55 per cent of German companies in Vietnam want to expand operation

According to the AHK World Business Outlook released recently by the Delegate of German Industry and Commerce in Vietnam (GIC/AHK), German businesses operating in Vietnam have assessed their own business situation and future business expectations in 2019 on a better stance than in 2018.

In particular, 77 per cent of the businesses surveyed rate their current business situation in Vietnam as good. In 2018, only 56 per cent had a positive view of their situation in the country. It is also significantly higher than the average level of ASEAN (61 per cent).

72 per cent of German companies show their belief in better business production in the next 12 months.

Meanwhile, 55 per cent of German companies in Vietnam intend to expand their activities in Vietnam and 59 per cent assume an increase in employment.

2018 was a successful year of Vietnam with a few positive developments, such as the GDP growth, FDI disbursement and import-export turnover. The Vietnamese government shows the commitment to support and create the most favourable conditions for foreign investors and businesses.

In addition, a wide range of free trade agreements (FTA) such as TPP11 (CPTPP – the comprehensive and progressive agreement for Trans-Pacific partnerships) as well as the FTA between EU and Vietnam, which probably comes into effect this summer, will boost the economic growth of this country.

AHK said that could be the reason why German business leaders in Vietnam maintain their positive view on the economic expectations and their situation in Vietnam, and they are now looking forward to a bright 2019 and 2020.

However, concerns on the economic policy framework are increasing. 51 per cent of companies cite economic policy as the greatest factor of uncertainty for their businesses in 2019 in Vietnam.

Other issues such as lack of skilled workers as well as labour costs might threaten their businesses here, AHK stated.

Other factors that might affect German businesses in Vietnam include corruption and lack of skilled workers and appropriate regulations.

The conclusion of the Regional Comprehensive Economic Partnership (RCEP), domestic and international demand, and the political stability, meanwhile, are expected to have a very high influence for the German engagement in Vietnam, in terms of market supply and demand and economic environment.

AHK suggests that building and developing domestic supporting industries can help to create the collaborate opportunities among domestic and foreign businesses.

The developed a practice-oriented vocational education system in Vietnam, on the other hand, will be able to help to build a new skilled generation with profound knowledge, practical and communicative skills.

“This is a competitive advantage of Vietnam which can assure the sustainable development in the long run,” AHK said.

In addition, AHK recommended that building a fruitful and creative ecosystem for startups as well as providing financial, educational and environmental supports will give domestic startup companies and small- and medium- sized businesses the capacity to call for foreign investments.