Business Opportunities in Vietnam: Prospects

For nearly four decades (1986 – 2022), business opportunities in Vietnam have been considered a successful model in attracting foreign direct investment (FDI) thanks to its attractive investment environment, stable political foundation, and potential for growth. economic growth is quite high. In 2022, foreign investors will continue to pour capital strongly into Vietnam, still viewing Vietnam as an attractive destination with geographical advantages, institutions, and an increasingly improved investment environment.

Prospects of Vietnam’s FDI Attraction in business opportunities in Vietnam

The Law on Investment in Vietnam has been revised mainly to make it easier for investors by reducing administrative procedures and facilitating foreign direct investment. Reducing regulatory barriers to business is expected to promote foreign investment attraction.

Many technology corporations have planned to leave China to avoid being hurt by the US-China trade war. Multinational companies such as Samsung and LG have invested in new production lines in Vietnam instead of China. Google and Microsoft are moving phone and laptop production lines from China to Vietnam due to the impact of the Covid-19 epidemic. Nintendo has also moved part of its Switch Lite game console production to Vietnam.

Vietnam is also highly appreciated by the foreign investor community and international organizations for its investment business environment. New-generation free trade agreements such as CPTPP, EVFTA, and RCEP have come into effect, so the prospect of attracting FDI in Vietnam is very bright. Investment from Japan, Korea, Singapore, and Asia is still increasing, while investment from the US, Germany, France, the UK, and some other European countries in modern technology, future technology, education, and training. Creation, research, and development with many large projects also increased.

Vietnam ranks 25th out of 60 countries attracting the most attractive FDI in the world3. With 25th place, Vietnam has surpassed other countries in Southeast Asia that are very strong in attracting FDI such as Indonesia, the Philippines, and Thailand thanks to its approach to reducing total costs for FDI, thanks to the size of the domestic market. large and attractive spending power. Vietnam topped the list, with 42.3% out of 122 Japanese businesses selected. Following Vietnam are Thailand (20.6%), the Philippines (18.6%), and Indonesia (16.5%)4. Japanese businesses relocate from China not only because of the trade war but also to “evade” the increasing input costs in the Chinese market. The assessment of international organizations, including the World Bank (WB), and Asian Development Bank (ADB) affirmed that foreign investment in Vietnam will continue to accelerate and the FDI sector will continue to grow. continues to act as a driving force for Vietnam’s economic growth. The competitive advantage in attracting FDI of Vietnam in Southeast Asia is outstanding, showing:

The economic – political – social situation is stable

Political-social stability, administrative procedures gradually opening up, inspection, and unofficial costs have been reduced are factors that are always attractive to foreign investors. Vietnam is known as one of the most dynamic economies. These factors of Vietnam are continuously appreciated by FDI enterprises, with a rate of over 90%. The socio-political stability has created strong trust with domestic and foreign investors, making investors willing to mobilize capital to increase investment and expand production. The infrastructure of industrial parks, export processing zones, and economic zones continue to be improved and upgraded. Moreover, factors such as a potential market with a population of nearly 100 million people, rising per capita income, and orientation to attract foreign investment are clearly announced, and infrastructure continues to be developed. , land resources, and labor resources will also be strengths for Vietnam to attract foreign investment. The early successful control of the Covid-19 epidemic gives Vietnam an advantage over other countries.

The geographical location is favorable for investment activities in business opportunities in Vietnam

Vietnam has a favorable geographical position for trade with the world, being both a regional connection center and a gateway to penetrate economies in the western region of the Indochinese Peninsula. Compared with India and Indonesia – countries that directly compete with Vietnam in attracting FDI in Southeast Asia, Vietnam has more advantages. Vietnam is closest to China, with easy transportation distance. Moreover, Vietnam has become a production base for smartphones and tablets of Samsung. Besides, Vietnam has the ASEAN community – a market with about 650 million people, a market size larger than the EU, and a GDP of nearly 4 trillion USD. Vietnam’s political regime is very supportive of businesses, there are many incentives for large FDI projects with preferential regulations that change on a case-by-case basis. Along with that, the advantage of human resources and a domestic market of nearly 100 million people, with a rapidly growing middle class, creating a market with relatively large purchasing power is attracting the attention of foreign investors. outside.

Join many free trade agreements in business opportunities in Vietnam

Vietnam’s participation in a series of free trade agreements is creating an important platform for foreign investment to flow into Vietnam. Among them, there are new-generation free trade agreements, such as EVFTA, CPTPP, and RCEP. New-generation free trade agreements are creating a stronger second wave of integration for Vietnam, helping Vietnam access the free market of 55 countries, including 15 from the G20 group… This wave is expected to strongly promote export activities, as well as increase the attraction of FDI inflows into Vietnam. In particular, the EU-Vietnam Investment Protection Agreement (EVIPA) offers an opportunity to attract FDI inflows from Europe, as well as from countries that want to benefit from tax incentives.

The Free Trade Agreement between Vietnam and the United Kingdom of Great Britain and Northern Ireland (UKVFTA) that took effect on December 12, 2020, is forecast to not only promote exports to the UK but also attract FDI inflows. Vietnam’s advantageous industries. Obviously, participating in many new-generation free trade agreements, Vietnam has a great opportunity to integrate, participate more deeply in the world production network, and select quality FDI projects to move forward. higher up the global value chains.

The rental price of an investment office is reasonable

Vietnam has a large population, a young and highly mobile workforce, and is in the golden population structure period (2007-2039) with more than 60% of the population of working age. Labor costs are lower and the average rental price of industrial parks is also lower. Occupancy rates and rents in industrial parks in Vietnam are quite attractive with average rents 45 – 50% lower than those of Thailand, Malaysia, and Indonesia. According to Mr. Troy Griffths, Deputy Director of Savills Vietnam, compared to the region, office rents in Vietnam are quite modest. Besides, the labor cost of Vietnam is also lower than that of Thailand, Malaysia, and Indonesia. Low cost of doing business, a booming middle class, and flexibility in changing regulations have helped Vietnam to rank 69 out of 190 countries worldwide in the “Ease of Doing Business Rankings.” of the World Bank, above the average for the Asia-Pacific region and above Southeast Asian competitors such as Indonesia, the Philippines, and Laos.

Stable currency with a suitable electricity price

The Vietnamese currency is the most stable in the region. Favorable macro factors such as a high level of foreign exchange reserves, controlled inflation, and reasonable management by the State Bank of Vietnam help the VND maintain its value and become more stable compared to the fluctuation of the Rupiah (Indonesia). ) and other currencies in Southeast Asia. Vietnam’s electricity price compared to other countries in the region is also cheaper, only 80% of Indonesia’s electricity price; about 42.1% compared to the electricity price of the Philippines and 66.7% of the electricity price of Cambodia6. These favorable factors make Vietnam’s prospects for attracting FDI bright.

You can read the previous article here: Business Opportunities in Vietnam: FDI Solutions

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