Positive sentiment among German investors towards Vietnam's future prospects

Positive sentiment among German investors towards Vietnam's future prospects

German companies in Vietnam remain optimistic about the country’s economic outlook, as highlighted in the AHK World Business Outlook – Spring 2023 report. The survey reveals that 91 percent of German companies plan to either invest in or expand their production in Vietnam, with 40 percent intending to increase their workforce in the coming year. This positive sentiment is attributed to the implementation of government action plans and the presence of stable macroeconomic conditions.

Although German companies maintain a cautious approach due to global challenges, they are more optimistic compared to the previous year. Around 88 percent of participants expressed confidence in their business situation in Vietnam, with nearly half expecting consistent economic growth and 21 percent anticipating further improvement.

However, German enterprises also identified several risks to their business development, including low global demand, concerns about the economic policy framework, a shortage of skilled personnel, and potential disruptions in the supply chain. Long-term geopolitical challenges, such as inflation, monetary policy, fragmentation of the global economy, and political influence on the supply chain, were also highlighted.

Despite these challenges, Vietnam is expected to experience a resurgence in economic growth in the medium term. This can be attributed to factors such as free trade agreements, particularly the EU-Vietnam Free Trade Agreement (EVFTA), the implementation of the China+1 strategy, the trend of shifting manufacturing supply chains to Southeast Asia, and the inflow of green investments.

German companies in Vietnam prioritize diversifying their supply chains, with Vietnam being their top choice, followed by Malaysia and Thailand. The Delegation of German Industry and Commerce in Vietnam suggests several focus areas to further enhance the attractiveness of investment in Vietnam. These include addressing the shortage of skilled staff by leveraging Industry 4.0 and digital transformation, strengthening local suppliers while complying with sustainable development regulations, incentivizing renewable energy production through the Power Development Plan VIII, and streamlining administrative procedures to leverage the EVFTA and improve the business and investment environment.

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