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Reasons on why should invest in Vietnam

Trang chủ | News (22/06/2021)

Vietnam is the third largest market in Southeast Asia and one of the fastest-growing economies in the world. Low costs and regulations that encourage foreign investment are only some of the key elements that attract foreign entrepreneurs

Having made rapid development, the country’s economy is expected to overtake many Southeast Asian countries in the years to come. When it comes to investing in Vietnam, from the early 90s up until now, Vietnam has brought in a strong inflow of foreign investments, with average GDP surpassing 7% each year.

Apart from the country’s beautiful sceneries and amazing beaches, what draw in all the interest of foreign investments are the numerous business opportunities, abundant resources, inexpensive workforce, strategic location to China and favourable business environment and some of the other reasons are as below:

Doing business is getting easier every year

Vietnam has made numerous amendments to their regulations to make investing in Vietnam more transparent.

In terms of ease of doing business, Vietnam ranked 82 out of 190 countries in 2016. Compared to the previous year, the ranking improved by 9 positions and it was predicted that it would rank at the position of 60 till 2020, but due to COVID19 many countries want to protect their local business, so it might not be achieved this year.

Openness to foreign investment

Geographical advantages and a growing economy are not the only attractive features for investors. Vietnam has always been welcoming to foreign direct investment (FDI) and encourages it by constantly renewing regulations and providing FDI incentives.

The government of Vietnam offers several incentives to foreign investors who invest in certain geographical areas or sectors of special interest. For example, in high-tech or healthcare businesses. These tax benefits include:

  • Lower corporate income tax rate or exemption from the tax
  • Exemption from import duty, e.g on raw materials
  • Reduction of or exemption from land rental or land use tax

Due to these benefits many global brands like Samsung, Nestle, and LG have made huge investments at various locations in Vietnam.

Trade agreements

After being included as an WTO member Vietnam has opened its market to the global economy by having numerous trade agreements to make the market more liberal.
Some of the memberships and agreements:
● Member of ASEAN and ASEAN Free Trade Area (AFTA)
● Member of World Trade Organisation (WTO)
● Bilateral Trade Agreement (BTA) with the US
● Free Trade Agreement with the European Union (comes into effect in 2018)
All these treaties show that Vietnam is eager to promote the country’s economic growth and will continue its commitment towards trading with other countries.

Stable GDP growth

As Vietnam is an socialist country and now moving towards capitalism, it has had a very stable government over the last few decades, which has led to Vietnam’s economic growth and one of the fastest in the world. This rapid development started due to economic reforms launched in 1986 and the rise has been continuous ever since.
According to the World Bank, the GDP rate in Vietnam has experienced a stable growth, averaging 6.46 % a year since 2000.

Strategic location

Located in the center of ASEAN, Vietnam has a strategic location. It is close to other major markets in Asia, the most notable neighbor being China.
Its long coastline, direct access to the South China Sea and proximity to the world’s main shipping routes give perfect conditions for trading.

Vietnam is the next China?

Rising labor costs in China increase the prices of products as well, giving Vietnam a good opportunity to become the next hub for producing labor-intensive goods. Industries that used to flourish in China are now moving to Vietnam.

Growing population

With over 95 million residents, Vietnam ranks as the 14th largest population in the world. By 2030, the population will grow to 105 million, as forecasted by Worldometers.
Together with a growing population, the middle class of Vietnam is increasing faster than any other Southeast Asian nation. Steadily increasing economy means more income which, in turn, will result in a growing middle class giving them more purchasing power for global brands as well as beneficial to product/service offered by FDI companies

Young demographics

The median age in Vietnam is 30.8 year which includes 60% under the age of 35.
The workforce is young and large and shows no sign of decrease. In addition, the country also invests more money in education than other developing countries. Thus, besides being vigorous, the labor force in Vietnam is skilled as well.

Relatively low setup costs

In contrast to many other countries, there are no minimum capital requirements for most business lines in Vietnam. In fact, setting a high capital for registering a company in Vietnam is one of the commonly assumed mistakes by foreign investors.
Few things to note before set-up a business is the amount of capital stated at the time of registration should be paid within 90 days of the date of registration and need to prove that you have enough funds to cover all the planned expenses.

Competitive labor costs

Despite the yearly increase of minimum wage, it is still comparatively half to that of China. That is why many manufacturing companies are now moving out of China and their first preference is Vietnam.

Vietnamese market size is much bigger than some of the developed European countries
There are more people living in Vietnam than in most of the large countries in Europe.

HOW GPO CAN ASSIST
We at GPO can assist you by hiring and managing an freelancer market researcher and if everything goes as per your expectations we can introduce an business legal partner for getting your business registered in Vietnam and then offer our core service of been your HR business partner in Managing your daily HR activities, as we are an HR business consultancy firm in Vietnam. So, please do share your contact details with us by clicking on this link http://hroutsourcing.gpo.vn/


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