News

• 25 August, 2023
• Posted by: EuroCham Cambodia

This week, Senior Comms Officer Brian Badzmierowski interviewed Mr. Marko Walde, Chief Representative at AHK Vietnam - German Industry and Commerce in Vietnam for the last 12 years. Marko, an expert on trade realtions, also serves as the AHK representative for Cambodia, Laos, and Myanmar. Before moving to Vietnam, Marko worked to promote German business and trade in similar capacities in Poland and Romania. As two institutions with shared goals working in neighbouring countries, EuroCham and AHK plan on working together to increase domestic and international trade with the EU. We are excited to host Marko as a panelist on business connectivity at our upcoming ASEAN-Cambodia Business Summit!

Brian: We are very pleased you will join us for the ASEAN-Cambodia Business Summit this 28-29 September. One of the major themes is regional connectivity. On that topic, how can increased connectivity benefit economies in the Mekong region? 

Marko: One of the earliest initiatives of the Mekong region was to enhance physical connectivity among the countries to facilitate cooperation in trade, tourism, and investment. The countries recognized the economic benefits of the region and agreed to expand the road networks and border crossings that link them together. 

This led to the development of “economic corridors,” or geographic areas such as major highways where a variety of development projects can generate and maximize their benefits. This might include projects involving infrastructure, trade policy reforms and regulations, market development initiatives, and the improvement of cross border facilities and urban centers. 

Cross border transport sits at the heart of Greater Mekong Subregion cooperation. The improvement of logistics networks, such as railways, ports, roads, bridges, and the promotion of strategic routes has been centralized to design a truly interconnected subregion. 

These economic corridors will help both governments and private companies. In ASEAN, we are connected politically, and we have the ASEAN Economic Community, and we are seeing more business connectivity, but there is more potential there on the private side. 

Additionally, cross-border digital payments using QR codes promotes trade and allows the public to purchase goods and make payments in their own currency when traveling to neighboring countries. For example, ACLEDA Bank from Cambodia recently launched cross-border QR payments for the Lao People’s Democratic Republic after successfully launching them in Thailand and Vietnam. 

This all brings companies together. Hopefully one day, admin barriers at the borders, customs clearance processes, and technical certifications, will be smooth and allow a free flow of goods. This is essential for business development in Mekong region countries, and brings a lot of opportunities for companies

Cambodia is right in the middle of ASEAN and accelerating plans to develop these corridors presents a big opportunity for the country.

Brian: Trade has increased recently between the two nations, with Vietnam becoming Cambodia’s third largest trading partner, behind China and the US. Where do the Vietnamese public and private sectors see room for increased trade with Cambodia? 

Marko: Cambodia is a really important partner to Vietnam. We see this cooperation on a political level, as the Vietnamese ambassador to Cambodia is one of the top 5 positions in Vietnamese diplomatic service. There’s a very close shared history together. This collaboration is backed up by increased investment in Cambodia as well. 

According to the Vietnam Investment Promotion Center, Vietnam has so far invested over $2.9 billion in 200+ projects in Cambodia, focusing on agriculture, energy, telecommunications, banking and finance, agriculture processing, healthcare, trade, and services. At the same time the growth in Cambodia’s exports to Vietnam has been mainly driven by the larger shipments of farm produce thanks to increased harvests. 

Indeed, Cambodia is the most attractive destination to expand for companies looking at a Vietnam Plus One strategy. Cambodia has an advantageous geographical position, political stability, robust economic growth, a favorable investment climate, natural resources, a competitive labour market, expanding infrastructure development, and a supportive legal framework act. These factors all act as strong magnets to diversify investments and sourcing.

From the public sector, the border trade agreement and the bilateral trade promotion agreement are the bridge connecting the Vietnamese and Cambodian economies. These agreements are also expected to create more opportunities for business between Vietnam and Cambodia to develop regional value chains for export to ASEAN countries as well as global market. 

Brian: What has impressed you most about Vietnam and the region over the last decade, in terms of business development, and how do you see trade relations evolving in the future? 

