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on Focus
Sozialistische Republik Vietnam
Capital City
Hanoi
Area
332.800 km²
Population
92 Mil.
Population density
276/km²
National language
Vietnamese
Government
one-party system
Head of State
President Trần Đại Quang
President
Prime Minister Nguyễn Xuân Phúc
anthem
Tiến Quân Ca

“There is a new momentum in the bilateral cooperation between Vietnam and Germany.”

AFTER THE END OF THE WAR, Vietnam became more open to the outside world with the Doi-Moi policy from the mid-1980s and has stabilized economically until today. With this year's Chair of the Asia-Pacific Economic Cooperation (APEC), the Southeast Asian country is also represented at the G20 summit in Hamburg. In an interview with the Diplomatisches Magazin Ambassador H.E. Xuan Hung Doan talks about investment opportunities in Vietnam, the new agreement with the EU and the successful integration of its fellow countrymen in Germany.
Excellency,

since 1986, Vietnam has introduced economic reforms, also known as Doi Moi. How has your country changed in the last 30 years?

Fundamentally changed! In the past three decades, by our ceaseless efforts and the precious assistance from friends around the world, Vietnam has emerged from a backward country with 90 per cent of the population working in the agricultural sector to one of the most dynamic economies in Asia with fairly strong economic growth and improved living standards. Our economic output reached 219.4 billion USD in 2016. The GDP in 2015 increased by 31 times compared to that of 1989, foreign trade is up by 60 times compared to that of 1990. Exports have registered double-digit growth, which is up by 30 times in 20 years between 1995 and 2015. The per capita income in 2015 increased by 23 times compared to that in 1990. More than 59 countries have recognized Vietnam's market economy status. Our agriculture has undergone significant changes transforming Vietnam from a food-hungry country to one of the world’s largest exporters of rice, coffee, rubber, cashew, pepper and seafood.

The equitization and privatization process of State-owned enterprises has contributed significantly to the revitalization of the Vietnamese economy. The different sectors of the economy are put on the more level playing field. State-owned enterprises have been restructured. Collective economic entities have adopted new forms of cooperation in the direction of market reforms. The private sector witnesses a rapid rise in the number of enterprises and improved performance. Foreign-invested companies are also stimulated and have made significant contributions to our job creation and export growth. In social sphere, poverty reduction rate has been improved unceasingly for a long period, with a very impressive rate of two per cent per year. In only two decades, nearly 30 million people were lifted out of poverty. Vietnam is considered by the UN as one of the first countries, which has reached the most of the Millennium Development Goals ahead of schedule. The living standards of our people have been improved significantly.

Thirty years of Doi Moi have also been a Vietnam’s journey of deep integration into the world. Vietnam now has established and maintained good diplomatic relations with 185 countries, in which 15 countries are our strategic and ten comprehensive partners. Vietnam is also committed to be an active and responsible member of numerous international organizations and multilateral frameworks. We have signed tens of regional and bilateral free trade agreements (FTAs) including six FTAs signed as an ASEAN member country and four FTAs signed as an independent party. Recently, we have completed the negotiations of two FTAs including the EU-Vietnam-FTA (EVFTA) and the Trans Pacific Partnership Agreement. We also took part in more than 80 bilateral, multilateral trade agreements and 70 MFNs. And you may know that Vietnam is now the Chair of APEC (Asia –Pacific Economic Cooperation grouping).

Foreign investments played an important role in the economic development of Vietnam in recent years. What concrete incentives does your country offer to foreign direct investors today?

Foreign direct investment is an integral part of the Vietnamese economy. The success of the FDI sector in Vietnam is also the success of the Vietnamese economy. As of March 2017, Vietnam attracted 23.071 FDI projects from 116 countries and territories with a total registered capital of 300.7 billion USD, of which 158.45 billion USD was disbursed (reaching 49.3 per cent). FDI has made important contributions to Vietnam's economic restructuring in the direction of modernization, job creation, import and export turnover, technology transfer, management skills, and contribution to the state budget. Our investment law has been amended many times to be more transparent facilitating domestic and foreign investors.

