Alain Cany - Chairman, European Chamber of Commerce
Over the last few decades, Vietnam has become more open, competitive, and attractive to foreign investment. However, despite significant progress, both short- and long-term challenges for European companies remain.
In the short-term, the interruptions to normal business because of COVID-19 have an inevitable impact on foreign investment. However, we hope that an ambitious and accelerated vaccination programmes will help to re-open borders and restart normal trade and investment soon.
In the long term, Vietnam remains on the radar of various European companies following the recent implementation of the EU-Vietnam Free Trade Agreement. To unlock the full potential of this wide-ranging agreement, the government’s new taskforce could create positive momentum for further modernising the legal framework and improving the business environment.
In this spirit, we encourage the government to continue its simplification of administrative procedures and streamlining of business conditions. We also urge further implementation of e-government initiatives and the digitalisation agenda. Both would help to reduce the bureaucratic burden on businesses and enable them to free up capital to reinvest into their companies and staff.
Meanwhile, further upgrading Vietnam’s logistics infrastructure and improving transport links between ports, industrial zones, and major cities would help to secure further overseas investment.
Marko Walde - Chief representative, Delegation of German Industry and Commerce in Vietnam
In 2020, Vietnam recorded economic growth of 2.9 per cent and is expected to achieve a growth rate of 7.5 per cent this year. The simultaneous implementation of free trade agreements will help Vietnam’s GDP increase by up to 3.2 per cent in this decade. Unfortunately, many companies have been feeling the initial impact of the virus, and investors from Germany must postpone their investment plans or stop the execution of their projects.
Vietnam’s travel restrictions – supported by other measures – help explain the country’s apparent mastery over the virus. Everybody who does get into the country has to submit tests and wait out a mandatory quarantine period under state supervision in a military-run facility or designated hotel, plus 14-day home quarantine. For those entrants with full vaccinations, Vietnam should reduce the quarantine duration to a week, which would relieve the burden on quarantine zones and reduce expenses for entrants.
Moreover, the government should act now to accelerate vaccination and find the way out of this pandemic, while continuing to scale up production, ensuring that necessary logistics and healthcare infrastructure are in place, providing further financial and in-kind support to COVAX, and developing long-term strategies that include commitments to making vaccines available.
Laurent Genet - General director, Audi Vietnam
The lockdowns are weighing heavy on many companies. Whether open or classified as non-essential business, economy is restricted and projects also take longer to implement and get off the ground.
In Audi’s case, the new dealership Audi Tan Binh under construction in Ho Chi Minh City is now delayed, which means that costs are piling up on top of suspended revenues since vehicle registration offices closed.
The start of a widespread vaccination campaign in large cities is a strong positive development. Vaccinations are the only affective way to protect the community and maintain economic activities.
The fast adoption of vaccine passports – for instance by using QR codes on smartphones, like the European Union is now implementing – will allow vaccinated people to be visibly identified when coming to Vietnam for business.
Ben Gray - General manager, Cushman & Wakefield Vietnam
C&W welcomes a taskforce to review and remove obstacles that are in the path of those seeking to invest here.
Looking at real estate, and specifically at development projects, Vietnam has the ability and the capability to drive sustainable, quality projects across the value spectrum.
The government needs to streamline the process of buying land under an urban master plan, to start constructions. The framework for this, specifically looking to the process of compensation has become particularly challenging and is easily frustrating. It is impossible for developers to see a clear path within the existing planning processes to realise their projects on time and on budget.
This shortage of projects that are viable restricts the supply of products and this constriction in the development pipeline has driven land prices to a level that is not sustainable. Developers should also be able to reset the tenure of land use certificates as part of the process.
The task force can also look at the process to register a project or a company in Vietnam and consider how some regional markets are able to have fully foreign-owned companies, capitalised and ready for business in under 24 hours.
The recent barriers raised with respect to foreigners with work permits is proving a challenge, however. The intent of the legislation, whilst admirable, is not aligned with the need from many multinational corporations coming to the market.
David Salt - COO, LOGIVAN Technologies
As we are a technology company, the new stay-at-work regulations have not affected us much. While we lose some quality time together for training and collaborating, we can achieve our objectives by working remotely, and we have been fully remote in Ho Chi Minh City since May.
Food and beverages have remained strong, with the only noticeable contraction being in the distribution channels of hotels, restaurants, and cafes. However, the many police checkpoints and requirements for regular testing of drivers have put pressure on companies. Nevertheless, we all understand the situation and respect that these measures are helping to curb the infection rate and keep people safe.
We are excited about the progress of the vaccination programme, noticing that many companies have already received their first doses. The programme will not only help to protect the elderly and other vulnerable but also help increase mobility for work and leisure.
Ngo Dang Khoa - Country head, Global Markets, HSBC Vietnam
Challenges for Vietnam’s economic growth stem from internal factors. Although the macroeconomic data for the first six months of 2021 shows a relatively stable trajectory, the current wave of the virus could take a serious toll on the country’s GDP growth target of 6.5 per cent.
The recent outbreak has also raised concerns that long-term production disruptions will affect Vietnam’s sustainable economic recovery. The distancing directives have led to a deterioration in the outlook for consumption and the recovery of the service and tourism sectors.
As a result, HSBC Research downgraded Vietnam’s GDP growth forecast to 6.1 per cent. However, in the long term, Vietnam’s growth engine remains very strong. Once the pandemic is under control, Vietnam will benefit from a strong tech-led recovery and promising foreign investment prospects, making it one of the most potential countries in the region.
For sustained recovery, it is crucial to quickly contain the virus and accelerate a nationwide vaccination programme. With the closure of major industrial zones, particularly in the south of Vietnam, the growth momentum in the third quarter has encountered many roadblocks. Therefore, it is necessary to have timely policies in both fiscal and monetary terms to further support businesses and people overcome these difficulties.
Nguyen Van Toan - Vice chairman, Vietnam Association of Foreign Invested Enterprises
The establishment of a task force is a good idea because it will be a win-win solution for both investors and localities. Investments will be deployed on time, while immediately generating jobs for the local community, and provinces will have more benefits from tax revenues.
The smooth cooperation between the task force, departments, and investment promotion agencies in cities and provinces is important to follow registered projects’ progress and study difficulties case-by-case. Along with following the progress of feasible projects, the task force should pay attention on long-delayed projects due to the investors’ lack of experience or financial capacity, as well as those projects with wrong purposes compared to their commitment.
Tran Duc Anh - Head of Macro and Strategy, KB Securities
Data collected at the end of the second quarter showed certain impacts of the latest resurgence which caused many provinces and cities to implement social distancing, and interrupted many businesses and industrial parks.
The driving force for domestic growth in the latter half of 2021 should come from exports and investment. However, the speed of large-scale vaccination programmes and Vietnam’s successful control of the pandemic are two drivers of economic growth in the last six months of the year. Thus, we lowered our forecast for 2021’s GDP growth from 6.5 per cent to 5.8 per cent, reflecting the impact of the ongoing pandemic.
Export growth, especially in processing, manufacturing, and traditional industries like textiles, footwear, wood, and fishery is expected to rebound thanks to the increasing consumption demand in developed countries.