­a­tion be­tween busi­nesses in Ger­many and the Asia- Pa­cific can thrive. —

VNS Photo

Cus­tomers at a Ger­man-owned dis­tri­bu­tion cen­tre in HCM City. Re­tail is one of the many sec­tors in Vieät Nam to have at­tracted Ger­man in­vest­ments. —

Marko Walde.

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