Confidence climbing in foreign business attitudes

Confidence climbing in foreign business attitudes, illustration photo

The south-central province of Binh Dinh last week granted an investment registration certification for German-backed KURZ Group’s $40 million project to develop a coating and thin-film technology factory in Becamex VSIP Binh Dinh. KURZ also has factories in Malaysia and China.

The 12-hectare venture is slated to be put into operation in the second quarter of 2023. Once completed, it will have a capacity of 15 million square metres per year of film, decorative decal, and hot stamping foil, as well as related tools and application machines and plastic parts.

Meanwhile, the latest AHK World Business Outlook Survey results were released last week, focused on German investor sentiment at a global level.

German companies in Vietnam are proving resilient this year, expecting a further revival of their own activities despite the cooling economy, and they remain confident about business development in the coming 12 months.

“Fifty-five per cent of German companies surveyed in Vietnam expect their own businesses to improve, 83 per cent of survey participants intend to invest further in their activities in Vietnam, and 33 per cent assume an increase in employment in the upcoming 12 months,” said a press release on the results.

Marko Walde, chief representative of the Delegation of German Industry and Commerce in Vietnam told VIR, “Vietnam is expected to continue leading the region in the recovery period and retains its position as an attractive investment hub for German entrepreneurs in the long term. They are drawn in by the reasonable and high-quality labour, open investment environment, the new-generation free trade agreements (FTAs), and a growing local market.”

Guru Mallikarjuna, managing director of Bosch Vietnam, said that Vietnam offers German investors a favourable economic outlook, with numerous benefits for continued industrial and high-tech growth, including the availability of a competitive labour force, desirable age groups, and a growing focus on capacity training and development.

“Furthermore, immediate effects from FTAs strengthen Vietnam’s position by removing nearly all trade barriers with EU and Asian countries, representing a massive buying power of more than 5 billion potential clients,” Mallikarjuna said.

Besides German groups, Indian investors also reported a slight improvement in sentiment after the easing of social distancing measures. Commenting on the prospect of Vietnam after severe lockdowns, Sanjay Jain, CFO of Wipro Consumer Care Vietnam, said that the company has adjusted itself to continue to grow and do business in Vietnam after a rocky summer.

“While GDP growth for 2021 has not been able to keep up with government targets, nevertheless, consumer demand and economic growth will rebound at a fast rate until 2023 and subsequently is expected to outpace rivals with Vietnam’s growth and foreign direct investment attraction rebounding to pre-pandemic levels,” Jain said.

In the same vein, Dheeraj Puri, co-chairman of the Indian Chamber of Commerce in the Northern Region, said that while the pandemic has been a very challenging period, certain businesses are in fact doing even better compared to previously. “However, it will take longer for many other businesses to normalise due to the negative impact of the prolonged issues,” Puri said.

He foresees continued problems with sourcing raw materials, logistics and shipping costs, and other supply chain headwinds. Another challenge is to bring enough workers back to work and help them settle down.

The third-quarter Business Climate Index, a regular indicator of business leaders’ sentiments from the European Chamber of Commerce, is also showing a rise in positive sentiment.

“Beneath the headline index figure, some interesting trends are emerging. While the prospects for Vietnam’s business environment has seen a small but confident rise, companies are a little more hesitant when it comes to their own operations,” said YouGov Vietnam CEO Thue Quist Thomasen.

“This suggests that business leaders are waiting to see conditions and regulations in the new normal unfold before making significant commitments in terms of investment projects or recruitment plans. However, the latest data should give us grounds for optimism in the months ahead,” he added.