|Pham Thai Lai, president and CEO of Siemens ASEAN and Vietnam |
What will be the EU-Vietnam Free Trade Agreement’s (EVFTA) effect on Vietnam’s economy in terms of exports and investment?
I would like to congratulate the Vietnamese government and its people for making the EVFTA a reality.
It is a great foundation to further boost trade, to attract more investment, to create more jobs, and to foster sustainable development between the EU and Vietnam. In the coming years, I strongly believe that we can expect a robust investment growth from the EU to Vietnam and a substantial increase in export from Vietnam to the EU as a result of the removal of over 99 per cent of tariffs on goods traded between the two economies.
Furthermore, Vietnam’s commitment to ensure a more open and transparent business environment will help to increase the investment flow from high-valued projects of the EU in Vietnam. This will enable Vietnam to become a hub for trade and investment activities of the EU in Southeast Asia.
The increase in value chains and value-added services will support Vietnam to restructure its economic growth model and will be a key driver for Vietnam’s ambition to become an industrialised nation in the near future.
What are the clearest advantages and barriers for Vietnamese enterprises today?
FTAs offer Vietnam great advantages in terms of export, and at the same time help to diversify its import markets. Not only can Vietnam gain benefits from significant tariff reduction but also from having ample opportunities to access and expand to new markets worldwide.
Vietnam’s deep global integration has also enabled the local business community to access state-of-the-art technologies, as well as to expand business relationships internationally. For example, FPT Group has been selected to be Siemens’ global partner for MindSphere – a cloud-based, open Internet of Things operating system.
However, competitive pressure will certainly be intensified and increased while one of the biggest challenges of Vietnam is from the stagnation of the local enterprise system. Their adaptability to the market economy is generally weak.
Vietnamese enterprises, especially small- and medium-sized enterprises, are facing many difficulties such as backwards technology, low labour productivity, weak competitiveness, inadequate management and leadership skills, and especially lack of capital investment. They also have limited knowledge about international business law and international integration, as well as limited international business experiences.
Other emerging challenges, such as the scarcity of natural resources and requirements for environment protection and CO2 emissions reduction, have also forced enterprises to invest in clean and green technologies, which are often very costly.
What should Vietnam do in order to achieve more sustainable growth, increase national competitiveness, and be well prepared for Industry 4.0?
Vietnam needs to focus on three basic factors – the establishment of a stable legal framework to support business; development of a high-skilled labour force; and improvement of basic infrastructure. In particular, Vietnam has to develop a “smart infrastructure roadmap” in order to build the country’s sustainable future over the coming years and decades.
Such a roadmap will need to take a holistic view at all vital development areas for the country, including infrastructure projects in the areas of power generation, transmission and distribution, and energy efficiency and transportation, but also building up skilled workforce capacities.
Digital and smart infrastructure ranging from digital factories, highly efficient power plants, smart grid, smart building, or seamless mobility systems are key levers to strengthen the basic infrastructure in Vietnam, and at the same time help to drive efficiency and increase productivity.
Our most comprehensive product lifecycle management portfolio helps VinFast to fulfill its vision of building the first Vietnamese car in record time, whereas our efficient combined cycle power plants significantly contribute to mitigating CO2 emissions in Vietnam.
Siemens smart grid solutions automate and stabilise Vietnam’s power grid and help to cope with fluctuating energy sources such as wind or solar power.
Digital twin buildings offer new dimensions to optimise the energy usage and operation of buildings. Lastly, digital railways provide new opportunities for cities and train operators to run railways that are interactive and self-managing, and at the same time they provide passengers with a new level of connectivity besides convenience and comfort when moving around.