8 Investing
January 3-9, 2022 l www.vir.com.vn
Greater EU investment flow expected
After the challenges in their commercial operations, European
businesses in Vietnam are recovering and rebounding. Alain
Cany, chairman of the European Chamber of Commerce in
Vietnam, talked to VIR’s Bich Thuy about the prospects and
trends of the EU-Vietnam Free Trade Agreement that bolsters
trade interaction with both sides.
What have been the priorities of positive precedent as we look ahead
the European Chamber of Com- to 2022.
merce’s (EuroCham) member Europe contains some of the
companies in Vietnam, and possi- world’s leading companies in high-
ble trends emerging for 2022? tech industries as well as green and
The focus for European busi- sustainable business. We know that
nesses during 2021 has been to the government is prioritising at-
weather the storm of the global pan- tracting foreign direct investment
demic. Our members suffered signif- in these areas, and 2022 should see
icant setbacks in their commercial significant opportunities for greater
operations during the outbreak, with inflows from the EU.
lockdowns, travel restrictions, and For this reason, EuroCham is
social distancing inhibiting interna- planning a major conference and
tional trade and investment. How- exhibition on green and sustain-
ever, despite these challenges, Eu- able business called Green Bizz.
ropean businesses remained resilient We want to bring together the pri-
and, now that Vietnam is returning vate sector and government leaders
to business as usual, our members to share best practices from across
are poised to rebound and recover. Europe in areas such as renewable
The most positive aspect of power generation, green buildings,
EU-Vietnam trade and investment smart cities, and others, to reduce
in 2021 was the initial success of the environmental impact of busi-
our free trade agreement. Even ness and make trade sustainable.
during the pandemic, exports from
the EU to Vietnam increased 12 per The government has issued many
cent in the first year of its imple- policies to support businesses hit
mentation. This strong start sets a by COVID-19. How have the poli-
German businesses express confidence
in crucial pandemic recovery scheme
Throughout the year, they fo-
cused on finding a way to cope with
the impacts while trying to main-
tain operation and production. We
have tried our best to comply with
all regulations issued by the gov-
ernment and secure health and jobs
After setbacks in business for our labour force to avoid supply
and investment activities chain disruptions.
The highlight for the German
due to the global health business community was the vacci-
crisis, German businesses nation campaign, which started in
are planning to expand October. Thanks to the support of
their business to diversify members of the German Business
their supply chain with Association, several supporters from
Germany, as well as the German
sustainable energy and
Embassy to Vietnam, we were able
infrastructure solutions. to convince the German government
Alexander Goertz, chair- to donate 2.6 million doses of Astra-
man of the German Business Zeneca to Vietnam. As part of this
Association, talked to VIR’s donation, an allocation of 100,000
Tung Anh about overcom- doses was exclusively given for the
employees of German companies in
ing the challenging time Vietnam. This was an unprecedent-
with its members. ed act of the German government
to support companies abroad and
shows the importance of bilateral
How have German businesses trade between our countries.
been faring during these challeng- The Vietnamese government
ing times? has issued several policies to sup-
Last year did not go in the way port businesses. There have been
that we expected. Economic recov- several actions, such as deferral of
ery has been held back because of tax and land lease payments, the
the pandemic, which also has af- one-time support for employees,
fected our member companies, re- and unemployment insurance and
gardless of industry and size. the corporate income tax reduc-
cies supported EuroCham member
businesses in their recovery?
European companies were glad
to receive support from the gov-
ernment 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 interpre-
tations of national regulations at
the provincial level caused prob-
lems 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 chal-
lenges and keep goods flowing, val-
ue chains intact, and people in jobs
tions for companies with a turnover
of less than $8.69 million. Those
incentives help businesses to re-
cover partially, but expenses for
COVID-19 prevention like testing
and extra allowances for employees
remain much higher.
