Positive economic climate and outlook of Vietnam
Despite COVID-19 epidemic, Vietnam recorded economic growth of 2.9 percent in 2020 and is expected to achieve a growth rate of 7.5 percent1 this year. The simultaneous implementation of the EVFTA and CPTPP Agreement will help Vietnam's GDP increase by up to 3.2% in the decade 2021-20302 . Vietnam will become a strategic investment destination in the process of restructuring the global and regional supply chain, a potential domestic market to attract international corporations.
Vietnam is still one of the countries with the fastest economic growth in Southeast Asia. FDI enterprises, especially German businesses also show optimism about Vietnam's economy in the medium and long term. German business leaders in Vietnam maintain positive view with the economic expectation as well as with their situation in Vietnam and they look forward to a recovered year of 2021 and 2022.
Source: vietnam.ahk.de
Result: One third of survey participants think that the economy of Vietnam will recover in the first half of this year, 30 percent says that the recovery will happen next year, in 2022.
Background: It is obvious that these results show Vietnamese government has taken decisive and forceful action against the impact of the corona crisis. These measures should be taken as fast as possible to counter the economic impact of the coronavirus, in order to bring the economy back onto a growth path as quickly as possible. Moreover, the Vietnamese government creates the most favorable conditions for foreign investors and businesses as well as EVFTA and this committment will boost the economic growth of this country and attract more investors to Vietnam. Vietnam has been implementing a number of activities and effective methods in oder to achieve the dual objectives: promoting socio-economic development and effectively preventing epidemic in the “new normal” condition of Vietnam.
Positive view with Business situation and expectation in Vietnam
German businesses operating in Vietnam assess both their own business situation and future business expectations significantly better than in 2020. 55 percent rate their current business situation in Vietnam as good and 11 percent as poor. While in 2020 only 36 percent had a positive view of their situation in Vietnam. The balance points increase from 13 points to 44 points. The great increase in business expectations is really positive surprising. While the positive ratings rise from 36 to 55 percent, the number of negative ratings fall from 23 to 11 percent.
Investment and employment intentions grow
47 percent of German companies in Vietnam intend to expand their activities in Vietnam and 50 percent assume an increase in employment in 2021/2022.
Lack of qualified workers and low demand are the greatest business challenges for German investors in Vietnam.
Concerning about the lack of qualified workers in Vietnam are increasing. After 18 percent in 2020, 42 percent of companies city this factor as the greatest factor of uncertainty for their businesses in 2021 in Vietnam. Another issues such as low demand (42 percent) and economic policy (36 percent) threaten their businesses here. Another factors that might affect German businesses in Vietnam are financing, legal certainty and infrastructure.
German companies in the corona crisis
The pandemic has affected local and German businesses and caused a decline in business performances of them as well. Factors such as travel restrictions, less consumer demand for products and services, the cancellation of trade fairs and events still hurt the German companies in Vietnam.
The sustainable supply chain: 67 percent of German participants would diversify their supply chain by finding additional suppliers, changing in delivery routes or increasing their inventory.
Participants: 22% of respondents stemmed from industry and construction, 54% from the service sector and a further 24% from the retail trade. Small companies with less than 100 employees account for 54% of responses. 19% of the companies employ 100 to 1,000 employees. Large companies with more than 1,000 employees account for 27% of the respondents./.