Vietnam is one of the fastest-growing economies in Southeast Asia, attracting the attention of foreign investors thanks to its highly potential business environment. Factors such as strategic location, competitive costs, and attractive incentive policies have made Vietnam an ideal destination for international businesses. Here are 9 reasons why Vietnam has become the top choice for foreign investors.
1. Strategic location
Vietnam's strategic location is a great advantage, situated in the heart of the ASEAN region and close to major markets like China. The long coastline, with direct access to the world's main shipping routes, creates favorable conditions for trade. Hanoi and Ho Chi Minh City, the two major economic centers of Vietnam, are not only important trade hubs but also top investment destinations.
2. The business environment is increasingly improving
The business environment in Vietnam is increasingly improving thanks to the government's continuous efforts to revise and clarify regulations. These changes have created more favorable conditions for both domestic and foreign businesses to operate.
According to the World Bank report, in 2016, Vietnam made significant progress by climbing 9 places in the ease of doing business index, reaching the 82nd position out of a total of 190 countries. With continuous improvement, Vietnam is forecasted to be among the top 60 countries with the best business environment by 2024, opening up many great opportunities for investors.
3. Trade agreement
These agreements not only reduce trade barriers but also create more favorable conditions for the export of goods from Vietnam, helping domestic and international businesses to effectively exploit market potential.
These agreements not only reduce trade barriers but also create more favorable conditions for the export of goods from Vietnam, helping domestic and international businesses to effectively exploit market potential.
4. Stable GDP growth
Vietnam's GDP growth has always been maintained at a stable level, with an average rate of 6.46% per year since 2000. This is one of the highest growth rates in the world, reflecting sustainable development and the strong potential of the economy.
The economic reforms implemented since 1986, also known as Đổi Mới, have laid the foundation for this continuous development. Thanks to this, the Vietnamese economy has not only grown steadily but has also become a reliable investment destination, attracting the interest of international investors.
5. The open-door policy attracts foreign investment to Vietnam
Not only does Vietnam have the advantage of geographical location and a developing economy, but it also stands out with an attractive investment environment thanks to its open policy towards foreign direct investment (FDI). The government always welcomes the presence of international investors and continuously improves regulations, while also offering many FDI incentives to create the most favorable conditions for businesses to develop.
For example, in high-tech or healthcare businesses. These tax benefits include:
- Reduce the corporate income tax rate or exempt from tax
- Exemption from import duties, for example, for raw materials
- Reduce, exempt land rental fees, land use taxes
6. New manufacturing center to replace China?
Rising labor costs in China are also driving up product prices, creating a good opportunity for Vietnam to become the next hub for labor-intensive manufacturing. Industries that once thrived in China are now shifting to Vietnam.
Vietnam is becoming a hotspot for manufacturing instead of China. Besides leading manufacturing sectors like textiles, Vietnam's manufacturing industry is also moving towards higher technology.
Source: Economist.com
7. A large population and a rapidly growing middle class
With a population of over 95 million, Vietnam ranks 14th in the world by population. According to Worldometers' forecast, by 2030, the population will increase to 105 million people.
Along with the population growth, Vietnam's middle class is increasing faster than any other Southeast Asian country. The population growth, along with the rapidly developing middle class, is creating a highly potential consumer market.
8. A young and high-quality workforce
Unlike China, where the population is aging rapidly, Vietnam has a youthful and dynamic demographic structure. According to data from Worldometers, the average age of the Vietnamese population is 30.8 years, significantly lower than China's 37.3 years. In addition, Nielsen estimates that 60% of the Vietnamese population is under 35 years old, creating a young, large, and increasingly growing workforce.
Vietnam also places special emphasis on investing in education, with spending on education higher than in many other developing countries. Thanks to this, not only is the Vietnamese workforce strong in numbers, but it also possesses high skills, meeting the demands of the modern economy and industries that require specialized expertise.
9. The cost of starting a company in Vietnam is relatively low
The cost of starting a company in Vietnam is quite low compared to many other countries, which is an important factor attracting investors. Most business sectors here do not require minimum capital, which helps reduce the financial burden for new enterprises. However, please note that the registered capital must be fully paid within 90 days from the date of company registration. With these advantages, Vietnam becomes an ideal destination for foreign businesses intending to invest in Vietnam.
If you are planning to expand your business in Vietnam, don't hesitate to contact us. Our experts will always be ready to support you from the initial steps to the long-term development of your business here.
