Barbara Möckli-Schneider, an expert on Asian trade, tells swissinfo why she believes in Vietnam despite the risks presented by such emerging economies.This content was published on September 17, 2006 - 10:11
Vietnam, which has one of southeast Asia's fastest-growing economies, is on the verge of joining the World Trade Organization (WTO).
After more than a decade of bilateral and multilateral negotiations – an accord with Switzerland was concluded in 2005 – Vietnam is preparing to become the 150th member of the WTO by the end of the year.
Möckli-Schneider, secretary general of the Swiss-Asian Chamber of Commerce, describes some of the contradictions facing Swiss investors in the one-party communist state.
swissinfo: What are your impressions of Vietnam?
Barbara Möckli-Schneider: Firstly, it's the enormous contrasts that exist between the urban and agricultural regions. While people almost have Western living standards in the capital, Ho Chi Minh City, in the countryside the conditions are very often primitive – many live in wooden huts with no water or electricity.
I am always very impressed when I watch farmers planting rice fields by hand. They work from early in the morning until late in the evening, using a hoe and a water buffalo. The Vietnamese are very tenacious. This explains the current striking economic development.
swissinfo: Since 2000 the gross domestic product in Vietnam has increased at seven per cent a year. How has the country changed in this period?
B. M-S.: In cities, especially Ho Chi Minh City, there have been construction sites for large hotels and modern apartment blocks for several years. Skyscrapers are mushrooming everywhere. In many ways this metropolis is like a modern-day Manhattan.
During the Vietnam war, the former Saigon was practically razed to the ground and now is growing and becoming a vibrant centre for the whole region.
Recently many luxury boutiques have appeared in Vietnam. Purchasing power is increasing and more and more Vietnamese can afford Armani or Gucci.
swissinfo: This remains however only one side of the country.
B. M-S.: Of course, one mustn't forget that Vietnam remains a developing country. Many people have to take two or three jobs – such as working several hours in a bar, then in a textile company and finally in factory – just to feed their families.
Wages are very low. People working in catering earn about $50 (SFr61) a month. This is little compared with China. By keeping working costs so low, Vietnam hopes to attract new Western investors.
People need jobs and the government knows it can only succeed with the help of foreign companies. In other words, the country is practically obliged to open up even further. Becoming a member of the WTO is a further step in this direction.
swissinfo: At the moment there are around 90 Swiss firms in Vietnam. Compared with China where many firms are encountering problems, the situation in Vietnam is much better. How do you explain this?
B. M-S.: The companies that I know – Nestlé, Holcim, ABB and many small and medium businesses in the textile and electronics sectors – are doing excellent business in Vietnam. All are making profits.
I think that in China copyright protection problems are more prevalent that in Vietnam, where, among other things, the framework conditions seem to be better: knowledge of English is more widespread, the investment climate is more relaxed and the population more keen to improve their knowledge. More than 40 per cent of young people go to university.
swissinfo: But it's not all plain sailing in Vietnam. What advice would you give a Swiss company?
B. M-S.: The level of corruption is worrying. The government is trying to contain it but at the moment it remains widespread.
There have been many recorded cases of entrepreneurs being invited to hand over envelopes here and there "to be able to be successful". It's normal – almost a rule.
Another issue is bureaucracy. In Vietnam it is often very complicated to complete the procedure to obtain permits. The rules are never quite clear. The whole thing can take years.
swissinfo: Despite this, why do you continue to believe in Vietnam's potential for Swiss firms?
B. M-S.: Because I have seen the important development which has occurred since 1997. One sees that people and institutions are continuously looking for new opportunities to do business and that the government is putting all its weight behind this.
In May we organised a seminar in Zurich and three Vietnamese ministers wanted to take part. They are very open and are seeking direct contact with investors abroad. This is synonymous with trust. They have very clear objectives and do everything they can to reach them.
swissinfo-interview: Marzio Pescia
Vietnam is around 331,000 sq km and has a population of around 85 million (average age 27 years old).
In the last five years its GDP has risen annually by 7%, following on from China and becoming one of the most dynamic economies in the world.
It started negotiations to join the WTO in 1995.
Bilateral relations between Switzerland and Vietnam are well developed, especially in politics and economics.
The two countries have a dialogue over human rights and Vietnam is also one of the priority countries for development aid from Switzerland.
In the last decades economic exchange has increased dramatically. In 2005 Swiss exports to Vietnam were worth SFr116 million ($94 million), especially industrial machines, chemical and pharmaceutical products. Imports were worth SFr195 million (mostly shoes and agricultural products).
The Swiss-Asian Chamber of Commerce has around 200 members, with many from the service, chemical and machine sectors.
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