Investment industry opportunities for Finnish companies in Vietnam

Investment industry opportunities for Finnish companies in Vietnam

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This article presents key imports and exports of Vietnam, main import and export partners of Vietnam. We also present potential industry opportunities for Finnish investors to have an overall view of the Vietnamese market. Based on that, Finnish companies can build a proper strategy to enter the Vietnamese market with their best products, services and know-how, which is demanded in the new market.

Vietnam imports

Figure 1 shows that imports in Vietnam decreased from 18459 USD million in May 2017 to 18090 USD Million in June 2017. Main imports to Vietnam include machinery, transports and equipment (32 percent) and manufactured goods (24 percent). Others are chemicals (14.2 percent), fuels (10 percent), food and live animals (7 percent) and crude materials except fuels (6 percent). Vietnam main import partners are China (28 percent of the total imports) and Korea (15 percent). Others include: Japan (9 percent), Taiwan (8 percent), Thailand (6 percent) and Singapore (6 percent).

Figure 1. Vietnam imports. Source: tradingeconomics.com

Vietnam exports

Exports in Vietnam also decreased to 17800 USD Million in June 2017. In the last 5 years, Vietnam’s exports have doubled. The reasons are thanks to competitive minimum wage and low costs of utilities which boosted foreign direct investment in the manufacturing sector. Vietnam main exports consist of telephone and spare parts (19 percent) and textiles (14 percent). Others are electronics, computers and components (10 percent), shoes and footwear (7 percent) and other machinery, equipment, tools and spare parts (5 percent). Main export partners are: the United States (20.7 percent of the total exports), China (10.6 percent) Japan (8.7 percent). Other export partners are South Korea (5.5 percent), Hong Kong (4 percent) and Germany (4 percent).

Figure 2. Vietnam exports. Source: tradingeconomics.com

Potential industries for Finland

Potential industries for Finnish companies are presented as in below:

Waste-to-energy and bioenergy (W2EB)

Finland is famous for its advance and innovative technology in treatment of urban, industrial and hazardous waste. There is serious demand for advanced solutions to:

  • MSW incineration
  • Biogas production from organic waste
  • Industrial/hazardous waste incineration to generate energy
  • Equipment/facilities to optimize the MSW/industrial waste handling processes

This opens great business opportunities for Finnish companies providing waste-to-energy and bioenergy (W2EB) expertise. In Vietnam, Finnish solutions are known to be eco-friendly and to have high efficiency and high adaptability. There is a lot of interest towards the Finnish expertise and need to understand different technological solutions. Regarding this area, Finnish companies are recommended to target the following potential Vietnamese clients:

  • MSW management companies replacing landfills with new solutions
  • Environment & urban works companies.
  • Industrial factories generating organic solid waste and side streams.
  • Environmental consulting companies

Waste water treatment plants

Vietnam’s demand for water sector know-how is increasing, because local water supply and sanitation systems are inefficient and the capacity of the water treatment plants cannot handle the country’s growing quantities of waste water. Because of this, waste water emissions that cannot be managed have caused serious environmental hazards over the country. With a population of 92 million people, construction of new waste water treatment is very important to increase the efficiency of its water supply systems.

Vietnam plans to build 40 new waste water treatment plants by 2020, which creates considerable possibilities for Finnish companies. The cooperation between Finnish and Vietnamese companies seems promising, because Finland has a good reputation in Vietnam and Finnish know-how is well-known in the water industry.

Science, technology and innovation

Finland was the first partner to support Vietnam the development of the national innovation system. The development cooperation with Vietnam in science, technology, and innovation started in 2009. The programme named Innovation Partnership Programme was initiated in 2009. This programme was divided into two parts: IPP I and IPP II. The IPP I (2009-2014) was to introduce about innovation concept and policies in Vietnam. The second phase IPP II (2014-2018) will focus on development of national innovation ecosystem. In this phase, capacities and networks, functions as a catalyst, initiator and accelerator and facilitates business and institutional partnerships and network building between Vietnam and Finland will be built. Besides, it aims to build a long term sustainability through policy and legal development work.

Under the Memorandum of Understanding on scientific and technological cooperation signed between the Ministry of Science and Technology of Vietnam and the Ministry of Economic Affairs and Employment of Finland in 2008, Finnish and Vietnamese companies, universities, research and financing organizations will receive support from the governments. In Finland, the body in charge of developing and implementing this programme is Tekes. Besides our official website finland-vietnambusiness.com, interested companies can also find more information on Vietnam market opportunities and funding option from Tekes.

Energy and other clean tech solution

Renewable energy and energy efficiency issues are growing in importance, but renewable energy’s share of the energy mix is negligible, excluding hydropower which counts for 1/3 of total power production capacity. Renewable energy targets remain at a modest level (10.7% of generation and 14.7% of production capacity by 2030) according to Tekes’s report 2017. Solar power, biomass, and wind power are the focuses in increasing renewable energy capacity. The renewable energy resource in Vietnam is very abundant. However, the main barriers at the moment are the low energy prices and monopoly of the EVN as the sole power purchaser.

The cleantech market development in Vietnam has caught interests from foreign investors for many years and there have been many ongoing renewable energy projects developed in Vietnam. However, due to the above-mentioned reasons, it is still difficult, but still can be expected to develop in the future as environmental issues due to pollution and climate change have an increasing effect on the economy and public health.

Forestry

Vietnam plays an important role in the timber processing sector in Southeast Asia. Finland’s forest sector development cooperation in Vietnam has had a positive impact on the sustainable management and protection of forests. It has also contributed to improved access to and quality of information on forests.

Education

Finland has had great reputation in its education. Finland always ranks top in education. Finland wants to become Vietnam’s important education partner. Through IPP, development cooperation with Vietnam in science, technology and innovation was started. There is big room for cooperation opportunities between Finland and Vietnam if there is willingness to do so as I can see that the Vietnamese education system need radical reform. Five principal areas of cooperation in the education sector include curriculum design and implementation, teacher training, vocational education, the higher education and educational system, and management (Memorandum of Understanding signed between Vietnam and Finland).

Other potential areas of cooperation

Other potential areas of cooperation are cold water fishery in Sapa, a mountainous area in Northern Vietnam. This has become an important livelihood in Sapa. Presently, there is more than a hundred cold fishery farms.

Smart solution in transportation due to fast urbanization is also a potential area that Finnish companies can cooperate because Finland has expertise in solutions it can offer to city planners and developers.

Another potential area is exports of Finnish consumer goods to Vietnam including both luxury end products for the rich Vietnamese, as well as products for the middle class. Returning Vietnam every year or two years, I have seen this trend that Vietnamese people are willing to pay for expensive imported products because they don’t believe in quality of domestic products.

By Hang Do

Source: BiziVietnam