Marko: I’ve been in Vietnam for 12 years, and before that I worked for 10 years in Eastern Europe -- Romania and Poland. When I was there, it was also a very dynamic place to be, there was a lot of opportunity for German companies. During my time in Poland, the country joined the European Union, which created a boom of economic activity. When I worked in Romania, they had recently joined the EU as well, which made it an exciting time to live and work there. It’s always my personal goal to serve in a country that’s dynamic and of course help create more benefits for German companies. I certainly found that here in Vietnam as well.

The city (Ho Chi Minh City) never sleeps and I think everybody feels a high sense of responsibility, The most important thing is to support your family, and provide education, and everyone works hard to achieve that. From my first day here I learned, the people are very reliable, and detail-oriented, and feel a sense of responsibility. There is a desire to constantly improve your skills and career, which creates a very nice business environment here. 

The speed of Vietnam's economy development has also been very impressive to witness. Vietnam achieved 6.09 % economic growth in the past decade (in 2013-2022), facilitated by effective government policy, drastic manufacturing output and rapid development of Human Resources. 

I expect more countries to start paying more attention to this region as a whole. All countries are looking for an Asia strategy, and while China is always considered, more countries are looking elsewhere as well. The shift in focus has already started happening. Traditionally, India was looked at as a major potential trading and outsourcing partner and they are important. But on the ground, it can be challenging to do business there. 

This year, German and Indian trade reached $30 billion. We hope for Vietnamese trade with Germany to hit $20 billion this year, so it’s catching up. But if you look at ASEAN, German trade with all ASEAN countries is $70 billion, more than double of the trade figures with India. Many people are still not aware of the potential of the region, however.

For example, the Mekong region has shown remarkable growth in manufacturing. To put things in perspective, the Mekong Delta’s economic scale is expected to expand by 2-2.5 times by 2030, according to a government resolution dated June 18, 2022, and it’s forecasted to reach an average growth 6.5% (YoY). 

Brian: We are following the green energy transition closely in the region, and Vietnam has been a leader in this regard. What is the situation on this topic currently in Vietnam?

Marko: This will soon be the most important factor for European and American companies looking to invest overseas. Vietnam has been an attractive destination for this type of investment over the past five years, but if it wants to continue to be that way, we need to scale up the transition and increase renewable energy capacity. It’s less about earning benefits like tax holidays, and more about a real need to have green energy power production.

This need is not wholly recognized yet by the government here, or in ASEAN. It’s not something that’s nice to have, it’s a must. We are facing some challenges on this front with a somewhat restrictive regulatory framework. Companies are already under pressure and trying to develop solutions. We have seen successes in energy efficiency, but the next step is rooftop solar. 

Currently, rooftop solar can be used for personal consumption, but not for commercial purposes. We also need power purchase agreements and bilateral agreements implemented. As it stands now, the grid may not be able to absorb all of the potential green energy being produced, so we need the proper infrastructure as well.

In Laos, 82 percent of renewable energy production is coming from hydropower, which I found very impressive, and we can learn from that. But first, we do need to change mindsets. Green energy is not just a noble thing to do that will sometimes win you benefits, it’s a major attraction for investors.

Brian: Why should people attend the ASEAN-Cambodia Business SUmmit in September? What do you hope is achieved? 

Marko: We believe this summit will help to boost business relations and economic ties in the Mekong Region by connecting business leaders and exploring ideas of integration, logistical connectivity, and economic cooperation. The participants will have a chance to meet regional leaders from public and private sectors, to identify obstacles and opportunities, to connect with potential sourcing partners and explore Trade and Investment Opportunities. 

Moreover, this event is an opportunity to explore the synergies between regional economic development, German interests, and the benefits of China plus one strategy. The Vietnam and Thailand plus one strategy is also a way of diversifying the supply chain and by participating in this event, you will learn about the potential markets, the challenges, and the best practices for doing business in Cambodia and this region. You will also network with experts, policymakers and business leaders who share your interest. This event is a valuable platform to enhance your knowledge, expand your network, and advance your collaboration.