15:30 21/02/2023

Vietnam holds significant potential for Czech enterprises

Phuong Hoa -

Mr. Jozef Síkela, visiting Minister of Industry and Trade from the Czech Republic, shares his thoughts with VET on Vietnam’s investment environment for Czech enterprises as well as cooperation between the two countries.

What is your view of Vietnam’s investment environment for Czech enterprises over recent years?

Vietnam is truly the economic dragon of Asia and one of the fastest-growing markets in the world. I have seen enormous progress for the country since the “Doi Moi” reforms were introduced in 1986 and it became a stable, rapidly developing, and high growth destination for international businesses and foreign investment. This is confirmed by the fact that it jumped from 90th place to 70th place in the World Bank’s Ease of Doing Business over the past decade.

Given that Vietnam has numerous comparative advantages, including strategic proximity to East and Southeast Asian countries, a robust free trade network with major agreements in place, a stable political system, a business-friendly environment, an abundance of natural resources, and an ample workforce of young and skilled workers, among other things, many companies from the Czech Republic are turning to Vietnam as an interesting option for industrial and business cooperation, exploring certain types of manufacturing, product assembly, and other services.

In what sectors does Vietnam hold potential for Czech enterprises to invest in?

It’s always about the match between our mutual strengths and capabilities. We believe that among the most promising sectors are automotive, power engineering, renewable energy, aerospace, mining, and tourism. Czech companies such as Home Credit, Elmich, and Hydra have successfully invested in Vietnam, mainly in projects in financial services, the production of electrotechnical equipment, or consumer products. However, as Vietnam’s economy has been growing, Czech companies are now looking into sectors with much higher added value.

A priority project for us is Škoda Auto’s decision to enter Vietnam. In cooperation with a local partner, Thanh Cong Motor Vietnam, the leading Czech carmaker will begin offering the first European models in Vietnam in the months to come. The company anticipates initial sales of 30,000 vehicles a year. By 2024, a production line of Škoda motor cars in northern Quang Ninh province will open.

The project is very important as it will not only elevate Czech-Vietnamese economic cooperation to a new high, but will also play a role as pioneer, creating new jobs, expanding industrial capacities, and attracting more foreign investment to Vietnam. Vietnam therefore has the potential to become a production hub for Škoda Auto and other Czech companies’ further expansion to other Southeast Asian markets.

The Czech Republic was one of the first EU countries to ratify the EU-Vietnam Investment Protection Agreement (EUVIPA) with Vietnam. How will investment cooperation between the two countries develop in the years to come?

As of 2023, Vietnam represents the most significant trading partner of the Czech Republic in the ASEAN region, with overall trade reaching a record $2.3 billion. This emphasizes the deeper cooperation between our two countries. We expect economic and investment relations to strengthen even more in the future thanks to the further implementation of the EU-Vietnam Free Trade Agreement (EUVFTA) as well as the opening of planned direct flights linking Prague and Hanoi, which will greatly contribute to the development of trade, investment, transportation, and tourism.

The Czech Republic is proud of the fact that it was one of the first European countries to approve the EUVIPA and we will continue encouraging the other EU member states to finalize the ratification process soon.

What do the governments need to do to promote cooperation between businesses in the two countries?

The Czech Republic is a medium-sized, open economy with an export-to-GDP ratio of more than 70 per cent. For this reason, the Czech Government has an advanced system of export promotions, with its Ministry of Industry and Trade a central authority in terms of international trade, foreign trade policy, export support, and financing, working closely with other ministries.

My official visit to Vietnam is the first governmental mission in more than three years and it is aimed at promoting economic relations with Vietnam after Covid-19. It’s a reflection of the particular importance we attach to strengthening our relationship. I had very productive discussions in Hanoi with State officials and representatives of State and private enterprises, aimed at promoting result-oriented cooperation and joint future projects. For example, I am very happy that during this visit a contract for training Vietnamese pilots was signed between Vietnam Airlines and Czech company F AIR.