German investors keen to expand operations in Vietnam11/08/2023 35
Vietnam is considered to be a promising and reliable investment destination for German businesses in their investment diversification strategy, according to industry insiders.
The recent report titled World Business Outlook Spring 2023 by the German Industry and Commerce in Vietnam (AHK Vietnam) indicates that a significant majority of 91% of German companies intend to continue to invest in or expand their production in the Vietnamese market, while approximately 40% of them plan to increase their workforce over the next 12 months.
These figures highlight the attractiveness and potential that exists in the Vietnamese market for German investors.
Despite facing challenges related to inflation, fragmentation of the global economy, and an increase in political influence on supply chain, Vietnam is expected to experience a resurgence in its economic growth over the medium-term.
This growth will largely be fueled by various factors, including the enforcement of Free Trade Agreements (FTAs) such as the EVFTA (EU-Vietnam Free Trade Agreement), the implementation of the China plus One strategy, the global trend of shifting and diversifying manufacturing supply chains towards competitive hubs in Southeast Asia, along with the inflow of green investments.
As many as 500 German companies have invested roughly US$2.9 billion in Vietnam so far, with 60% their projects carried out in the south and 22% undertaken in the north. These projects have generated roughly 50,000 jobs, making positive contributions to bilateral economic relations.
At present, German businesses have expressed high expectations regarding business development prospects and strong commitment when investing in the country.
In July, Ziehl-Abegg, the world's leading manufacturer of electric motors and fans, confirmed that it is planning to open a new production facility in the country with an investment capital of roughly US$20 million.
The move marks an important step towards expanding Ziehl-Abegg's global footprint and demonstrating its commitment to sustainable development through the responsible use of natural resources.
Furthermore, Deutsche Bank also intended to inject an additional US$100 million into its branch in Ho Chi Minh City in May.
On August 9, German pharmaceutical manufacturer STADA Vietnam established a new office in the southern city, underscoring its commitment to improving the quality of healthcare services in the country.
As of July 20, total newly-registered capital, additional capital, capital contributions, and share purchases made by German investors in Vietnam reached nearly US$197 million, including 21 new projects mainly focusing on the fields of investment, the construction industry, and building materials. Their investment shows increasing business confidence among German companies in the Vietnamese market.
According to numerous think-tanks, to further improve investment activities and enhance the attractiveness of this market as a place open to foreign investors, the Vietnamese Government should continue to exert greater efforts to simplify administrative procedures and pour further investment into infrastructure development, especially transportation and logistics.
The experts also underscored the importance of improving the competitiveness of domestic enterprises, strongly developing industrial clusters, training intensive workforce, complying with international standards, and ensuring stable power supply in a bid to achieve sustainable development and boost the investment attractiveness of Vietnam moving forward.
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