Ludwig Graf Westarp im Interview zu EVFTA Lao Dong

Lao Dong: In the process of working with Vietnamese enterprises, what impressed you? What strengths do Vietnamese businesses have?

Ludwig Graf Westarp: A short while ago, in October 2020, Vietrade in co-operation with the German Association for Small & Medium-sized businesses (BVMW), has conducted a trade promotion conference for Vietnamese and German SMEs. Subsequently to the webconference, we offered a question & answer session. This session took further three hours with lively exchange and well-structured questions from Vietnamese companies.

Vietnamese enterprises have shown their eagerness to develop and explore business opportunities in foreign markets. We also experienced the newly demand of Vietnamese businesses for international market development. These enterprises are dynamic, result-driven and future-orientated.

In your opinion, what do Vietnamese businesses need to improve to penetrate international markets more effectively, especially the EU market?

Vietnamese enterprises should actively take the opportinities to understand EU market and use available ressources.

EU has a wealth of statute and law on all aspects of environmental and consumer protection, including product liability and minimum warranties. Vietnamese companies need to look in all what they do for sustainability, strive to reach and maintain high product quality and stable supplies. For example, to catch the new business trends and understand the EU market, they should join business delegations, participate in business dialogs and develop strategic business co-operation programmes.

What are the available ressources? In Germany, there are 180,000 Vietnamese living, working and studying, other 100,000 Vietnamese returned to their home country. To mention are also several civil organizations in Germany that have been contineously promoting Germany-Vietnam relations, such as the DVG, the German-Vietnamese Society, active since 1991. Very important for Vietnamese businesses is to know there are 40 industry associations and 250 business associations. Each association focusses on different industries or sectors. Vietnamese enterprises should actively approach these valuable networks.

After the EVFTA took effect in August, how do you think the agreement has affected trade activities between Vietnam and the EU?

The EVFTA has had a very timely impact, helping businesses find markets for their products, especially during the Covid-19 pandemic and the US-China trade war. In December 2020, four months after the EVFTA came into effect, total export turnover of Vietnam to the EU reached about $14.66 billion, up 2.05% over the same period last year.

Vietnam has already started to advance quality and sustainable production in its economy to meet both domestic consumption and export demands, and the Ministry of Planning and Investment (MPI) estimates that by 2030 the EVFTA will even increase Vietnamese exports to the EU by 44 per cent.

Currently, European companies represent just 11.8 per cent of foreign direct investment (FDI)-linked projects in Vietnam and account for 15.6 per cent of all FDI. The EVFTA will lead to further market penetration by EU investors. Soon the EU will have ratified also the Investment Protection Agreement (EVIPA). The reason why the ratification from the EU´s side is not completed yet, is related to the process itself, since all 27 EU member states have to ratify the EVIPA and this process takes time.

In combination with Vietnam‘ s new Investment Law from January 2021, EVFTA and EVIPA will lead to significant synergy effects!

The business confidence in EVFTA is also strong. According to the European Chamber of Commerce (EuroCham), 85 per cent of its members expect the EVFTA to have either a „significant“ or „moderate“ impact on their long-term business and investment plans.

Though EVFTA Vietnam gains access to the EU’s market, which is the world´s largest market, enabling the country to further long-term economic reform and growth. For Vietnam, the deal also serves as a counterweight to China’s growing economic power and brings Vietnam closer to international economic integration. The free trade agreement offers Vietnam an opportunity for economic diversification and deeper engagement with another key foreign partner, while decreasing its dependence on Chinese markets and FDI.

In your opinion, what should the business community of both Vietnam and the EU do to maximize the values / benefits that EVFTA brings?

It is important that businesses have to be very good informed about the benefits accompanied with EVFTA, EVIPA and Vietnam’s new Investment Law from the 1st of January 2021. Therefore an intensified dialog and co-operation between Vietnam’s and the EU`s business community should be stimulated to determine the huge potential and business opportunities. Both business communities can then use the full potential of the free trade agreement. Germany, for instance, is still focussed too much on the EU market, and Vietnam should stonger diversify and ballance its partner markets. German enterprises should look much more for business opportunities in Vietnam. Currently, just around 300 German companies are active in Vietnam.

Germany is Vietnam‘s strongest trading partner in the EU but obviously there is much space left for further German enterprises to do business in Vietnam! Surveys show that German businesses in Vietnam are optimistic. Compared to 2020, 2/3 of the German enterprises expect a better business situation in 2021. That can be explained with two factors: Vietnam‘s dealing with the Corona-crisis and the country`s liberal economic policy, where EVFTA plays an important role!

Working in Vietnam, how do you evaluate the business environment here?

Vietnam is an impressive fast growing lower middle-income country. Living standards have improved quickly in the last decades. The country is now entering a new phase of its national development and has set out to become a modern and industrialised country.

The first opportunity for foreign enterprises is the size of Vietnam’s market with almost 100 million inhabitants and with one oft he fastest growing middle classes in the world. Vietnam has a very good groth rate, a stable currency and stable political environment. The country is an export-orientated economy with a low cost labour force and an openess regarding FTAs.The population is young, energetic and future-orientated, and the country invests in infrastructure development in education, roads, metro and airports.

Foreign citizens can own 100% of a company, and the new Vietnamese Investment Law from January 2021 improves the situation for foreign investors.

Challenges in doing business for European enterprises in Vietnam can be related to different cultures and expectations. As soon as such challenges are overcome, a fruitful business relation can be developed.

Weitere Interviews:

https://laodong.vn/kinh-te/doanh-nghiep-viet-da-tan-dung-duoc-bao-nhieu-co-hoi-tu-evfta-878160.ldo

https://laodong.vn/thi-truong/kinh-te-24h-gia-vang-hung-huc-da-tang-880571.ldo

https://laodong.vn/kinh-te/nha-dau-tu-nuoc-ngoai-viet-nam-la-thoi-nam-cham-moi-878061.ldo