To ensure a quick recovery, we
need swift improvements in admin-
istrative procedures, especially on
work permit issuances and entry
regulations. For foreign direct in-
vestment, it is crucial to have access
to foreign experts and meetings with
their business partners. We hope the
government is focusing on those
topics and so we can see an improve-
ment in the first quarter of 2022.
What is German enterprises’ im-
pression about the local business
climate throughout the last year?
Vietnam remains a strategic
investment destination for Euro-
pean corporations and enterprises.
More than 65 per cent of the re-
spondents of a recent survey con-
ducted by the German Chamber of
Commerce (AHK) believed that the
Vietnamese economy would recov-
er in 2022. Over the last year, the
number of new investments from
German companies was quite low.
This, however, did not reflect a de-
crease of interest of German inves-
tors in doing business in Vietnam.
wherever it was safe to do so.
Vietnam has made efforts to im-
prove the business climate. Have
you seen any improvements
during 2021?
The EuroCham Business Cli-
mate Index (BCI) fell to its low-
est-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 sig-
nificant drop as most non-essential
businesses were forced to close
while consumers remained at home.
However, now that the govern-
ment is implementing an ambitious
and accelerated vaccination pro-
gramme, we can reopen commer-
cial operations and restart normal
life. As a result, business leaders
are looking ahead to 2022 with cau-
tious 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 govern-
ment’s clear direction of learning to
live with the virus.
The implementation of the
EU-Vietnam Free Trade Agree-
ment (EVFTA) from August last
year has created a new impetus for
It is just simply a slowdown due to
travel restrictions and lockdowns.
We believe many investors are
ready to reschedule their visits to
Vietnam in the first half of 2022, es-
pecially when the government has
approved to resume international
commercial flights from January 1.
Has the pandemic had any im-
pact on the performance of the
EU-Vietnam Free Trade Agree-
ment (EVFTA) in 2021?
The EVFTA is a key driver for
the optimism of German compa-
nies in Vietnam. It gives European
companies better opportunities to
expand further in the market.
Unfortunately, the long lock-
downs in Germany and the current
dynamic development of the pan-
demic in Vietnam have been pre-
venting both countries from making
use of the reduced trade barriers.
Vietnam has recently stopped
following the zero-COVID strategy
in favour of a more flexible strate-
gy, which will ease the current con-
straints and solve bottlenecks for
an economic bounce back in 2022.
With a bilateral trade volume of
almost $15.8 billion in 2021, Ger-
many was by far the most import-
ant European partner, and with the
advantages from the EVFTA, we
expect to see more opportunities 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 in-
creased 11 per cent, with goods
such as footwear and textiles, cof-
fee, seafood, and machine parts
benefitting from a gradual phasing
out of tariffs and a mutual opening
of markets.
Meanwhile, EU exports in-
creased 12 per cent over the same
period. And this trend is set to con-
tinue 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 vac-
cinated business leaders, investors,
and experts.
If Vietnam can implement a fast-
track entrance procedure for these
essential travellers, foreign enter-
prises can get back up to full speed
and make a significant contribution
to Vietnam’s economic growth in
the post-pandemic period.n
potential exploration, partnerships,
and dialogue among enterprises of
the two countries in 2022.
Economists forecast that 2022
will see improvements in the busi-
ness and investment picture. Have
you seen any trends among Ger-
man firms?
Nearly 50 per cent of Ger-
man companies in Vietnam have
planned to expand their business to
diversify their supply chain, hence
reducing the dependency on Chi-
na. The current investment trend of
German companies still focuses on
industrial strengths such as manu-
facturing and technical processing
and services.
Besides those, we think sus-
tainable energy and infrastructure
solutions are segments with a very
high potential for future invest-
ments. Many German companies
are market leaders in those fields
and can support Vietnam to become
advanced in those fields.
However, to attract high-tech
enterprises from Germany, some
legislative frameworks and sup-
portive administrative procedures
are needed for investors. That will
help German companies feel con-
fident to enter Vietnam and ensure
long-term planning of business op-
erations and strategies.n