Peter Lysholt Hansen, the Danish Ambassador to Vietnam, reveals expectations to the bilateral trade between Denmark and Vietnam for the year 2007.
The Great Expectation for 2007
In recent years, the Embassy of Denmark in Hanoi has serviced increasing numbers of Danish companies looking for business opportunities, exploring market developments as well as the improving investment climate in the Vietnamese market, one of Asia’s fastest growing economies.
“After Vietnam’s accession to the World Trade Organization (WTO), I am confident that this trend will continue. Therefore, I expect bilateral trade as well as Danish investments in Vietnam to increase in 2007,” the Danish diplomat tells ScandAsia.
At present, approximately 70 Danish companies are established in Vietnam. And the number of newcomers planning to set up representative office, branches or companies in Vietnam is increasing.
Embassy’s Strategy on Trade and Investment
Through commercial assistance to Danish enterprises and the Business-to-Business Programme supporting partnerships between Danish and Vietnamese companies, the Embassy is continuously following the developments of the Vietnamese economy in order to spot new opportunities to further expand trade and investment between the two countries.
“We do this through the publication of sector reports, providing market intelligence through direct contacts to Danish business and the organization of export promotions where Danish companies come to Vietnam to explore business opportunities and talk to potential Vietnamese partners,” the ambassador explains.
In addition, the Embassy also plans to further attract the attention of Danish business to new and interesting commercial opportunities in Vietnamese market.
“We aim to further strengthen the cooperation this year with the Vietnamese shipbuilding industry, and started the year with the successful visit of a delegation of 24 Danish companies to Vietnam at the end of February.”
Furthermore, the Embassy plans to focus and explore on Vietnam’s fishery sector including aquaculture and fish processing, oil and gas, International Computers and Tabulators (ICT), as well as the energy sector of which Denmark has a number of world class companies within renewable energy like wind power, solar power, bio energy and energy savings.
“We believe that these key competencies could be of major importance to Vietnam in the coming years where power supply will be a major challenge to the continued economic growth,” he adds.
Danish Imports and Exports to Vietnam
Trade between Denmark and Vietnam has good performance, with the number of Danish exports to Vietnam rising continuously during the period of 2004-2006. In 2006, exports to Vietnam rose almost 50 per cent compared to 2005.
Among the export articles from Denmark to Vietnam, the main ones are machinery for industrial use, engines, and foods.
“I think these will also be dominant in the year ahead,” says the ambassador, adding that a new trend could very well be an increasing export of fast moving consumer goods and luxury items, such as state of the art hi-fi products and designer articles.
Moreover, the ambassador also foresees the increasing trend of exports in ICT and ICT related services from Vietnam to Denmark to continue in 2007. Main exports items from Vietnam to Denmark include the traditional Vietnamese export strongholds; garments, shoes, and furniture, for example.
Meanwhile, imports from Vietnam in 2006 seemed to remain at similar level to the previous year. However, Denmark’s imports were still higher than its exports to Vietnam.
Bilateral Trade after WTO accession of Vietnam
Vietnam’s membership of WTO in January this year has undoubtedly concrete effect on trade and investment in general not only in the global market, but also positive effects on bilateral trade between Denmark and Vietnam.
“Danish companies will only become more interested in commercial opportunities in Vietnam,” credits the ambassador, continuing his analysis that trade barriers will be reduced easing the export of goods and services to Vietnam.
“And perhaps more importantly, it should become easier for Danish investors to set up business in Vietnam,” he concludes.
Booming Vietnam, an Advantage FDI Destination
Vietnam becomes a more competitive and favorite destination of foreign investment. The country has very much been driven by Foreign Direct Investment (FDI), with approved investments as well as disbursements increasing significantly during the last four years.
“Looking at the FDI track record of Vietnam, I believe it is obvious that Vietnam has a number of advantages as FDI destination,” the ambassador starts and gives reasons “Firstly, Vietnam has proved to be very dedicated to the economic reform strategy and foreign investors consider the country to be economically stable,”
The ambassador also adds that the Vietnamese government has pursued a continuous strategy of integrating Vietnam into the regional and global economy, making it more attractive to use the country as a production site and turning Vietnam into an increasingly interesting market.
Most importantly, Vietnam has a great potential due to its human and natural resources. Not least the young, dedicated and quite well qualified work force is a Vietnamese stronghold, even when compared to other dynamic economies in Asia.
“The opening of the Vietnamese services sector will also make it more attractive for foreign investors to come to Vietnam,” he says and continues that not only will investors benefit from better banking, auditing, financial, insurance, and other services, but they will have their own opportunity to compete in these sectors.
It is expected that FDI resurgence will continue after WTO membership, exceeding the 2006 achievement of USD 10 billion.
Insecure Investment Atmosphere?
An increase in the commitment of Danish and other foreign investors depends on the continued reforms in Vietnam. Corruption is of very serious concern and among a number of issues that could make foreign investors more hesitated to invest in Vietnam.
“A strong and consistent effort in combating corruption is essential to ensure proper confidence in Vietnam on the part of investors as well as the donor community,” says the ambassador.
He also mentions that lack of transparency in the legal system as well as poor implementation of reforms are causing some foreign investors to be hesitant. It is important for authorities at all levels and localities to be aware of these challenges and to be supportive of commitments to ease administrative procedures for business.
In addition, infrastructure could threaten the economic growth, especially insufficient port facilities and power supply. Regarding human resources, where education is a key to future success, the ambassador comments that Vietnam has to invest now in order to prosper in the future.
“It is essential that Vietnam focus on further improving the business climate through increased transparency and predictability for all companies and reduced red tape,” says the ambassador, adding that Vietnam should honor the goal of establishing a level playing field for all investors, irrespective of nationality and form of ownership.
Moreover, it is also extremely important that Vietnam make major steps forward on banking and judicial sector reforms to attract investors, he ends.