Vietnam – An investment spotlight with optimism, resilience and sustainability

A significant majority of 91 percent of German companies intend to continue to invest in or expand their production in Vietnam, while approximately 40 percent of them plan to increase their workforce in the next 12 months.

Thanks to the implementation of immediate government action plans and the presence of stable macroeconomic conditions, Vietnam has maintained positive economic growth. As a result, German companies operating in Vietnam are more optimistic than they were in the fall 2022, although their short-term expectation remains cautions, due to the geopolitical challenges such as inflation, decoupling and the increasing political influence on supply chains. 88 percent of the survey participants are confident with their business situation in Vietnam (satisfying and good) and nearly half of the German participants in the survey expect the economic growth to remain consistent, while 21 percent of them believe it to be better. 

Vietnam – An investment spotlight with optimism, resilience and sustainability -0

Despite German enterprises show resilience and have high expectations in the Vietnamese market, they still identified several risks and challenges to their business development caused by global economic fluctuations. These risks include low global demand (51 percent), concerns regarding the economic policy framework (46 percent), a shortage of skilled workforce (34 percent), and potential disruptions in the supply chain (28 percent). Added to this are long-term geopolitical challenges, which companies see particularly in inflation/money policy (41 percent), fragmentation of the global economy (41 percent) and increase in political influence on supply chain (40%).

Even so, Vietnam is expected to experience a resurgence in its economic growth in the medium-term. This growth will be fueled by various factors including the Free Trade Agreements (FTAs), notably the EVFTA (EU-Vietnam Free Trade Agreement), the global trend of shifting and diversifying manufacturing supply chains towards competitive hubs in Southeast Asia, and the inflow of green investments. 57 percent of German companies in Vietnam prioritize diversifying their supply chains, with Vietnam being their top choice, followed by Malaysia and Thailand.

Vietnam is ranked as the 33rd trading partner out of 232 countries exporting goods to the German market, and 49th out of 206 countries importing goods from Germany. By the end of December 2022, trade turnover between Vietnam and Germany reached nearly 12.6 billion USD, up 12.1% over the same period, in which, exports from Vietnam reached nearly 9 billion USD, up 23.1%, accounting for more than 71% of import and export value with the main export items being machinery and equipment, telephones, footwear, textiles, coffee, seafood...

Regarding investment, Germany has 441 direct investment projects in Vietnam with a total registered capital of 2.37 billion USD, ranking 18th out of 141 countries and territories investing in Vietnam.

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