Vietnam has a robust economy with an attractive business environment: Diplomat

Vietnamese Ambassador in German Nguyen Minh Vu. Photo: Mohamed El Sauaf

Excellency, how would you describe the Vietnamese-German relations today?

I took office at the end of December 2018, handed over my credentials to President Steinmeier at the end of February, and have hardly had a quiet week since then. My calendar has always been jam-packed with visits by high-ranking Vietnamese officials, chairmen of people's committees of cities and provinces, heads of social organisations and economic delegations who discuss cooperation on a wide range of issues and areas with our German colleagues.

One clear proof for the Vietnamese-German Strategic Partnership is that the exchange of visits between the two countries is taking place at a fast pace, at different levels and in various fields. In the first half of 2019 alone, a number of Vietnamese Leaders – Deputy Prime Minister, Minister of Foreign Affairs Pham Binh Minh, Minister of Planning and Investment Nguyen Chi Dung, Minister of Industry and Trade Tran Tuan Anh – paid visit to Germany. On the German side, Minister for Economic Affairs and Energy Peter Altmaier and Thüringen’s Premier Bodo Ramelow also paid visits to Vietnam. During these visits, agreements and documents have been signed, setting the framework to enhance the bilateral relation in the fields of politics, economy, science and technology, and labor, to name but a few.

In addition, regular dialogues and consultations in foreign affairs, security and national defense, economy, jurisdiction and development cooperation have been strengthened, contributing to making the bilateral relationship more effective and meaningful. Measures have been discussed to speed-up cooperation in prioritized fields, including innovation and digital technology, which are a new focus of our bilateral cooperation in the coming time.

On multilateral cooperation, Vietnam and Germany have always been closely coordinating and supporting each other in regional and international forums such as in the United Nations, ASEAN – EU, and ASEM. Facing complex challenges, both Vietnam and Germany remain committed to free trade, multilateralism and a rule-based international order. Those are important points on which bilateral relations can be strengthened on a larger scale and with more substance, contributing to peace, stability in our two regions and the world.

The year 2020 will also be marked by the anniversary of 45 years of diplomatic relations between Germany and Vietnam. What can we expect in Germany?

Vietnam and Germany established diplomatic relations on 23 September 1975. Our two countries will celebrate the 45^th anniversary of this event in 2020. The year 2020 is also an important milestone for each country: Vietnam will celebrate the 75^th anniversary of its Independence Day and Germany will celebrate the 30^th anniversary of the German Unity Day. Vietnam and Germany will both serve as non-permanent members of the United Nations Security Council and will assume key roles as ASEAN Chair 2020 and EU Presidency 2020, respectively. The Vietnamese community in Germany will also celebrate 45 years of integration. Many commemorating activities are expected to be held in both countries.

We have had discussions with the Foreign Ministry and Culture Ministry of Vietnam, Auswärtiges Amt and other German partners, Germany-Vietnam Friendship Association, and representatives of Vietnamese Community here in Germany on these events. We plan to hold various celebration events throughout the year and in different places. These events will be in different formats to reflect the multi-faceted bilateral relations, ranging from song contest, sport tournament, exchange of visits, painting exhibition, film festival, seminar, etc. With such a plan, we want to present the beauty of the country, people and history of Vietnam and the fine traditional Vietnam – German relations to our German friends to strengthen mutual understanding and trust, and to bring the two peoples closer.

Would you tell our readers what the German House in Ho Chi Minh City is?

I had a chance to visit the German Haus in Ho Chi Minh City before I left Vietnam. That is a 25-story building with modern architecture, energy efficiency, optimal utility and lies at a very convenient location. The German Haus has been awarded with different prizes for its design in Vietnam and Southeast Asia. This will be home to representatives and famous companies such as the German Consulate, AHK, Adidas, Apple, etc. Well, I can say that this German Haus was the first foreign project in Vietnam using German state assets to benefit the state and businesses of Germany and to show a positive image of Germany in Vietnam.

German Haus is a pilot project in the bilateral relations, a symbol of Vietnam-Germany strategic partnership.

When you think of cars, you don't immediately think of Vietnam. The "VinFast" project aims to change that in the future. Please tell us about it.

VinFast was born out of the desire to build a world-class Vietnamese automobile brand, while contributing to promoting a leading industry in Vietnam. After almost two years, VinFast has completed the construction and installation of the factories, and also launched the first cars. With design capacity of 250,000 vehicles per year for phase 1, and 500,000 cars per year for phase 2, VinFast aims to become a leading automobile manufacturer in Southeast Asia.

The company is also making headway in research and development of vehicles using clean energy, such as electric cars and smart electric motorbikes, with the aim to significantly reducing the amount of gas emissions and noise to the environment.

VinFast is also built upon cooperation with Germany in many ways. From the very first steps, VinFast has cooperated with several partners from Germany such as SCHULER, FFT, EBZ, Dürr, GROB, MAG, AVL, or Eisenmann to design and install the factories. The heart of VinFast cars – the engine – embodies German spirit as they are built upon the modern technology of BMW. Currently, VinFast is working closely with the German Chamber of Industry and Commerce (AHK) in training high quality human resources through a parallel training program of theoretical learning combined with practice. In the future, a training centre developed in cooperation with AHK will become the largest source of human resources for 4.0 technology production in Southeast Asia.

"Despite a challenging global context, Vietnam continues to achieve robust growth with moderate inflation and a relatively stable exchange rate," said Ousmane Dione, World Bank Country Director for Vietnam. To what do you attribute this positive development?

First of all, I think that the main reason for the success of Vietnam's economy in the past years can be attributed to the results of economic restructuring in the right direction, of effectively improving the business environment and actively promoting the role of development. Vietnam's business environment has improved significantly. The business community has benefited from the reforms through the reduction of conditions for investment, simplified administrative procedures and policies to support business development.

