Viet Nam is a vibrant emerging market with good consumer demand for Middle Eastern enterprises

Update: 11:44 | 28/08/2021
According to Mr. Krishnakanth Kodukula – General Director of Zamil Steel Buildings Vietnam Co., Ltd, for Middle Eastern enterprises, Viet Nam is not only a thriving manufacturing hub and an ideal base to reach out to the Asia Pacific, but also a vibrant emerging market with good consumer demand.

What are the reasons for Zamil Steel to continue expanding its investment in Viet Nam?

First, Viet Nam has been among the region’s most dynamic economies, with an average GDP growth of 7.5% before the Covid-19 pandemic. In 2020, although most of the major economies in the world experienced a severe recession due to the Covid-19 pandemic, Viet Nam’s economy still maintained positive growth with an impressive GDP growth rate of 2.91%.

In the medium and long term, we believe the Viet Nam's economy will soon recover from the impacts of Covid-19 and get back to GDP growth rate of 7.5%, or even more in the years to come.

Second, Viet Nam has a favorable geographic location right at the heart of East Asia and is surrounded by many vibrant economies. The country is also a member of the World Trade Organization (WTO) and has participated in varieties of international and regional partnership agreements, including the recently announced EVFTA, CPTPP, and so on, making Viet Nam an ideal investment destination for manufacturing enterprises like ourselves.

Viet Nam is a vibrant emerging market with good consumer demand for Middle Eastern enterprises
Mr. Krishnakanth Kodukula – General Director of Zamil Steel Buildings Vietnam Co., Ltd

Zamil Steel particularly considers Viet Nam as the gateway to the region, and we have confidence in the development of the market.

And last but not least, Viet Nam has its socio-political stability with the Government’s proactive efforts in creating proper legal frameworks, regulatory stability, building integrated infrastructure, and developing a quality workforce to attract foreign investment.

Zamil Steel has invested in Viet Nam since 1997, and we have observed these positive changes, year by year, in the last two decades. We highly appreciate the efforts of the Government of Viet Nam in creating a fair and attractive business environment for foreign enterprises and keep revitalizing the investment climate to appeal to foreign investors.

The Vietnamese market always plays a vital role in Zamil Steel’s global business transformation and development plans for the above reasons.

In recent years, the Government of Viet Nam has implemented many measures to improve the business and investment environment to attract foreign investment. How do you think about these measures? Do they have positive effects?

I think these measures are working very well in creating a more attractive business environment for foreign sectors.

Viet Nam has the advantages of geography, natural resources, affordable workforce, several unexplored sectors, and a booming consumer market, making the country among the top investment destinations.

However, these conditions would not have been leveraged if the Government has not improved the investment climate. In recent years, we have seen many positive resolutions and action plans proposed by the Government to improve the business environment, for example: revising the Law on Corporate Income Tax or actively engaging in the negotiation of international strategic partnerships.

The country also organizes frequent business forums, panel discussions, and dialogues between the Government and foreign investors to provide businesses with opportunities to discuss important legislative issues.

In 2020 and 2021, against the backdrop of sharply weakening global investment and economic downturn in many countries impacted by the Covid-19 pandemic, the Government of Viet Nam has assisted enterprises struggling amid the pandemic outbreaks with its credit support and fiscal package, including many tax measures, employment-related and economic stimulus measures.

All these swift actions have kept investors’ confidence high and the positive FDI inflows for many sectors, such as manufacturing, hi-tech, and FMCG.

Viet Nam has become the member of many new-generation, high-quality Free Trade Agreements (FTA) such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), EU-Viet Nam Free Trade Agreement (EVFTA), UK-Viet Nam Free Trade Agreement (UKVFTA), and so on. How will these agreements create advantages for Viet Nam? And how will Zamil Steel take advantage of these opportunities?

I believe these agreements will enable Vietnam’s economic development to gradually shift away from exporting primary goods and low-tech products to more complex and high-tech products, such as, smartphones, vehicles, and electronic components.

With cheaper imports from partnering countries, Viet Nam will have access to a more extensive trade network with more diversified sourcing partners, increasing the competitiveness of its exports.

In addition, knowledge and technology transfer through partnerships with foreign enterprises will support the country to gradually build up sophisticated business practices and focus on higher value-added production.

While on the other hand, the removals of a few trade barriers will support Viet Nam to engage deeply in the global production and supply chains, thereby creating more favorable conditions for Viet Nam to attract FDI from partner countries.

As of 2021, Viet Nam has participated in 16 FTAs, with many of them signing with ASEAN and members of G20 countries. This has opened up the investment and business cooperation prospects between Viet Nam and many countries in the world.

