April was a busy time for European businesses seeking new business in Vietnam, with a host of delegations searching for investment opportunities across the country.

A group of French businesses met with Phan Van Mai, Chairman of Ho Chi Minh City People’s Committee, on April 19 to seek business and investment opportunities in smart urban development and green growth.

Optimism rises for stellar EU investment across Vietnam, Photo Le Toan

Members of the European Chamber of Commerce in Vietnam (EuroCham), the German Business Association in Vietnam, and the Nordic Chamber of Commerce in Vietnam also gathered at a meeting with authorities in the central city of Danang to learn about investment activities in the high-tech industry on April 21.

According to Gabor Fluit, chairman of EuroCham, European investment in Vietnam is on the rise.

“The EuroCham Business Climate Index (BCI) of the first quarter presents a glimmer of hope, as the number of European businesses feeling optimistic about the Vietnamese economy has increased by 8 points, even though the BCI remains at 48,” Fluit said.

“Furthermore, the upward revision of the EU’s growth forecast suggests that the economic slowdown might be bottoming out. This positive trend is definitely reassuring.”

European companies are increasingly shifting their operations from China to Vietnam, with 42 per cent of respondents reporting such a move. This demonstrates Vietnam’s attractiveness as a top investment destination, with 35 per cent of respondents ranking it in their top five international investment destinations.

In late April, EuroCham was among business associations at a meeting with Prime Minister Pham Minh Chinh to discuss challenges faced by foreign businesses in Vietnam, with green energy transition, circular economy, and digital transformation topping the agenda. The event was held amid global economic turmoil, which has affected European enterprises and Vietnam’s investment environment.

Fluit said the conference provided them a precious opportunity to brainstorm and devise strategies to empower Vietnam to unlock its enormous potential.

“One area where we’re seeing particularly strong interest from European investors is in renewable energy development. Vietnam’s government has been proactively promoting the growth of this sector, particularly offshore wind and solar power,” Fluit said. “We anticipate that once Vietnam’s Power Development Plan VIII is finalised and adopted, more European firms will eagerly invest in renewable energy development and deployment.”

Danish-backed Lego’s $1 billion investment in Vietnam is one European-invested project reflecting this trend. The company is constructing a brand-new factory in the southern province of Binh Duong that will be the first of its kind for Lego Group.

Not only will the facility incorporate cutting-edge technology and provide advanced training to employees, but it will also be the first carbon-neutral factory in the company’s history.

For member companies of the British Chamber of Commerce in Vietnam (BritCham), in addition to the traditional sectors such as financial and professional services and insurance, bilateral ties have been expanded and now take in pharmaceuticals, technology, digital transformation, climate change, and green growth.

BritCham chairman Kenneth Atkinson said, “I expect to see more investment from UK companies into renewable energy, particularly wind and solar, and a significant increase in financing through green bonds and loans, to help Vietnam on its journey net-zero by 2050.”

Meanwhile, Techtronic Industries, a multi-billion-dollar German-Hong Kong producer of power tools, has decided to invest $650 million in Saigon High-tech Park to establish a manufacturing plant and research and development centre.

Elsewhere, Messer is supplying gases to local customers such as Hoa Phat Group from its main production hubs in the northern province of Hai Duong and the south-central province of Quang Ngai. Messer boasts a charter capital amount of $228 million and more than 700 employees.

Similarly Tesa, a German company manufacturing adhesive products, has laid the foundation stone for a new plant in the northern port city of Haiphong with an investment of €55 million ($60.8 million) to create new production capacities for Asia, one of its fastest growing markets.

Other German companies investing in Vietnam include Magnetec, a producer of electric spare parts, cleaning technology firm Kärcher, and climate solutions provider Viessmann.

Elmar Dutt, co-chairman of the German Business Association, said, “Our companies will continue or expand their investment in Vietnam, as they see the country as a stable and attractive market with a large population, a young workforce, a competitive cost structure and a favourable business environment.”

The bond between Europe and Vietnam has flourished in recent years, and strong partnerships have yielded exciting success stories.

For example, EuroCham member DEEP C is a top figure in the Vietnamese industrial development scene. By establishing a massive industrial zone cluster across 3,400 hectares, it has helped turn northern Vietnam into a hub for new market entries, providing an enormous boost to the country’s economy. DEEP C’s achievements have generated countless jobs for Vietnamese citizens and have enabled the nation to thrive.

Bosch, a global supplier of technology and services, has invested more than $500 million in Vietnam since 2008, operating two manufacturing plants and one research and development centre. The company employs more than 4,000 associates in Vietnam and produces automotive components, power tools, security systems, and terotechnology products for both domestic and export markets.

Elsewhere, Adidas has been sourcing from Vietnam since 1995, making it one of its key production hubs in Asia. The company works with more than 40 suppliers in Vietnam, producing footwear, apparel, and accessories for both local and international markets. Adidas supports its suppliers to improve their social and environmental standards through various initiatives such as the Better Work, Green Company, and Fair Play programmes.

According to Vietnam’s Ministry of Planning and Investment, Vietnam attracted about $8.9 billion worth of foreign investment in the first four months of this year, down 17.9 per cent on-year. European countries invested $1.02 billion.