Many Danish enterprises are increasing their investment in Vietnam as the country has been cementing its position to become a key hub for technological manufacturing in the region and the world as a whole, author David Hutt wrote in his article ‘What's luring Danish companies to Vietnam?’
According to the article published on the website of German public international broadcaster Deutsche Welle (DW) last week, the number of Danish firms pouring capital into Vietnam is double the number of other Northern European companies.
“Denmark and Vietnam have had very close ties and last year we celebrated our 50th year of diplomatic relations, so Vietnam has always been a major investment destination for Danish companies," said Troels Jakobsen, head of commercial section at the Danish Embassy in Hanoi.
More and more Danish companies have diversified their supply chains and “Vietnam is very high on the shortlist for Danish companies that wish to expand in Asia”, Jakobsen added.
This year, Denmark has emerged as a big investor in Vietnam, mainly thanks to its toymaker LEGO Group’s commitment to invest US$1 billion in its first factory in the country, probably a carbon-neutral plant.
“We wanted a location that offered proximity to our major markets, enabling us to support customers and consumers with speed,” a spokesperson of the group told DW.
“We also needed a location where we can recruit a highly qualified workforce to produce the high-quality LEGO products we make.”
Reporting news about LEGO’s $1-billion investment in Vietnam, the Financial Times stated that Vietnam has positioned itself among international investors as a lower cost manufacturing alternative to China in recent years.
Vietnam has also become an important tech manufacturing hub. Teach giants, such as Apple and Samsung, have announced plans to expand their operations in the Southeast Asian country.
Last month, Apple unveiled a scheme to produce Apple Watch and MacBook in Vietnam. Meanwhile, Samsung has been the largest foreign investor in Vietnam for several years.
On September 8, the Bangkok Post reported that Thailand’s largest refinery Thai Oil Plc is keen on investing in oil refining, lube oil, and high-value petrochemical products in Vietnam, Indonesia, and India.
On the other hand, Vietnam is investing heavily in renewable energy to push for net-zero carbon emissions by 2050.
According to experts, Vietnam is attractive to foreign investors owing to its favorable location, which is close to China and other markets, and its improvement of infrastructure and connectivity.
Attractive thanks to clean energy development
Since the European Union-Vietnam Free Trade Agreement (EVFTA) came into force in August 2020, Europe’s trade and investment activities in Vietnam have boomed.
Last year, the two sides’ bilateral trade reached $63.6 billion, up 14.8 percent year on year.
According to DW, another attraction for Danish firms is Vietnam's drive toward renewable energy.
Lina Hansen, Danish State Secretary for Trade and Global Sustainability, said at the recent Vietnam-Denmark Business Forum that energy is a decisive factor for Danish enterprises’ investment in Vietnam.
Vietnam is currently among the world's 10 biggest producers of solar power, making up more than 11 percent of its electricity needs.
With a 3,260-kilometer coastline, Vietnam is also investing significantly in wind power.
Denmark’s largest energy firm Orsted has proposed developing a 3,900-megawatt offshore wind power project in the northern Vietnamese port city of Hai Phong at an estimated cost of $13.6 billion.
Last month, Orsted signed a memorandum of understanding with PTSC Merchanical & Construction Co. Ltd. to initiate their cooperation in offshore wind power projects in Vietnam.
“Vietnam has natural advantages for offshore wind,” said Sebastian Hald Buhl, country manager of Orsted in Vietnam.
“With over 3,000 kilometers of coastline, shallow water depths, and high consistent wind speeds, Vietnam offers excellent conditions to develop reliable and cost-competitive offshore wind projects."