Why invest in Vietnam?
Is the country worth the hype?
In recent years, Vietnam is step-by-step earning its title as one of the best markets for growth in Southeast Asia – the buzzing business hub of the world. In 2019, the country was ranked 8th among the 29 best economies to invest in by World Bank, and here are the reasons why:
1. Young and fast-growing market with heightening purchasing power:
In recent years, Vietnam is transforming at a rapid pace. From 2005 to 2016, Vietnam’s GDP per capita tripled from more than $600 per person to almost $2,185, empowering its consumers with significantly more purchasing power. Vietnam has one of the fastest-growing middle-class in the region; the upper-middle income class is predicted to grow from less than 1% in 2011 to almost 10% in 2030.
In addition, demand for consulting services into IT, HR and business development has gone up by 40% in the last few years. We can say that Vietnam is still in its growing phase within the product life cycle, and the market is open for business for both start-ups and established entities.
Although many people still associate the word “Vietnam” was with images of war, destruction and poverty. It is time to change that perception. Vietnam now emerges as a haven for investment. The political situation in many countries, such as Thailand, Indonesia, China, Hong Kong, has become complicated and uncertain, causing concerns among investors. Foreign investors thus consider moving their capitals and resources to Vietnam, to utilize its social stability, steady economic growth, and increasingly advantageous conditions for doing business. A recent example, many companies are moving their factories out of China to avoid dire consequences from the U.S. – China trade war, making Vietnam into a promising destination. The government’s success in controlling COVID-19 in Vietnam also demonstrates its capability to communicate with the publics to call for their cooperation.
3. Openness for trade
The Vietnamese government has put continuous efforts to open and integrate its local economy into the global economy. Besides being a member of the World Trade Organization (WTO), Vietnam has also participated in many international cooperative agreements, including various free trade agreements (FTA) with a number of regional and global partners. Most recently, Vietnam ratified for The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2018, opening up new opportunities for free trade within the members.
4. Topnotch talent and modern infrastructure
Vietnam currently has an ideal age structure, with more than 50% of the population currently in the working age. More than one-third of the total population occupies the urban areas. The average labor productivity for Vietnamese workers continues to increase over the years, narrowing the gap between the country’s labor productivity and the top performers’ in the region. The labor force offers a winning combination of the abundance of low-cost general labors and the wide availability of highly competent talented individuals, who master the knowledge of Western/Asian business culture and are eager to join the global force.
Vietnam is also improving its infrastructure to provide the best condition for foreign ventures to invest in the country. By March 2020, Vietnam has around 355 industrial parks across all the cities and provinces, and 03 hi-tech parks in Hanoi, Ho Chi Minh City and Danang City. When investing in these industrial zones or export processing zones, businesses can benefit from various incentives policy, such as lower tax rates and other investment supporting services.
In 2020, global citizens are shocked by the news that the high-end Samsung Note20 products are made in Vietnam. Despite the outbreak, Samsung said that its workhorse factories in Vietnam are fully operational.
Vietnam is also famous for having abundant natural resources, including raw oil, gas, coal, and various mineral resources. It enjoys increased attention from international exploration companies, particularly in the oil and gas sector. The country is also bestowed with other natural wonders and favorable weather patterns to exploit significant hydropower, wind power and solar power potentials, marine resources, tropical forest, and agricultural potential. These beneficial natural resources act as stepping stones for economic development.
6. Ideal position to do international business:
Lying in the heart of Indochina, Vietnam is in a favorable location to reach China, Malaysia, Thailand, Philippines, Hong Kong, Taiwan, Japan, South Korea, and India within a few-hour flight. Furthermore, the long coastal line harbors many world-class deep-water ports. The convenience in transport has made Vietnam a busy transit hub for cargos and passengers.
As the frontier market in Southeast Asia, Vietnam has been growing strongly and steadily in recent years as one of the world’s most attractive destinations for foreign investors. With great potential in both natural resources and humanpower displayed through these 6 reasons, Vietnam is gradually positioning itself as the promise land for investors in the Southeast Asia region. Well-aware of the nation’s immense potential, EloQ Communications wishes to be the middleman of choice for partners to approach their new markets, both foreign and local. Whether it is getting familiarized with the country’s market particularities, or expanding the business to another city/area, EloQ is happy to provide well-rounded services that make sure customers’ venture into the Vietnam market is a worthwhile and fruitful investment.
Cross-posted from EloQ’s blog.