Sanofi’s recently-built warehouse in Long An province applies modern tech in its operations, Photo: Sanofi

Rémy Rioux, CEO of the French Development Agency (AFD), last week came to Vietnam to discuss the energy transition here. “Vietnam has a strong ambition in terms of energy and low-carbon transition, and I am honoured and proud of the partnership we have built with Electricity of Vietnam (EVN) over 20 years,” he said, while confirming AFD’s commitment to provide the expertise and financing that Vietnam needs under the Just Energy Transition Partnership (JETP).

“The experience of Vietnam, EVN, and its public banks will be useful in preparing for a new financial pact to be announced by the President of France in Paris in June,” he added.

The AFD has been operating in Vietnam since 1994 and has financed almost 100 projects for a total of €2.3 billion ($2.44 billion) in various sectors, including energy, transport, infrastructure, and agriculture.

The JETP will mobilise an initial $15.5 billion of public and private finance over the next 3-5 years to support Vietnam’s green transition. Public financial contributions, including those of the AFD, will be made available to the tune of $7.75 billion.

Vietnam has promised to expand renewable energy with measurable goals, limit the use of fossil fuels, and reduce annual emissions from the electricity sector by 30 per cent.

Besides the public sector, the surge in French business investment in Vietnam indicates a positive sign in a brightening outlook for the domestic economy. Energy company GreenYellow in November successfully acquired the domestic subsidiary of Qair – a French independent renewable energy producer – as well as 70 per cent stake in Binh Dinh solar farm, a 49.5MWp asset on Vietnam’s central coast. The acquisition highlights its commitment in the Vietnam and Southeast Asian market, where GreenYellow operates more than 250MWp of renewable energy projects.

The following month, CMA CGM Air Cargo, the cargo airline division of the CMA CGM shipping group, was reportedly seeking a flight licence in Vietnam. The French corporation has invested in Vietnam since 1994 through its joint-venture partnership with Sowatco and Mitsui on the VICT Terminal in Ho Chi Minh City. Patric Bergamini, vice president of business development at CMA CGM, emphasised that the company was “dedicated to helping Vietnam’s economic growth and providing logistical solutions”.

According to the France-Vietnam Chamber of Commerce and Industry (CCI France Vietnam), Vietnam is an attractive business environment with a consistent track record of high performing economic and market growth, as well as ample workforce of young and skilled labourers.

“Its business-friendly policies stand out among its Southeast Asian country peers and encourages a healthy influx of foreign capital,” CCI France Vietnam said, adding that many French companies have chosen to set up in Vietnam for its domestic market and/or to support their regional development.

“Indeed, Vietnam benefits from an ideal strategic location in the heart of ASEAN, close to major Asian markets. Its coastline, with direct access to the world’s main maritime routes, offers favourable conditions for trade,” CCI France Vietnam said.

In January, French Trade Minister Olivier Becht told Nikkei Asia that the country would encourage businesses to spread their operational bases to Southeast Asia, including Vietnam, in an effort to reduce their supply chain’s exposure to China.

Becht proposed moving semiconductor and component manufacturing to ASEAN and several African nations, which he considers to be geopolitically stable, as well as Europe. Specifically, he wants to persuade “businesses in important sectors like semiconductors and medicines to relocate their manufacturing facilities and broaden their pool of vendors”.

As of January 20, the newly-registered capital, capital contributions, and capital from stake acquisitions involving French investments reached $3.77 billion for 662 valid projects, according to Vietnam’s Ministry of Planning and Investment.

Nicolas Warnery, French ambassador to Vietnam, told VIR that the milestone anniversaries of France-Vietnam relations this year is a good opportunity to look back and assess what the two countries have accomplished in trade and investment and reflect on ways to further develop our economic exchanges.

“As the Vietnamese economy is getting increasingly sophisticated, many French companies are starting to see Vietnam as a base to design new products or conduct research and development. Others also set up offices to support the country’s digitalisation and tap into its pool of IT talent,” Warnery said.

Numerous French entrepreneurs and corporations have set up successful companies in Vietnam over the years, including Vergers du Mekong, Annam Gourmet, Aden Services, Saint Honoré, L’Oreal, and Sanofi.