Zamil Steel is among the enterprises benefiting from this trend as we are seeing a new wave of FDI into Viet Nam in recent years, with more and more European, American, Australian, and Middle Eastern enterprises choosing Viet Nam as the base to expand their business to East Asia region.

We expect this trend to be even stronger once the pandemic is globally controlled and newly signed agreements are fully implemented in the coming years.

Viet Nam is a vibrant emerging market with good consumer demand for Middle Eastern enterprises
Zamil Steel Noi Bai Manufacturing Plant, Noi Bai Industrial Zone, Hanoi.

There is an opinion that the trend of transforming the global supply chain due to the Covid-19 pandemic will give Viet Nam new opportunities when many large companies and corporations in the world move their production facilities out of China. What do you think about this?

Many opportunities exist for Viet Nam as the country is now thriving as the new manufacturing hub with many technology giants and multinational corporations transferring production lines to Viet Nam.

In recent years, the country has prepared itself for the new inflows of FDI with institutional reforms, establishing a fair and competitive business environment, upgrading and strengthening legal systems, participation in global supply and global value chains, implementations of international standards, and applying practices to improve market management and governance capacity.

Such measures have signaled Viet Nam as a stable, fast-growing investment destination for international investors. The Covid-19 pandemic and the changing geopolitical and global trade landscape also play a vital role in enterprises’ decisions to relocate their production facilities.

Meanwhile, challenges also remain there. We are now seeing a proper build of supply chains in Viet Nam with the presence of more and more multinationals, but the local supply base of raw material still has a long way to go compared to China.

Further, the infrastructure needs to be significantly upgraded to handle such large-scale transformations. Increasing labor costs compared to neighboring countries like Bangladesh, the Philippines, and India and investment strategies of these countries might also have impacts on the investment inflows to Viet Nam, for which the country must be fully prepared and have comprehensive strategies to handle these challenges.

Viet Nam seeks stronger cooperation with Middle East nations

Viet Nam seeks stronger cooperation with Middle East nations

Deputy Minister of Foreign Affairs Pham Quang Hieu on August 19 held an online meeting with nine resident and non-resident ambassadors and chargé d'affaires of ...

How do you feel about the interest of Middle Eastern enterprises in the Vietnamese market?

The bilateral trade and partnership between Viet Nam and the Middle East region have been very promising in recent years.

The UAE, Saudi Arabia, Kuwait, and Turkey play vital roles in the Middle East and Vietnam trade. Vietnamese goods such as seafood, garment and textile, footwear, farm products, foodstuff and household appliances have established a firm foothold in Middle Eastern markets, while LPG, chemical products and base metals imported from UAE, Saudi Arabia, Kuwait, Turkey and Qatar are major imports to Viet Nam.

In terms of investment, we think the trend has just picked up, and there are many opportunities for Viet Nam to promote investment cooperation with the Middle East region in the upcoming years.

From what we see in the last three years, Middle Eastern enterprises are showing interest in a few sectors in Viet Nam, such as oil and gas, mineral exploitation and processing, chemical and fertilizer production, production of textile, garments, and FMCG products.

For these companies, Viet Nam is not only a thriving manufacturing hub and an ideal base to reach out to the Asia Pacific, but also a vibrant emerging market with good consumer demand.

Could you share Zamil Steel’s future plans in Viet Nam?

The year 2021 marks our 24 years of operation in Viet Nam, and the country has always played a vital role in the global business plan of Zamil Steel since the early days.

Today, we have got two state-of-the-art plants in Viet Nam with a capacity of 114,000 metric tons of steel structures per year, making us one of the leading steel structures suppliers in the country. We have nearly 1,000 employees, operate 13 representative offices and branches in the ASEAN region, and have successfully delivered more than 6,000 steel buildings to clients around the globe. These achievements are not the result of a short-term investment plan but a vision of nearly three decades.

Since we exported our first steel buildings to Viet Nam in 1993, Zamil Steel has considered our mission to support local and foreign enterprises to set up their production facilities in Viet Nam with international quality standards. In the last two decades, we have been doing so and will continue to deliver excellence to our clients in the coming years with quality products and services.

In 2020, Zamil Steel Vietnam invested significantly in machinery and operational systems to improve our workflows and efficiently use resources to improve the production capacity of our two factories.

We also put more effort into developing a new range of products and value-added services to better support our clients. With such investment, we would look forward to expanding our business in the Vietnamese market and strengthening our position in Southeast Asia.

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