Preparing for the new era

Pham Thai Lai

What is your view about the prospect of Vietnam’s economy in 2019?

Vietnam has continuously achieved very impressive economic growths in the past few years and I’m confident that Vietnam will be able to keep this growth momentum in 2019 and the years to come.

Going forward, Vietnam is entering an exciting time with many growth opportunities brought by the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the ratification of EU-Vietnam Trade Agreement, as well as the finalisation of the Regional Comprehensive Economic Partnership’s negotiations. These trade agreements, once ratified, will be key drivers for trade promotion, further attraction of foreign direct investment, job creation and GDP growth for Vietnam.

Besides, the enhancement of Vietnam’s position and prestige in the international arena supplemented by the government’s great efforts to ensure a more open and transparent business environment will definitely make the country even more attractive to investors.

I strongly believe that there will be many investment flows from overseas for high-valued projects in Vietnam. This will enable Vietnam to become a hub for trade and investment activities in South East Asia.

What will be biggest ­opportunities and challenges for Vietnamese enterprises?

Free trade agreements offer Vietnam great advantages in term 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 amble opportunities to access, invade and expand to new markets worldwide.

Vietnam’s deeper global integration has also enabled the local business community to access new and state-of-the-art technologies as well as to expand business relationships internationally. For example, FPT has been selected to be Siemens’ global partner for MindSphere – a cloud-based, open IoT operating system from Siemens.

However, competitive pressure will certainly be intensified and increased whereas 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 ones, are facing many challenges such as 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, which results in the pressing need to find alternatives, and the utmost requirements for environment protection and CO2 emission reduction have also forced enterprises to invest in clean and green technologies, which are often very costly.

What should Vietnam do to achieve a more sustainable growth, raise its national competitiveness, and to be well prepared for Industry 4.0?

Vietnam needs to focus on these three basic factors, including the establishment of a stable legal framework to support business, development of high skilled labour force, and improvement of basic infrastructure. In particular, Vietnam should develop a “smart infrastructure roadmap” in order to build its sustainable future over the coming years. 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, energy efficiency and transportation, and 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 also help to drive efficiency and increase productivity. For example, our most comprehensive product lifecycle management portfolio helps VinFast to fulfill its vision of building the first made-in-Vietnam car in record time.

Siemens’ leading steam and gas turbine technologies have helped create the highest efficiency and most environmentally friendly power plants 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 of buildings offers new dimensions to optimise the energy usage and operation of buildings. Lastly, digital railway provides new opportunities for cities and train operators to run railways that are interactive and self-managing, and also provides passengers with new level of connectivity besides convenience and comfort when moving around.

Education and training are also key factors for Vietnam’s sustainable growth. In the past years, Siemens has donated Industry 4.0 software licences valued at over $70 million to academic institutions such as the Hanoi and Ho Chi Minh City polytechnics or the Vietnamese German University.

We also have enabled local businesses to gain access to our latest Internet of Things technologies. We are supporting local customers such as VinFast with our digital factory software suite to speed up the manufacturing of the first car made in Vietnam.