German businesses in Asia: 'Basic conditions must be right'

DW: This year's Asia-Pacific Conference is taking place in Vietnam. Why here?

Hubert Lienhard: We were very keen for the conference to take place in one oft he ASEAN countries, and Vietnam is one of the region's strongly growing and ambitious countries.

Are you optimisitc about the economic situation in South East Asia?

600 million people live here, by 2020 that is set to rise to 700 million - in that sense it is the third largest economic area in Asia, although at the same time one has to say: First of all it needs to grow together. By the end of next year there should be a common economic area within the ASEAN Economic Community. Of course, like in the European Union, it will take a few years until it really grows together, but the basis is there, so in that sense, for businesses thinking in the medium and long term, this is a good place to be.

"Economic growth" always sounds very positive, but here in Ho Chi Minh City, as soon as you step outside you notice a lack of infrastructure and the sort of problems that growth can result in. What do you think about this?

Vietnam has a gross national product of around 150 billion euros. That is around the same as the GDP of the city of Stuttgart, to put it into perspective. Vietnam has a population of 90 million, and of course, you quickly notice the crowded streets and traffic jams here. On the other hand that is also a sign that many people have a steady income, they can afford a motorbike or for some, even a car, so in that sense, poverty is reducing. We saw this happening in China and Korea in the 1980s. These countries have to go in the same direction. Of course the governments can play a part in ensuring that the basic conditions are right: that it is easy to start up a business, that investments in infrastructure run smoothly and according to regulations, that corruption is tackled which is a problem in these countries. That would accelerate economic growth and also make life easier for people.

Are German companies well positioned in the region?

In ASEAN we do not yet have the penetration of German companies as we do in China. Around 3,000 German companies are represented in China, in Vietnam for example it is only 300. So there is significant potential for growth here, which is why we are really pushing for the right basic conditions. How quickly can I start a business? Is there a visa for foreign employees? These are the kind of things that need to be worked on. Sigmar Gabriel, Federal Minister for Economic Affairs and Energy, has already raised these issues twice in his speeches here. Competition between governments for the best basic conditions could also be something which could help us, because a medium-sized business cannot just go to every individual ASEAN country. In the Philippines for instance we saw the new president really adding a new momentum to tackling these issues. The economy normally reacts very quickly to this, so businesses really prefer to go to a country where the basic conditions are good.

Hubert Lienhard is the chairman of the Asia-Pacific Committee of German Business (APA), an organization which promotes cooperation in business between Asia and Germany.