Greater EU investment flow expected

What have been the priorities of the European Chamber of Commerce’s (EuroCham) member companies in Vietnam, and possible trends emerging for 2022?

Alain Cany, chairman of the European Chamber of Commerce in Vietnam

The focus for European businesses during 2021 has been to weather the storm of the global pandemic. Our members suffered significant setbacks in their commercial operations during the outbreak, with lockdowns, travel restrictions, and social distancing inhibiting international trade and investment. However, despite these challenges, European businesses remained resilient and, now that Vietnam is returning to business as usual, our members are poised to rebound and recover.

The most positive aspect of EU-Vietnam trade and investment in 2021 was the initial success of our free trade agreement. Even during the pandemic, exports from the EU to Vietnam increased 12 per cent in the first year of its implementation. This strong start sets a positive precedent as we look ahead to 2022.

Europe contains some of the world’s leading companies in high-tech industries as well as green and sustainable business. We know that the government is prioritising attracting foreign direct investment in these areas, and 2022 should see significant opportunities for greater inflows from the EU.

For this reason, EuroCham is planning a major conference and exhibition on green and sustainable business called Green Bizz. We want to bring together the private sector and government leaders to share best practices from across Europe in areas such as renewable power generation, green buildings, smart cities, and others, to reduce the environmental impact of business and make trade sustainable.

The government has issued many policies to support businesses hit by COVID-19. How have the policies supported EuroCham member businesses in their recovery?

European companies were glad to receive support from the government during the pandemic. Our members appreciated not just the national-level policies but also the practical support and assistance on the ground to resolve some of the specific issues faced by companies.

For instance, different interpretations of national regulations at the provincial level caused problems for our members moving their goods and staff between localities. However, thanks to the proactive support of local authorities, we were able to overcome these challenges and keep goods flowing, value chains intact, and people in jobs wherever it was safe to do so.

Vietnam has made efforts to improve the business climate. Have you seen any improvements during 2021?

The EuroCham Business Climate Index (BCI) fell to its lowest-ever score in over a decade of monitoring. Each quarter, we ask our over 1,200 members for their perceptions of their companies and Vietnam’s trade and investment environment. In Q3, we saw a significant drop as most non-essential businesses were forced to close while consumers remained at home.

However, now that the government is implementing an ambitious and accelerated vaccination programme, we can reopen commercial operations and restart normal life. As a result, business leaders are looking ahead to 2022 with cautious optimism, and we have seen the BCI take a small but promising uptick as a result. I am confident that it will continue to climb now that we are following the government’s clear direction of learning to live with the virus.

The implementation of the EU-Vietnam Free Trade Agreement (EVFTA) from August last year has created a new impetus for Vietnam-EU relations. What are your expectations for 2022?

The EVFTA has been in force for around 18 months now and there is no question that it has made a strong start. In the first year alone, Vietnamese exports to the EU increased 11 per cent, with goods such as footwear and textiles, coffee, seafood, and machine parts benefitting from a gradual phasing out of tariffs and a mutual opening of markets.

Meanwhile, EU exports increased 12 per cent over the same period. And this trend is set to continue into 2022. Now that we are entering a new normal where, we hope, the challenges around trade, travel, and tourism will continue to be resolved, EU-Vietnam trade and investment should accelerate and ensure that the EVFTA lives up to its full potential.

The most important thing now is to implement the ease of travel restrictions and quarantine for vaccinated business leaders, investors, and experts.

If Vietnam can implement a fast-track entrance procedure for these essential travellers, foreign enterprises can get back up to full speed and make a significant contribution to Vietnam’s economic growth in the post-pandemic period.