German enterprises are demonstrating their confidence in Vietnam, thanks to the country’s improved investment climate and participation in free trade agreements.
|Auto brand Mercedez-Benz is part of the uptrend in German investment- Photo: Le Toan
Released last week, the results of the AHK World Business Outlook survey, conducted in March 2016 by the German Industry and Commerce in Vietnam (GIC/AHK Vietnam), show that German firms’ confidence, outlook, and expectations in Vietnam for the next year are growing.
Marko Walde, GIC/AHK Vietnam’s chief representative, said that “German enterprises are seeking opportunities for further investment in Vietnam, because they see Vietnam as an attractive destination in terms of the integration efforts made by the Vietnamese government - EU-Vietnam Free Trade Agreement (FTA) and Trans-Pacific Partnership and its other locational advantages”.
More than half of the German companies surveyed are upbeat about Vietnam’s economic outlook. 47 per cent expect better economic development, and 60 per cent forecast good business performance over the next 12 months. Seventy per cent thought their business situation at this time was “good”, while 58 per cent perceived their business outlook as “positive.” Some 54 per cent of respondents were considering raising their investment in Vietnam next year, with 58 per cent intending to hire more employees for their investment plan.
According to GIC/AHK Vietnam, Bosch will complete its $340 million investment in Vietnam during the 2011-2016 period. The firm will continue expanding its production lines and will build a research and development centre in the southern province of Dong Nai.
In another case, after investing $20 million in Vietnam between 2013 and 2014, Mercedes-Benz will launch its first cars assembled here in June. Meanwhile, medical equipment maker B.Braun will complete its $225 million investment by 2017. Ball-bearing manufacturer Schaeffler is also boosting its investment, after having disbursed $117 million across its projects in the central city of Danang.
Other German firms are also considering a hike in investment here, including Messer, which has invested $80 million in producing industrial gas; and Knauf, which has invested $38 million in gypsum production. Also, Siemens wishes to participate in projects such as thermal power and smart transport in urban areas. It is also pursuing a role in the development of metro line No2 in Ho Chi Minh City.
“German companies are more confident regarding Vietnam’s economy and business development than in other ASEAN members, or in China and India. It shows a very positive sign in terms of the business confidence, outlook, and expectations among German companies in Vietnam,” Walde said, adding that “All the positive feedback from German companies as well as Vietnam’s locational advantages are the results of Vietnam’s government encouraging integration into the world economy and improving the infrastructure of the investment environment.”
According to Walde, Vietnam is a fast-growing market and only the second ASEAN country (after Singapore) to have a free trade agreement (FTA) with the EU.
“This FTA will provide significant new opportunities for companies on both sides by increasing market access for goods and services. The agreement will help promote high-quality capital flow from the EU as the business and investment environment is bound to improve now that commitments have been made,” Walde said.
Around 300 German companies have ongoing operations in Vietnam. To date, most German companies (182 projects worth $880 million) have entered through greenfield or 100 per cent foreign-owned companies, while others have opted for direct acquisition or joint ventures.