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Mr. Alexander Ziehe, Chairman of the German Business Association in Vietnam, recently participated in an interview with Hanoi Radio Television titled “Vietnam – A New Focal Point in Asia.” During this discussion, he shared insights on Vietnam’s recent changes and developments in diplomacy, economy, and FDI attraction.
Question 1: The previous report highlighted the significant contributions of major cities, particularly Hanoi, to Vietnam’s growth. Mr. Alexander, from the perspective of a foreign investor, what are your thoughts on Hanoi’s growth rate in recent years?
GBA Chairman: Investment demand in Hanoi is steadily increasing. Moreover, neighboring areas, including provinces adjacent to Hai Phong, are also attracting a large number of foreign investors. It can be observed that recently, large companies have committed to investing in Hanoi, especially in industries such as electronics.
Furthermore, in addition to the initial large investments, the region is also receiving additional investments from suppliers, services, and other related investments. These secondary investments contribute to the overall economic growth of the area. Therefore, I believe that Hanoi has effectively attracted FDI capital. The city’s policies and strategies have been successful in promoting economic growth.
It is evident that Hanoi is a city with high competitiveness. This brings many benefits to Vietnam as it helps distribute FDI throughout the country, rather than concentrating it in one area. Therefore, I think Hanoi has done very well in attracting FDI to the Northern region in recent years.
Question 2: So what about Vietnam? Vietnam is considered by experts and international investors to be an emerging focal point of the Asian region. What is your opinion on this?
The GBA Chairman believes that Vietnam is strategically positioned to attract foreign direct investment (FDI) from around the world. Several factors contribute to Vietnam’s attractiveness as an investment destination:
- Geographical Location: Vietnam serves as the hub of Southeast Asia and the center of ASEAN. Its infrastructure system supports both the domestic market and regional trade, with many roads connecting China and northern provinces. Coastal provinces have upgraded seaports.
- Investment-Friendly Policies: Vietnam warmly welcomes foreign investors and implements free trade agreements. These policies create a favorable environment for investment.
- Abundant Workforce: Vietnam has nearly 100 million efficient workers. The government’s efforts in building a high-quality labor force with good skills and techniques support investors.
- Diverse Characteristics: Different provinces and cities in Vietnam cater to various types of investments. Cities with universities are ideal, while border provinces with China are suitable for supply chain-oriented investments.
- Growing Population and Income Levels: As Vietnam’s population grows and income levels rise, it becomes an even more attractive market. Manufacturing in Vietnam is a strong trend beyond just an export-oriented economy.
Question 3: Vietnam’s FDI attraction in the first months of 2024 has been showing positive signs. What is your opinion on the positivity of Vietnam’s FDI attraction in 2024 and the contributions of this field to Vietnam’s economic development?
GBA Chairman: As we step into 2024, the world is witnessing a greater sense of stability with initial progress. It’s evident that the overall economy of the United States is gradually stabilizing, while in Europe, the inflation rate is decreasing, and consumer spending is picking up again.
Therefore, looking at the overall picture this year, I assess that it will be a more stable and developed year compared to 2023. It may not be the most prosperous year Vietnam has ever experienced, but certainly, 2024 will set a good starting point and direction for 2025. Because now, if companies have the motivation and confidence that the global economy is bouncing back, they will also begin to reconsider planned investments from 2023. These investments may not be executed immediately, but surely, businesses will arrange to implement them later this year or next year.
That’s why we see an increasing interest in restarting projects. Therefore, we also believe that the global economy will experience more stable development in the coming time.
Question 4: Compared to Asian countries, in your opinion, what are Vietnam’s strengths in general economic development?
GBA Chairman: I’ve provided quite a detailed overview of Vietnam’s positive factors. In fact, we, as foreign investors, also reflect on the challenges that Vietnam is still facing. I believe the most important thing is that Vietnam has been willing to acknowledge these challenges.
Therefore, we are addressing issues regarding infrastructure to better facilitate efficient digital management. We are committed to implementing more open policies regarding global income tax and foreign labor sources, and we will also find other solutions to attract FDI. This is extremely important.
Fundamentally, we also emphasize the importance of liberating the financial system in all meetings with the government. What makes Vietnam stand out is that all remaining challenges are being addressed very well by the government.
Summary
Since 2018, amidst a complex global political landscape, major manufacturing centers worldwide have been gradually shifting their production operations to Vietnam, experiencing a continuous upward trend from 2021 onwards. This shift is driven by Vietnam’s focus on fostering a business-friendly environment, its strategic location as a gateway to other rapidly growing markets, an abundant and skilled workforce, competitive labor costs, and numerous preferential policies. These factors serve as a compelling draw for companies seeking to expand production within the region and offer an effective solution to the recently emerged global supply chain disruptions. As global manufacturing centers undergo structural shifts with production at their core, Vietnam is poised to become a new manufacturing hub in the region and beyond.
The year 2023 marked a significant milestone in Vietnam’s position on the global economic map with the strengthening of Comprehensive Strategic Partnerships with Israel, China, the Philippines, and Singapore. Most recently, Vietnam also upgraded its relationship with the United States to a Comprehensive Strategic Partnership, signaling a new era of enhanced bilateral cooperation. These trade agreements, in general, have outlined a long-term roadmap for Vietnam, not only as a leading manufacturing hub but also as a center for attracting high-value foreign direct investment.
In a year of challenges for most economies, Vietnam has steered its economic development towards a high growth trajectory, establishing itself as Asia’s new economic growth engine. With a solidified position in the global supply chain, continuous investment from multinational corporations, and a thriving innovation and startup ecosystem, Vietnam nurtures its aspiration to reshape the world.
According to experts, 5 main areas are expected to dominate Vietnam’s economic growth in the future including: Medical technology, financial technology, logistics support technology, green economy and educational technology. Per capita healthcare spending in Vietnam has tripled in the past five years. These five areas will together create an innovation ecosystem in line with the ambition to become a developed country by 2050, as well as the need for global innovation./.