Great future for cooperation between Vietnam and Germany

TIN LIÊN QUAN
	Vietnam Airlines uses Airbus A350 on route to Germany
	VN-Germany Strategic Partnership to be promoted

We are witnessing a lot of ‘extraordinary’ things in the world today. Germany’s top economists are warning of ‘dark clouds’ on the horizon for Berlin and Europe, amongst the most worrying is the consequences of a trade war between the United States and European Union. In that context, how will economic ties between Vietnam and Germany be influenced and what are the prospects for this cooperative relationship in the years to come?

Impressive statistics

According to statistics by the General Department of Vietnam Customs, since the establishment of the Vietnam-Germany strategic partnership in 2011-2012, the bilateral trade balance has increased by 120% in just 4 years. Among European Union countries, Germany ranked second, behind the Netherlands, and ranked seventh in the world among countries importing goods from Vietnam. The volume of Vietnamese goods exported to Germany accounts for 19% of Vietnam’s total exports to foreign markets, equaling the total exports to Britain and France combined.

The two-way export import turnover in 2016 reached 12.6 billion USD, and that of 2017 was around 10 billion; according to Germany’s statistics this figure is 12 billion USD. In the first four months of 2018, bilateral export and import reached 3.3 billion USD. If the turnover in 2008 was 3.5 billion USD, after 10 years, bilateral export and import has increased three-fold.

Prime Minister Nguyen Xuan Phuc and German Chancellor Angela Merkel at G20 Conference in Humburg, July 2017. (Photo: AFP)

The structure of Vietnamese exports to Germany also changed, with goods from foreign invested enterprises such as telephones and electronic components increasing sharply (the figure for the first four months of 2018 was 685 million USD), followed by traditional goods like footwear (279 million USD), textiles (217 million USD), coffee (176 million USD) and seafood (61 million USD). If counting only raw coffee, Vietnam topped the list of countries exporting to Germany with a stable level of about 500 million USD. Due to some external factors, fishery products, especially pangasius, tended to decrease.

Meanwhile, Germany mainly exports machinery and equipment to Vietnam (514 million USD in the first four months), followed by motor vehicles and spare parts (52.5 million USD). In 2017, Germany was considered the export champion of the world with a great trade surplus, including large markets like the US, Russia and other EU countries. In contrast, Germany has a trade deficit with Vietnam.

In terms of direct investment in Vietnam, Germany’s remains modest compared to the great potential of the two countries. By April 2018, Germany had 286 FDI projects in Vietnam, with total registered capital of over 1.4 billion USD, ranking 20th among 116 countries investing in Vietnam. In the first four months of 2018, 14 new projects were registered with capital of about 40 million USD. Investment from Vietnam to Germany reached 21.44 million USD with 11 projects.

What is the implication of these numbers?

Firstly, the Vietnam-Germany bilateral economic and trade cooperation is of special importance. Germany is Vietnam's largest trading partner in the EU and Europe in general and vice versa, Germany also regards Vietnam as a fast-growing market in Asia, just after China and India, with 92 million consumers. ‘Made in Germany’ products are also prestigious in Vietnam.

German-made high-class cars are very popular in Vietnam.

Secondly, economic activity and international trade have their own rules, with the regulation of markets and supply and demand. It cannot be denied that the political climate has a certain impact on businesses and trade activities. Facing the current tense relationship between the EU, Germany and the United States following high tax penalties, enterprises have adjusted themselves to minimise trade losses.

Similarly, after US-related threats to the business of the EU in Iran, German enterprises have remained there and continue to implement cooperative agreements normally.

Thirdly, what is important for economic activity is the issue of benefits, corporation profits, and national interests. If economic activity is stalled by the impact of politics, the consequences will be severe and not all governments will be willing to pay compensation for enterprises.

So far, the European Union has considered the possibility of compensating European businesses if they withdraw from Iran at the behest of the United States, but found that the damage would be far greater than the allowable EU budget.

Brussels has recently decided to renew its economic sanctions against Russia, but Germany has persisted in building a gas pipeline from Russia to Germany because it is a strategic advantage for the country’s energy security.

​Prospects of cooperation

It is predicted that the bilateral trade balance between Vietnam and Germany in 2018 will reach the level of 2017, at around 10 billion USD. Our goods still hold a certain position in the German market and vice versa, goods and technology from Germany are still essential for the industrialisation and modernisation of the Vietnamese economy. One of the new features of cooperation in the coming years will be labour training to supply the field of nursing and healthcare in Germany.

Nursing is one of the areas of great potential in Germany - Vietnam cooperation. (Photo: Alamy)

Germany is facing rapid population aging. According to statistics, by 2060 the population of Germany will drop to 70 million people, falling by 10 million people compared with today. The proportion of people of working age (20-60 years old) will decrease by 20%, while the proportion of people over 60 is forecast to increase from 25% to 39%. In particular, the number of elderly people over 80 will increase from 4 million to 10 million. By 2025, the number of people of working age will fall to 6 million.

In this context, the German government has launched several national programmes to tackle the serious shortages in the nursing industry. By 2021, Germany needs at least 8,000 to 13,000 nurses. In addition to the local workforce, Berlin is also interested in cooperating on training with foreign workers.

By the end of 2017, three Economic Ministers from the states of Hamburg, Bremen, Rheinland-Pfalz and Mecklenburg-Vorpommern visited and sought cooperation opportunities with Vietnamese counterparts. One of the topics mentioned in all meetings was training and introducing Vietnamese nurses to work in Germany. It is expected that in the future, Germany’s states will continue sending high-level delegations to Vietnam.

Therefore, it can be said that the future of Vietnam-Germany cooperation, especially in economic and trade ties, has many opportunities to continue developing sustainably, for the benefit of the two peoples.

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