Being a country with important geopolitical position in the middle of a dynamic but strategically complicated region, what are the main characteristics of Vietnam’s foreign policy to weather the challenges?

It is true that Asia-Pacific, of which Southeast Asia is a part, has been one of the most dynamic development centers of the world. But this region, at the same time, is witnessing rapidly changing and complicated developments in recent years, including fierce strategic competition among major powers, territorial and sovereign conflicts, not to mention a number of on-going hotspots. Vietnam, with its important geopolitical position, has also been suffering from certain impacts from the above-mentioned unstable factors.

Overcoming such challenges and difficulties to make Vietnam a success story, the country’s foreign policy has played a crucial role. To be more specific, over the years, Vietnam has identified and pursued the foreign policy guideline of independence, self-reliance, peace, cooperation and development; diversification and multilateralization of international relations; active and proactive promotion of international integration; and a reliable partner and responsible member of the international community. This guideline was once again ascertained, approved and adopted by the 12th Congress of the Communist Party of Vietnam in January 2016.

Vietnam and the European Union are going to officially sign the EU-Vietnam Free Trade Agreement. How can EU- and Vietnamese companies benefit from this agreement?

The trade and investment relations between the EU and Vietnam are already very strong. Bilateral trade has grown from 4.1 billion USD in 2000 to 42 billion USD in 2016, making the EU Vietnam’s second-largest trading partner and largest source of foreign direct investment (FDI), with 2,162 valid investment projects with a total registered capital of 38.4 billion USD. The most prominent feature in the trade and investment relations between Vietnam and the EU is complementarity. This is the basis for great potentials for trade, investment and cooperation between the two parties after the signing of the EVFTA. The agreement will allow EU exporters and investors to access a fast-growing market of 90 million people and consolidate their presence in one of the most dynamic regions in the world.

Vietnam and Germany are going to commemorate 42 years of diplomatic establishment and six years of strategic partnership. Throughout such a long history, what are the key points in the bilateral ties?

In the last 42 years, Germany and Vietnam have been enjoying remarkable progress in our relations, especially since the establishment of strategic partnership in 2011. Our two countries enjoy high degree of mutual confidence and trust. The good relations between Germany and Vietnam were given fresh momentum by the visits to Vietnam by Federal Chancellor Angela Merkel (in 2011), German Bundestag President Norbert Lammert (in March 2015) and, most recently, the state visit to Germany by President Truong Tan Sang (in November 2015). And, as was mentioned above, as a sign of our excellent relations, Germany, as the Chair of G20 - 2017, has kindly invited Vietnam - the Chair of APEC - 2017 to participate in the G20meetings.

Two countries have closely coordinated on regional and international fora on the issues of mutual interests and concerns, particularly at the United Nations, Asia-Europe (ASEM) Summit, and ASEAN-EU. Germany is our leading partner in the European Union in trade-investment, science-technology, education-training, vocational training and employment cooperation. I am very pleased to observe that there is a new momentum in our bilateral cooperation in many areas. For many years Germany has been Vietnam’s largest trade partner in the EU, making up nearly 20 percent of the Vietnam’s export turnover in the EU market. Our trade volume experiences a significant growth which nearly tripled from 4.1 billion USD in 2010 to 10.3 billion USD in 2016. Many German companies like Siemens, Mercedes-Benz, Bosch, B. Braun, Messer and Allianz are operating successfully in Vietnam.

We set a target for bilateral trade to 20 billion USD and Germany’s FDI in Vietnam to five billion USD in the near future. To this end, we commit to create favorable conditions for businesses to beef up their cooperation, especially in manufacturing, electronics, renewable energy, infrastructure, consumer goods and agro-fisheries products. Enhancing trade and investment cooperation between the two countries are in line with the consensus reached by our leaders and aspirations of our businesses. In the field of development cooperation we are grateful for Germany‘s provision of development aid to Vietnam, with 220 million USD to be supplied in 2015-2017 prioritizing energy, environment and vocational training.

“The upcoming EU-Vietnam Free Trade Agreement (EVFTA) gives us unique advantages in Southeast Asia.”

