With pivotal FTAs due to takeeffect within the next twoyears, what sectors will attractGerman investment in the in-terim period?

In the view of FTAs like the

Trans-Pacific Partnership

(TPP) and the EU-Vietnam

Free Trade Agreement

(EVFTA), and the establish-

ment of the ASEAN Economic

Community, we can expect

high growth in investment from

Germany to Vietnam, not only

in the sectors like green tech-

nology, and infrastructure, but

also in education, sciences, as

well as in healthcare and med-

ical appliances.

Germany’s principal ex-

ports to Vietnam are machinery,

motor vehicles, equipment, and

chemical products. Vietnam has

set its sights on becoming an in-

dustrialised country by 2020.

This means that the country

will need more sophisticated

production facilities, which is

likely to translate into increased

demand for machinery made in

Germany.

German food and drink ex-

porters see Vietnam as an ideal

export destination and an in-

creasingly important market. In

terms of absolute export value,

milk products, baking seeds,

malt, and potato products are

the top four product categories.

In the future, exports might in-

crease further as Vietnam still

cannot produce all of what it

needs. Milk, for example, is in

high demand in Vietnam, while

there is an oversupply of milk

products in Germany.

What German firms are plan-

ning to take advantage of theupcoming opportunities fromFTAs?

After the EVFTA takes ef-

fect, nearly all customs duties –

over 99 per cent of the tariffs –

will be eliminated. Vietnam

will liberalise 65 per cent of im-

port duties on EU exports to

Vietnam at “entry into force”

and the remaining duties will be

eliminated over the next ten

years. The market will be

opened for most EU food prod-

ucts. Wine, spirits, and frozen

pork meat will be liberalised

after seven years, and dairy

products within a maximum of

five years. Furthermore, the

agreement will contain an

annex with provisions to ad-

dress non-tariff barriers in the

automotive sector. As Germany

is the largest supplier of ad-

vanced machines, equipment,

and technology for the national

industrialisation and moderni-

sation of Vietnam, the German

firms – as well as others within

these sectors – are expecting to

see growth opportunities in

Vietnam and are eager to tap

this potential.

The FTA will also allow

EU companies to bid for Viet-

namese public contracts with

bodies such as local ministries,

state-owned enterprises, public

hospitals, and the most lucra-

tive contracts in Hanoi and Ho

Chi Minh City. Furthermore,

the Vietnamese market will be

more open to EU service oper-

ators.

What does Vietnam need to doto lure more German in-vestors?

German companies that

have successfully tapped the

potential of the Chinese market

are now turning their attention

towards other high-growth

countries in the region, espe-

cially ASEAN nations. Viet-

nam will clearly play a role in

this development, both due to

the range and size of business

opportunities, but also due to

other ties such as the sizeable

Vietnamese community in Ger-

many. I am sure that German

investment in Vietnam will

continue to grow, especially in

line with the further strengthen-

ing of the legal framework.

Currently, GBA has 192

members with growth rate of

around 10 per cent each year.

This figure is expected to in-

crease in the future as more

German companies are plan-

ning to invest into Vietnam due

to the lucrative benefits offered

by a wide range of FTAs.

From the government’s

perspective, I would recom-

mend that they first of all re-

solve the difficulties relating

to the taxation and customs

mechanisms by removing un-

necessary administrative for-

malities which inconvenience

enterprises. Also, duties and

taxes arising from businesses’

negligible liabilities should be

waived. Other outstanding is-

sues include the annulment

and unenforceability of arbi-

tral awards in Vietnam, cer-

tain trade restrictive measures

in the field of import-export,

burdens created for enter-

prises in tax administration by

the state authority, and espe-

cially the corrosive and wide-

spread corruption in Vietnam.

These problems require

stronger effort and urgent ac-

tion by the government, build-

ing upon the several attempts

already made – which we re-

ally appreciate.n

InvestingDecember 14-20, 2015

FTAs entice German investorsThis year marks the 40th anniversary of the Germany-Vietnam diplomatic relationship, and 20 years ofthe German Business Association (GBA) in Vietnam. The association’s chairman Jens Ruebbert spokewith VIR’s Thanh Van about the prospect of increasing German investment in Vietnam in light of theEU-Vietnam Free Trade Agreement and the Trans-Pacific Partnership deal, which are both expected totake effect in the next two years.