Nordic nations staunchly working alongside Vietnam

Vietnam emerged as one of the great success stories among Asian emerging economies. Vietnam found its way to thrive economically and even achieved an impressive 8.02 per cent GDP growth in 2022. The improved business environment has contributed to socioeconomic recovery and development, thus regaining the trust of the foreign business community in Vietnam.

In 2022, Denmark emerged as one of the top investors in Vietnam with a total investment of up to $1.32 billion. This is largely due to the $1 billion commitment of Lego Group to build its first factory in the southern province of Binh Duong. Furthermore, the Danish jewellery manufacturer Pandora also signed an MoU to invest $100 million in building a new facility in Vietnam-Singapore Industrial Park.

The two countries share many common interests and hold increasingly comprehensive relations, and many Danish businesses intend to expand their operations abroad, with Vietnam emerging as an attractive investment destination.

Vietnam and Sweden also possess a strong diplomatic relationship of over 50 years. Previously, Sweden’s trade with Vietnam was only associated with mechanical engineering, pharmaceuticals, household appliances, and environmental technology, but has now been expanded in many different aspects and fields based on common interests and potentials. In 2022, 2-way trade between Vietnam and Sweden reached $1.61 billion. Many major Swedish enterprises and corporations are doing very effective business in Vietnam, including Ericsson, Volvo, ABB, IKEA, and Tetra Pak.

Along the energy transition target towards green growth, Vietnam’s collaboration with the Nordic countries has seen a significant increase in the sharing of renewable energy technology, experience, best practices and investment. Denmark, Finland, Iceland, Norway, and Sweden, are home to many world-class renewable companies and many of those are now actively investing in Vietnam. Equinor, Ørsted, Vestas, and Wartsila became important players by bringing the capabilities in innovation and large-scale industrial solutions to the country. For Iceland, during a meeting with the Vietnamese ambassador to Iceland, the president of Iceland reaffirmed that there is room for bilateral cooperation between the two nations, especially in the field of green energy, sustainable aquaculture, and low-emission technology.

Vietnam has been an attractive destination for international investors for many years and sustained this throughout the pandemic. Vietnam stands out in many ways, with low inflation and high growth driven by domestic consumption and an inflow of new foreign direct investments that help mitigate the effect of falling global demands. Furthermore, the country has been one of the most dynamic countries, with 15 signed free trade agreements linking Vietnam to major global markets.

However, the growth rate may slow down in the first quarter of 2023 when there are fewer export orders from American, European, and Asian nations and will recover in the middle of 2023 as the global economy recovers. In addition, many of Vietnam’s industries, including apparel, chemicals and electronics, heavily depend on input materials from China. Therefore, the timing and the speed of reopening of this market are also important and will have a major impact on Vietnam’s growth potential in 2023.

Given the commitments of the EU-Vietnam Free Trade Agreement, more dialogue channels should be promoted for businesses to raise their voice on any barriers they face when operating in Vietnam, thereby creating more favourable conditions for businesses. This has always been one of our top priorities for our members. Having seen the government’s efforts in improving the business environment for foreign businesses, along with the rising trend of the China+1 business strategy, I believe more Nordic businesses as well as international investors will find Vietnam an attractive destination to invest in.

Looking at 2023 and the future, it is critical for Vietnam to move from quantity of foreign direct investment to quality for sustainable development. To achieve this, Vietnam will need to grow its economy and quality of jobs in order to avoid the middle-income trap. Incentives should be for investments that are here for the long run and care for the environment and people - not just short-term exploitation of resources and cheap labour.

Whilst Vietnam needs more energy, Nordic companies are ready to bring in high-end investments. Lego is an epitome of a company that has a long sustainable vision. By collaboration, adapting regulations, and removing barriers, the country can see huge investment in green energy.

Vietnam Investment Review