Boosting Vietnam's production value chain

The Business Forum Magazine had an interview with Mr. Dennis Quennet, Director Sustainable Economic Development at GIZ Vietnam, on this matter.

In your view, what role does the cooperation between VCCI and international organizations like GIZ play in promoting Vietnam's economic integration up to this point?

As a German cooperation agency, GIZ always looks for cooperation with chambers representing businesses in the countries where we operate, including Vietnam.

Organisations like the VCCI serve as a focal point for business-related information to inform policy makers, for example how digital transformation or climate change impact businesses and how companies deal with the challenges they face during these processes. This is very important to GIZ because we are supporting the transformation of Vietnam’s economy both from the government side as well as from the private sector.

GIZ has a history of 30-year cooperation with Vietnam in economic and finance development. We have assisted Vietnam in transition from a centrally planned economy to a market economy. And now we continue to support the country in moving to a green economy, which is also a trend of the world.

The German and European markets are changing rapidly, with sustainability criteria becoming increasingly important. To "win" in these markets, there are two important issues Vietnam needs to pay attention to. First, businesses should look into their own supply chains to find potential for innovation or efficiency improvement. Second, businesses need to be informed about changes in market requirements and adapt their processes and business models, especially sustainability criteria. This is the area where GIZ is cooperating with VCCI to provide necessary information and advice to help businesses make decisions in entering overseas markets.

To help Vietnamese businesses improve their capacity and meet new sustainability standards, what initiatives is GIZ implementing?

In the pursuit of a green economy, the voice of the private sector is very important, because they are key actors of the economy. Currently, to provide information and support to Vietnamese businesses in matters related to the sustainability requirements of international partners, especially from German and European markets, GIZ and VCCI have established a Responsible Business Helpdesk. This initiative helps Vietnam better integrate into the world economy, and become well aligned with the rapidly changing and more demanding global supply chain.

Germany is home to a thriving small and medium-sized enterprise (SME) community, with many of them being "champions" in their respective fields, rather than large corporations. A lot of this experiences may be helpful for the development of Vietnam's SME and to continue to improve their competitiveness.

Enhancing competitiveness is an area cooperation between GIZ and VCCI, through  improving knowledge and capacities of Vietnamese SMEs in the age of digital and green economy, thereby contributing to Vietnam's economic integration and development.

Competition is e very helpful for an economy like Vietnam because it would bring diversity and innovation. If Vietnam wants to change its role in the global supply chain and integrate better in the regional and world markets, then competition will be a great driving force to create new and better businesses.

In the current context, human resource development is an area that requires more attention from Vietnamese companies. Digital transformation has a considerable impact on the way of working and skills of the workforce, in which digital skills and green skills will be in high demand. This is a reason why GIZ is supporting Vietnam in vocational education training across the country, because if you want to improve your business, you'll need to mobilize the right new workforce.

In addition to improving labor quality, labor productivity also needs to be further improved through education and training. The service sector will become an important part of Vietnam's economy, so it is necessary to prepare a good workforce to meet the market demand.

Achieving the goals of the circular economy is a challenging task. What recommendations do you have for Vietnam to improve the value chain towards sustainable development?

I think from a policy perspective, Vietnam has done quite a lot, with commitments to reach net zero emissions by 2050, or the 2030 agenda for the implementation of the sustainable development goals. The Vietnamese government has also issued a green growth strategy, with the support of GIZ from the very early beginning.

Regarding recommendations for Vietnam, I have three suggestions as follows:

Firstly, the position of Vietnamese companies in the global supply chain and in the international market needs to be affirmed through more products that create "made in Vietnam" reputation. To do so, a strong coordination between the govermentand private enterprises is needed to identify the sectors with the highest potential for enhancing the position of Vietnamese companies in the global supply chain. I believe this is an important next step that Vietnam will make to achieve your goal of becoming a high-income country by 2045 and to achieve Net Zero in 2050.

Secondly, it is necessary to clearly identify and communicate the opportunities, challenges and costs associated with economic transformation. It is also important to ensure that costs are distributed equitably, as the impact of economic transition on different segments of society and vulnerable groups will be different.

Thirdly, linkages between government and the private sector are essential in economic transformation. Experience from Germany shows that a strong connection between the state and the private sector makes an important foundation for change. This can be a decisive factor for the success and progress of transforming the economy into the digital age and responding to climate change.

Eventually, you cannot transform the economy without adjusting financial policies. That is the reason why GIZ supports Vietnam to develop policies for green and sustainable finance, establish a system of green taxonomy to help investors decide what projects to invest in, or shifting capital into priority areas such as response to climate change.