German Foreign Minister Boosts Ties With Vietnam

The People’s Republic of Vietnam has boasted growth rates of about 8 percent ever since it introduced a market-oriented economy in the 1980s. This makes Vietnam very attractive to Germany. About 280 German companies are currently present in Vietnam.

But Germany is still underrepresented in comparison to other countries, says Thomas Speeger from the German Business Association in Ho Chi Minh City, formerly known as Saigon.

“There are multinationals such as Siemens, DaimlerChrysler and Metro Cash & Carry in Vietnam. But there are also medium-sized firms, which export furniture and ceramics for example. And we also have several smaller firms involved in the software trade and tourism,” Speeger said.

Significant trade balance

With a trade balance of over three billion US dollars, Germany is Vietnam’s largest EU trading partner. The investment volume of German businesses in Vietnam has grown steadily in recent years. Direct investment from Germany exceeded 400 million US dollars last July.

But bureaucratic barriers and a lack of infrastructure mean that some German companies are still reluctant to invest in Vietnam.

“The ports in Vietnam have reached their capacity limit,” explains Bernd Baunack who represents the international logistics firm Kühne & Nagel. “Yet container traffic is growing by 20 percent a year. So in five years’ time, we’ll need double the port capacity.”

“The second problem is the connection to the rest of the country. The roads aren’t good. There is only one railway from Ho Chi Minh to Hanoi. Rail transport as we know it in Europe doesn’t really exist here. So, the infrastructure in Vietnam’s rural areas really needs to be built up.”

Abolishing trade barriers

Since Vietnam joined the World Trade Organisation about a year ago countless trade barriers, quotas and tolls have been abolished. But the German business world in Vietnam hopes Foreign Minister Steinmeier will apply pressure on Vietnam to create even better conditions.

“Vietnam and Germany are linked by many things,” says Jan Nöther from the German Chambers of Industry of Commerce. “Over 100,000 Vietnamese have lived, studied and worked in Germany in the past.”

“Many of them took up important positions when they returned to Vietnam -- they want to ensure their past connections give rise to economic benefits. But for a long time, the Vietnamese thought the Germans were not really living up to the mark in this sense. But that changed two years ago. We are sure the foreign minister’s visit will further strengthen economic co-operation between our two countries.”

And one example of such co-operation is the German Vietnamese University, which has just been founded in the presence of the German foreign minister. The university is expected to open its doors in 2009 and will contribute to the modernisation of the Socialist state.