Swiss target Vietnamese business opportunities

Ho Chi Minh City is at the centre of Vietnamese economic activity swissinfo.ch

A Swiss delegation is visiting Vietnam to encourage economic ties between the two countries, which are celebrating 35 years of diplomatic relations.

Swiss businesses are keen not to miss out on Vietnam, which has one of southeast Asia’s fastest-growing economies and is on the verge of joining the World Trade Organization (WTO).

“I feel as though I’m witnessing something similar to what happened around 15 years ago in China,” Catherine Kellerer, in charge of bilateral relations with Vietnam at the State Secretariat for Economic Affairs (Seco), told swissinfo.

“Step by step, using a mix of prudence and intelligence – and for a large part following the Chinese example – the Vietnamese authorities are implementing a series of reforms which favour the [business] market to attract foreign companies and investors,” she said.

In 2005 alone, $5.8 billion (SFr7.2 billion) worth of foreign investments were made in Vietnam, up from $4.2 billion in 2004. Gross domestic product in the communist country has increased by 8.4 per cent, a growth rate topped only by China.

With an internal market of 83 million inhabitants – roughly the size of Germany – Vietnam is seen as a good business opportunity.

Seco also signed on Tuesday a cooperation agreement with the Vietnamese authorities to modernise the signalling system of one of Vietnam’s most important railway lines. Seco is funding the project through a mixed credit of more than SFr16 million.

Opportunity

In addition to the current visit, the Swiss-Asian Chamber of Commerce (SACC) is organising during the first half of September a forum on bilateral Swiss-Vietnamese business ties.

Taking place in Ho Chi Minh City, the country’s largest city, speakers include the Swiss ambassador to the country, Bénédict de Cerjat, and SACC president Werner Berger.

Also taking part are around 100 representatives from Swiss and Vietnamese companies in addition to officials from both countries.

According to Daniel P. Keller, director of Swiss Consulting, based in the country’s capital Hanoi, the advantages of doing business in Vietnam go beyond having a young, motivated, well-educated and low-cost workforce.

The framework conditions to attract foreign investors have markedly improved over the past few years, he said.

What’s more, a new law designed to make conditions more equal for domestic and foreign companies is set to come into force in the coming weeks. The cost of basic services such as telephone and electricity are to be reduced and intellectual property rights reinforced.

Problems

Nevertheless, Vietnam, like many developing economies, still suffers from corruption and complicated bureaucracy.

Another problem is that while the authorities seem to be keen to encourage the big guns such as sporting goods company Nike or computer chip manufacturer Intel, there seems to be less support for small and medium-sized enterprises (SMEs).

This is the experience of Andrea Kalberer, owner of ABPromotions, a textile company employing 350 people near Ho Chi Minh City.

He says the Vietnamese government “doesn’t pay enough attention to SMEs. I often have the impression that the authorities think all foreign investors should be global players”.

“And to think that in Switzerland 99.7 per cent of businesses have fewer than 250 employees.”

swissinfo, Marzio Pescia in Ho Chi Minh City

In brief

By the end of 2005 Swiss investment in Vietnam totalled SFr720 million, putting Switzerland among the 15 largest investors in the country.

Around 90 Swiss companies are active in the country, including Holcim, Nestlé, ABB and Syngenta, employing a total of around 2,500 people.

In 2005 trade between the two countries was more than SFr240 million. Swiss exports include industrial machines, chemical and pharmaceutical products. The country imports mostly shoes and agricultural products.

15,000 Swiss tourists visit Vietnam each year, making Switzerland the sixth-most important European country for the Vietnamese tourist industry.