Taking into consideration the rapid development of the Vietnamese economy and the traditional relationship between Vietnam and Germany, what are the opportunities for German companies in Vietnam?

Since the establishment of the diplomatic relations on 23rd September 1975, the relationship between Vietnam and the Federal Republic of Germany has ceaselessly been strengthened and developing greatly in different aspects. The fine Vietnam - Germany relationship is built upon a firm foundation laid by the traditional and multi-faceted ties between the two peoples, which had rooted and burgeoned before the inception of the diplomatic relation between the two countries. Vietnam always attaches importance to developing the cooperation with Germany, and Germany is currently one of the leading partners of Vietnam in Europe in politics, trade, investment, education, technological science, law and environmental protection et cetera.

More and more German companies see growth opportunities in many business sectors in Vietnam and would like to tap this potential. This is reflected in the growing number of German companies entering the Vietnamese market. The Free Trade Agreement between Vietnam and the EU will further boost this development and make doing business easier. In line with the strengthening of the legal framework German investment should increase gradually.

Vietnam is widely seen as a rapidly developing martket in Asia. Many leading German corporations opened business facilities and commit to long-term investments in Vietnam. Vietnam's economy in 2016 posted a positive growth of 6,21 per cent – the highest rate in five years. Inflation this year, on the other hand, stayed far below the red line of five per cent as issued by the National Assembly. It merely reached 0.6 per cent, marking it as the lowest inflation rate in a decade. Human resources is another advantage of Vietnam. Many under-30s have been selected by Forbes in 2016 as those having great influence in their working area. This group of young but talented people provide high potential for investment, innovation and development.

The upcoming EVFTA gives Vietnam unique advantages in Southeast Asia. Consequently, the Vietnamese government highly welcomes foreign investors, who leverage new technology. Foreign SMEs and multinationals that enter Vietnam therefore experience a "red carpet" treatment and receive attractive incentive programs. For example, within a special industrial cluster, investors will receive inducement on Corporate Income Tax (CIT average of 4.3 per cent on a five to ten year project) and benefits on Personal Income Tax for employees. Together with further development strategies in other important areas, such as logistics by building new deep sea harbors or facilitating the cross border road traffic, Vietnam is going to be the new production hub in Asia for the machinery and, especially, the automotive tier two manufacturing industry, where several German and European automotive companies already experienced their own success story.

Vietnam enjoys a high degree of political and social stability. And, as was mentioned earlier, Vietnam has signed a number of FTAs with numerous partners. In addition, our Embassy in Berlin will render every possible assistance to German companies who want to do business or invest in Vietnam.

“In more than 40 years the Vietnamese community has become one of the role models for other foreign community’s integration into the German society.”

The Vietnamese community in Germany, numbered around 176.000 people, has successfully integrated into the German society. What role can this community play in the relationship between Vietnam and Germany?

Exactly, as you said, here in Germany we have a relatively large Vietnamese community. In more than 40 years of integration and development in Germany, the Vietnamese community has achieved certain successes, becoming a role model for other foreign community’s integration into the German society. We are also very proud that the second and third generations of the Vietnamese in Germany have set many great examples for those studying and working in Germany, and these generations are quite promising in the sense that they would become excellent citizens and contribute significantly to the economic and social development of this country.

Needless to say, it is that strong Vietnamese community that has played an important and indispensable role in linking Vietnam and Germany, and promoting the relationship of the two countries. This role can be seen from and reflected in reality by different aspects as follows:

Firstly, the Vietnamese community has served as one of the most effective connections to boost trade and investment between our two countries. Over the years, many Vietnamese businesses together with the Embassy of Vietnam in Germany have tirelessly promoted Vietnam’s investment and business environment to German businesses, introducing and bringing German businesses to Vietnam to explore and study the market there. In the opposite direction, through a number of Vietnamese businesses in Germany, many Vietnamese enterprises have found reliable and reputable business partners in Germany.