Secondly, the internal strengths of Vietnam's economy have been effectively capitalized on. The private sector is developing robustly, currently accounting for the largest share of the economy, with more than 40 per cent, and this proportion is expected to continue to increase. In particular, the wave of start-up and innovation in Vietnam is contributing to economic growth by mobilizing capital and taking advantage of the well-educated and tech-savvy young population.

At the same time, the accelerated process of privatisation of state-owned enterprises and improved public administration system helps make better use of economic resources. Real wage increase thanks to a more prosperous economy and the country‘s current optimal population structure help boost domestic demands and consumption.

Third, Vietnam has effectively utilized external resources for economic development. More than 30 years of Reformation (Doi Moi) and twelve years after joining the WTO, Vietnam's economy has become increasingly integrated into the regional and global economy.

Vietnam has now joined and completed 13 bilateral and multilateral free trade agreements (FTAs), including high-quality, new generation FTAs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or the Vietnam-EU Free Trade Agreement (EVFTA) with extensive commitments and high standards in many fields. These FTAs provide further incentives for economic growth and create opportunities to attract more foreign investments.

Moreover, Vietnam has always maintained political, social and macro-economic stability. Legal institutions and transparency are constantly improving, enabling foreign investors and businesses to undertake long-term business plans and participate in regional and global value chains.

Is Vietnam benefiting from the trade conflict between the US and China?

Regarding the US-China trade conflict, in my opinion, this is a concern for the whole international community as it immensely affects global trade and the stability of the world economy. This is especially true for Vietnam as we are among the countries with the highest level of integration into the world economy. It may be the case that in the short term Vietnam has certain advantages thanks to the reshuffling of trade and investment flows, and Vietnam needs to take advantage of these opportunities to enhance its position in the global value chains. However, in the long run, like other countries, Vietnam will bear negative effects of the US-China trade conflict. From the very beginning of our country’s international integration, Vietnam has always supported and actively participated in building an open, fair, and rule-based international trading system. Therefore, Vietnam hopes that China and the United States can quickly resolve the disputes through dialogue and negotiation in the spirit of mutual respect, cooperation and understanding, in accordance with international law and commitments, especially the principles of the WTO.

At the end of June, the free trade and investment protection agreement between Vietnam and the EU was signed. What are its key points?

The Vietnam-EU Free Trade Agreement and Investment Protection Agreement (EVFTA and IPA) were officially signed in Hanoi after nine years of negotiation. This is considered a historical event in the relationship between Vietnam and the EU and is expected to open up unprecedented opportunities for companies, consumers and workers in both Europe and Vietnam.

The WTO and the EU consider this to be a "new generation, comprehensive, high quality" FTA that links trade and investment with "social, labour, environmental standards and inclusive and sustainable development goals". These are also the first new-generation Trade and Investment Agreements reached by the EU with a middle-income country.

The EVFTA provides for the near complete removal of tariff barriers. Accordingly, 65 per cent of duties on EU exports to Vietnam will be eliminated while the remaining will be gradually phased out over a period of 10 years. 71 per cent of duties will be eliminated on Vietnam exports to the EU, with the remaining being eliminated over a period of seven years.

In terms of non-tariff barriers, Vietnam will align more closely with international standards on motor vehicles and pharmaceuticals. As a result, EU products will not require additional Vietnamese testing and certification procedures. Vietnam will also simplify and standardise customs procedures.

EU companies will be able to compete for Vietnamese government contracts, and vice-versa. Regarding trade in investment services, the EU and Vietnam are committed to creating an open and favourable investment environment for businesses from both sides. The FTA will make it easier for EU companies to operate in the Vietnamese service market, including postal, banking, insurance, environmental and other service sectors. Vietnamese manufacturing sectors such as food, tyres, and construction materials will open up to EU investment.

Under the EVIPA, Vietnam and the EU commit to accord national treatment and most favoured nation treatment to the other Party, with some reservations. Both sides also commit to grant equal, satisfactory, safe and adequate protection; to allow the free transfer of capital and profits from investment abroad; to refrain from confiscation or nationalisation of foreign investors' assets without satisfactory compensation; and to compensate for damages to investors of the other party similar in case of damage caused by war, for example.

The "Vietnam Green Growth Strategy" was adopted in 2012. What is it aimed at?

As one of the countries heavily affected by climate change, Vietnam has determined that green growth is the only way to prepare ourselves for the future. In 2012, the Prime Minister of Vietnam signed a decision approving the Green Growth Strategy with the aims to accelerate the process of economic restructuring in order to use natural resources efficiently, reduce greenhouse gas emissions through research and application of modern technologies, develop infrastructure to improve the entire efficiency of the economy, cope with climate change, contribute to poverty reduction, and drive economic growth in a sustainable manner. The Strategy then lays out three specific objectives:

First, to promote “green production” via more efficient use of resources and new technologies. This objective aims to facilitate sustainable production, green existing business, and create new green businesses. Second, to reduce the intensity of greenhouse gas emissions by 8-10 percent as compared to the 2010 level, and reduce energy consumption per unit of GDP by 1-1.5 percent per year. And third, to stimulate green lifestyles and promote sustainable consumption.

As a developing country, Vietnam is facing many challenges, yet the Green growth strategy shows our full commitment to join hand with the international community in coping with climate change. At the same time, it is also an opportunity for us to improve our people’s well-being by accelerating the process of economic restructuring towards sustainability and increasing the competitiveness of the economy.

Excellency, thank you very much.

Enrico Blasnik/Diplomatisches Magazin