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In Downturn Vietnam Shines For European Investors

American investors tend to view Vietnam through the lens of manufacturing and investment flows and trade agreements reflect that perception. The EU-Vietnam trade agreement far exceeds the American counterpart and provides for almost 100% removal of tariffs between the nations which has resulted in a 25% surge (30% with America in the same period) in bilateral trade since implemented in 2019. European investors have a deeper appreciation and value of the consumer market, and its position to serve as a regional trading hub. They lean more towards tech and infrastructure investing and are attracted by its favorable business climate and rapid modernization.

European and Vietnam Flags molded together

Despite facing global economic headwinds, Vietnam remains a preferred choice for European businesses seeking growth in Southeast Asia. European companies are doing well for the most part in Vietnam and find the business climate favorable. Growth rates are good with 2024 GDP increases projected to top 6%. Vietnam is benefiting from years of stable growth and politics, accommodating policies to attract foreign businesses, and is doing a good job picking up some of the manufacturing exiting China.

"Vietnam is a beacon of stability and growth in Southeast Asia, offering a compelling proposition for European businesses seeking to expand their operations in the region." - Mario Stefano Maltese, President of the European Chamber of Commerce in Vietnam (EuroCham), 2023
"We are very optimistic about the future of Vietnam and are committed to increasing our investments in the country. Vietnam's strong economic fundamentals, favorable business environment, and strategic location make it an ideal destination for European companies." - Jens Ruebbert, Managing Director of BASF Vietnam, 2022
"Vietnam is a key market for Siemens, and we see significant potential for future growth in areas such as energy, healthcare, and infrastructure. The country's commitment to sustainable development and digitalization aligns perfectly with our own priorities." - Roland Berger, CEO of Siemens Vietnam, 2023

While the outlook for Vietnam is largely positive, there are challenges that the European investors are monitoring. Globally, 2024 is viewed with trepidation, and Vietnam as an export economy will suffer if economic slowdowns persist. Vietnam is a communist nation and has an entrenched bureaucracy and often unclear regulations. According to the Department of Administrative Procedures Control, in 2023 628 time-consuming and frustrating to foreign investors regulations were removed. More cuts are expected this year as the Vietnamese government doubles down on being a top place for countries with capital to invest.

Growth can also be a curse and Vietnam's success has led to labor shortages in some sectors, as well as infrastructure bottlenecks. A new airport is in the works in Dong Nai as well as the North-South Expressway which will both do much to ease congestion and boost cooperation between business nodes in the country.




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