Secondly, the community has played a crucial role as an agent for promoting tourism and cultural exchanges between the two countries. Indeed, more and more Germans now know about and marvel at our unique cuisine in Vietnamese restaurants in Germany, our traditional festivals organized here and traditional costumes displayed and shown on these occasions. Things like these have helped attract more German visitors to Vietnam to discover and see with their own eyes our beautiful country and friendly people, to immerse in our thousand-year history and rich culture. Vietnamese travel agencies, in their turn, have organized numerous tours for Vietnamese people to Germany every year.

Thirdly, with the size of more than 100,000 Vietnamese in Germany, this community has offered an abundant labour force to supplement the current labour shortage in Germany. The Vietnamese in Germany have been known for their industriousness, diligence and law observance. I therefore see no reasons for us to doubt their success and strong rise in the Germany society.

As APEC Chairperson in 2017, Vietnam is invited to the G20 meeting in Germany. What can Vietnam contribute to the G20?

Vietnam has received a twofold invitation to the G20 summit so far. The first time was in 2010, when Vietnam took over the ASEAN presidency. This year, Vietnam is again invited as an APEC chair. This is a great honor and at the same time responsibility for Vietnam to advise and contribute to important global issues.

The unified motto of the G20 summit in 2017 is "Shaping an Interconnected World" with a wide range of issues such as financial regulation, trade, digitalization, sustainable development, work, health, equality and so on. As a guest of this year's G20 presidency, Vietnam represents APEC actively and responsibly in almost all deliberations throughout content input on many topics such as politics, trade and finance.

The topics and agenda of G20 include many common priorities of APEC and Vietnam this year, such as sustainable growth, networked economy, investment, trade and innovation promotion. Vietnam is keen to participate in all G20 events and actively contribute. In particular, the G20-Sherpa of Vietnam has been very proactive, involved constructively in the discussions on topics and was recognized and appreciated by the German host.

H.E. Nguyen Xuan Phuc, Prime Minister of Vietnam, will visit Germany in early July 2017 and participate in the G20 summit in Hamburg. What is the significance of this visit?

This will be the first visit of H.E. Nguyen Xuan Phuc at Chancellor Angela Merkel’s invitation and in his role as Prime Minister of Vietnam since taking office in April 2016. This invitation was arranged in 2016, when both officially met for the first time during the G7 summit in Japan. At the same time, Germany is going to be one of the first EU member states Prime Minister Phuc will visit. This is a compelling proof that Vietnam attaches great importance to strenghtening the strategic partnership with Germany and expects the development of bilateral relations in the future. The German side is keen to intensify the cooperation with Vietnam.

The visit provides new impetus for deepening strategic partnerships between the two countries. During official talks with the German leadership Prime Minister Phuc will address important measures to strengthen bilateral relations in the future. There are numerous cooperative areas that we would like to deepen. These include areas such as trade and investment, which have a great potential and good prospects in the run-up to the official signing and ratification of the EU-Vietnam Free Trade Agreement. At the meetings with various German enterprises, Prime Minister Nguyen Xuan Phuc is expected to deliver a strong and clear business-friednly message. We have learned that many companies from Germany are showing great interest in Vietnam. With his message I hope for a new start for business and investment of German companies in Vietnam.

Vietnam maintains a good relationship with many regions in Germany and attaches great importance to the relationship with the federal states. Vietnam and Hessen, for example, signed a memorandum on priority cooperation in 2012. With Hamburg Vietnam has a very intense economic relationship. The capital Hanoi cooperates efficiently with Berlin. Prime Minister Phuc’s stops in these states during the visit will explicitly contribute to strengthening the relationship between regions of both countries in detail and between Vietnam and Germany in general.

Finally, I would like to emphasize that the invitation to G20 has created a very favorable opportunity for Vietnam. It allows Vietnam to play a more crucial role as an APEC chair by linking and promoting cooperation between two forums to tackle the new global challenges more effectively. Vietnam is also learning about logistical and protocolar issues in Germany to successfully organize the APEC summit, which will take place in the beautiful sea town of Danang in November.

Interview Raimon Klein

Pictures: 1, 2, 3, 4, 5 = Mohamed El-Sauaf