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COVER STORY

Vietnam’s business and investment envi- investments of the past but more high-tech face government scrutiny, with approval need-
ronment is doing relatively well given investments and, most recently, those in the ing to go to the highest level of the Vietnamese
the circumstances caused by Covid-19. The renewable energy sector. Nevertheless, there Government. These investments will generally
world knows that Vietnam has had tremen- is evidence that businesses are struggling in take time and a lot of upfront costs. Other
dous success controlling the pandemic and Vietnam, especially in the hospitality sector. notable challenges are the tax process (with
also that it was able to achieve 2.9 per cent In manufacturing, exports are susceptible to assessments sometimes done arbitrarily and
GDP growth in 2020 while other countries demand in the destination. If those countries with little recourse to appeal), obtaining work
in ASEAN experienced negative GDP growth. are struggling economically, then demand permits for expat staff, protecting intellectual
No doubt there is a lot of investment interest for imports will be lower. The Vietnamese property, and resolving disputes when they
in Vietnam, not just the traditional low-tech market has a lot of potential for Canadian occur. The biggest operating issue is retaining
companies. Vietnam has many positive qual- talented and skilled staff. These people are
ities that are appealing to Canadian businesses always in high demand and are often sought
and those from any other country. It is strate- by other companies or competitors. Foreign
gically located in Southeast Asia, has a young companies often work with their business
and relatively cheap workforce, and the gov- chambers to engage the government to
ernment is promoting global integration and improve the business environment. These
creating incentives for foreign investments. discussions are done through the Vietnam
There are many industries in Vietnam where Business Forum, which takes place semi-
Canada has expertise that could receive invest- annually and is a good forum for discussions
ment. Canadian companies operating in indus- between the foreign investment community
tries such as information technology, educa- and the Vietnamese Government. As evi-
tion, healthcare, renewable energy, clean denced by the new Law on Investment and
energy, aerospace, and agriculture and agri- other legal changes, the engagement between
food are much needed and would be welcomed the foreign business community and the Viet-
Mr. Jack Nguyen, in Vietnam. Foreign investors do face barriers namese Government is working and there
Member, Canadian Chamber of Commerce when investing in the country. Major invest- have been improvements to the foreign busi-
in Vietnam (CanCham)
ments or investments in sensitive sectors ness environment. %

Vietnam has a dynamic investment envi- opment in Vietnam would improve this year. (27 per cent), exchange rates (23 per cent), and
ronment and rapid economic growth, German businesses overall think that more a shortage of skilled workers (18 per cent). %
and has seen remarkable transformation over investors and experts from Germany and the
the last ten years. Despite Covid-19, the country EU will come to Vietnam for diplomatic and
recorded economic growth of 2.9 per cent in business purposes as a result of its commitment
2020 and is expected to post growth of 7.5 per to creating the most favorable conditions for
cent this year, according to Deutsche Bank. A foreign investors and businesses to enter for
recent World Bank study found that the simul- short periods, and also because of the EUVFTA.
taneous implementation of the EUVFTA and One factor that makes Vietnam more attractive
the CPTPP will help increase Vietnam’s GDP is global integration through the network of
by up to 3.2 per cent in the decade 2021-2030. FTAs. German companies expect the EUVFTA
Vietnam will become a strategic investment and EUVIPA will improve economic policy in
destination in the process of restructuring the the country in the long run. European and Ger-
global and regional supply chain and a domestic man companies can enjoy investment protection
market with the potential to attract international with trade facilitation and increase their invest-
corporations. It still has among the fastest eco- ment in Vietnam. According to our latest AHK
nomic growth in Southeast Asia. Foreign- World Business Outlook survey, 68 per cent of
invested enterprises (FIEs), especially German German companies see demand as the greatest
businesses, are optimistic about its economy in risk in 2021. More than half (64 per cent) cited
the medium and long term. In our AHK World economic policy. Trade barriers / preferences Mr. Marko Walde,
Chief Representative, Delegation of German In-
Business Survey in Fall 2020, half of German for German companies in Vietnam are also bar- dustry and Commerce in Vietnam (AHK Vietnam)
respondents expected that their business devel- riers (32 per cent). Following were legal certainty

Thanks to the Vietnamese Government’s years is one of the positive points we emphasize departments under the city’s Peoples’ Committee,
appropriate and successful handling and with Japanese investors. Through multiple chan- in tackling the difficulties Japanese enterprises
control during the Covid-19 pandemic, we nels, such as the Vietnam-Japan Joint Initiative, must confront in Vietnam. We very much appre-
believe Vietnam’s business and investment and especially the annual roundtable session ciate such support.We need to see how relevant
environment has maintained its positive posi- between the Ho Chi Minh City People’s Com- authorities actually enforce relevant provisions
tion, at least when compared with other ASEAN mittee and the Japanese Chamber of Commerce in the new Law on Investment before we can
countries. Once the Covid-19 pandemic is over, and Industry in Ho Chi Minh City (JCCH), verify the effect of the amendments. Assuming
we expect further expansion of foreign invest- organized by the city’s Investment & Trade Pro- authorities enforce the new law in accordance
ment in the country. The strong political rela- motion Centre (ITPC), we have received support with the literal reading of provisions, one of the
tionship between Vietnam and Japan in recent from relevant government authorities, especially amendments we can expect to create favorable

12 | VIETNAM ECONOMIC TIMES | APRIL 2021