Why you should do business in Vietnam
1 Strategic location
Located in the center of ASEAN, a most develop and dynamic area in the world.
With over 3000 km length of coastline and direct access to the South China Sea and proximity to the world’s main shipping routes give perfect conditions for erecting and expanding deep-water harbor and international trading.
Hanoi and Ho Chi Minh City are two main cities in Vietnam, two the most important cultural-political-economical centre of Vietnam. Hanoi, the capital, is located in the North and has a significant number of advantages for trading. Ho Chi Minh City, the largest by population, is located in the South-eastern region and is the Pearl of the Orient of Vietnam.
Tropical monsoon climate with the different reasons and clear- different between two region North-South offers beneficial features for agricultural production, becoming a focal agriculture, forestry and fisheries supplier for region and worldwide.
2 Doing business is getting easier every year
Attracting foreign direct investment (FDI) has always been a key part of Vietnam’s external economic affairs. Vietnam already has a significant number of comparative advantages and a strong investment climate.
The Vietnamese government is continuing to revitalize its business and investment climate. One way it is doing this is its work on three “strategic breakthroughs”: putting in place market economy institutions and a legal framework; building an advanced and integrated infrastructure, particularly transport; and developing a quality workforce. These should all be completed by 2020.
According to the World Bank’s Doing Business 2018 report, Vietnam moved up 14 places from last year and ranked 68th overall in the world for the ease of doing business. While, according to the World Economic Forum’s (WEF) Global Competitiveness Report 2017-2018, Vietnam ranked 55th amongst 137 nations, increasing 5 ranks compared to previous year.
Vietnam has made paying taxes easier as facilitating the administrative procedures of comply with tax obligations. Exporting and importing across border are easier as applying an electronic customs clearance system. The investors need a shorter of time to start a business as procedures for obtaining a license and a registered certificate are simplified.
The reforms that Vietnam has been pursuing are helping create a transparent and vibrant economic, and attractive FDI into Vietnam.
3 Trade agreements
Vietnam has signed a significant number of bilateral and multilateral free-trade agreements (FTA) such as Vietnam – Japan economic Partnership Agreement, FTA Việt Nam – Chile, ASEAN Free Trade Area, FTA ASEAN- China, FTA ASEAN – Korean, ASEAN- India Free Trade Area, ASEAN- Australia- New Zealand Free Trade Area, The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CTTPP)….
It affirms Vietnam’s role and position becoming more important in the global economic as well as commitments to international integration and compliance.
4 Stable economic growth
After the economic reforms launched in 1986, Vietnam has gain considerable achievements. The GDP growth is highly high comparing to the average figures of region and worldwide. Despite continuously facing up to instabilities and challenges as international economic has suffered from depression for 10 years recently, the GDP rate in Vietnam has experienced a stable growth, averaging over 6% per year.
Vietnamese Government confidently sets a target becoming a high-income economy by 2035 and the average growth in following period increases to 7%.
Vietnam has successfully controlled the stabilization of other macroeconomic indicators. The inflation rates in recent year has been managed at less than 5%. Foreign exchanged rates have always maintained at a stable level. Credit growth has been closely regulated.
High and stable growth over years is always attracting investors and enabling Vietnam to enhance its competitive advantage compared to other countries in the region.
5 Openness to foreign investment
Vietnam has always been welcoming to FDI and encourages it by constantly renewing regulations and providing FDI incentives.
The Vietnam Government provides attractive incentives for both foreign investors with preferences in land rental, import-export duty, corporate income tax. Depending on the operation fields of company’s operation, foreign investor shall enjoy different level of investment incentives.
In July 2015, Vietnam also implemented Decree 60/2015 which allows foreign investors to invest in more areas than before.
6 Vietnam is the new China?
When the labor market tightens and labor wage continues to increase, a significant number of manufacturing in China have been moving to Vietnam. Vietnam has similar demographic to those that China experienced, with a burgeoning middle class and is undergoing the leap to become a high-income economic in next decades. Beside the low labor cost, manufacturing in Vietnam are various, from simple to complicate, from the labor intensive to the highly automated. Therefore, Vietnam could become the hotspot of manufacturing rather than China.
7 Potential market size
Given 60% of popular is of labor age, 70% of popular is under 30 -year olds, according to estimation, Vietnam’s market size would be 35 billion middle class consumers in 2020. It is the increase in middle class consumers that contributes to promote the economic, especially retail market and consumer sector as they are large clients with a high standard and needs for improve their life’s quality. They are main motivation in turning Vietnam’s domestic consumption market to one of the most attractive markets.
Demography and remuneration are boosting quickly, while the proportion of argriculture is declining gradually, and demand of service sectors is increasing. Vietnam is one of top emerging markets, out of the BRICS, attracting foreign investors.
8 Young demographics and competitive labor costs
Unlike China or Thailand where the population is ageing rapidly, the demographics of Vietnam is young. According to Worldometers, the median age in Vietnam is 30 years, contrast to 37 years in China, and 38 years in ThaiLand.
Vietnam has a large base of labor force, with roughly 1 million new youths entering the labor market every year. It is a dynamic, potential and knowledgeable labor force that meets the demand of knowledge-based economy, especially Industry 4.0 explosion.
The labor costs in Vietnam are lower than those in the third-world countries. It is this competitive advantage that absorb foreign investment in Vietnam.
ASEAN Minimum Wages
The quality of Vietnamese workers has been improved and the rate of trained workers increased from 30% to 50% within ten years, meeting certain requirements of the regional labour market. The technical workforce has step by step mastered new scientific technology.
9 Relatively low setup costs
In Vietnam, there is no requirement of the minimum charter capital for most business lines, however some of conditional business sectors are required to qualify the minimum legal capital to start a business. It is notable that investors must fully paid in the amount of capital committed within 90 days from receiving the Enterprise registration certificate.