Investing in Vietnam is more attractive. From its large, expanding consumer market to a vibrant manufacturing landscape supported by a young and abundant workforce, Vietnam offers great business opportunities. This article provides you an insight into the foreign investment environment in Vietnam, so you can consider whether Vietnam is the right place for your business expansion.

Top 6 Reasons to Invest in Vietnam

Vietnam might offer foreign investors a plethora of strategic advantages to benefit from:

#1. Fast growing economy

A recent Asian Development Outlook Report by the Asian Development Bank forecasts that Vietnam’s GDP will grow by 6,5% in 2023, despite global uncertainties such as economic recession, tightening of monetary policy of advanced economies, and spillover effects from recent armed conflicts.

According to the PWC’s World In 2050 Report, Vietnam could be among the Top 20 economies in the world and the Top 10 in Asia by 2050. The average real GDP growth of the Country could reach 5.1% p.a. between 2016 and 2050.

Even as Vietnam has rapidly developed a strong, resilient, and sustainably growing economy, future economic forecasts predict even more accelerated growth due to a large amount of untapped potential, leaving massive opportunities for foreign development in the coming decade.

#2. The Vietnamese Government supports Foreign Direct Investment (FDI)

In an era of global instability, the political stability of Vietnam is a huge advantage that helps Vietnam to persevere and consistently implement long-term economic development policy.

The Vietnamese Government consistently considers “the FDI economic sector as one of the important driving forces for economic development, promoting international cooperation and participating in global value chains”. This view is further confirmed in the Document of the 13th Party Congress: “The FDI sector is an important part of Vietnam’s economy, playing a big role in attracting investment capital, modern technology and management methods, expanding export markets”.

The Vietnamese Government has committed to improving the attracting foreign investment policy; actively creating a favorable, open, competitive investment environment that abides by the high international standards set forth in the new generation of Free Trade Agreements.

Foreign investments are protected by the Vietnamese government through the mechanisms specified in its Investment Law such as:

• Guarantee of property ownership
• Guarantee of business investment activities
• Guarantee of the right to transfer assets of foreign investors going abroad
• Guarantee of investment in case of changing laws

In addition, eligible foreign investment projects can enjoy investment incentives including:

• Tax incentives
• Exemption from import tax on goods imported to create fixed assets; raw materials, supplies and components imported for production in accordance with the law on import and export tax;
• Exemption or reduction of land use levy, land rent, and land use tax.

#3. Vietnamese – based businesses offer huge benefits from many FTAs

As of 2023, Vietnam is leading the world in having the most Free Trade Agreements (FTA). Being a member of FTAs is an extremely important factor that continues to encourage investment capital to steadily flow into Vietnam. The main benefits of being a member of an FTAs are:

• They significantly reduced tariffs imposed on Vietnam’s imports and exports to major markets in the world such as the US, Europe, China
• They promote administrative reform
• They remove barriers to entering markets

#4. Competitive workforce

In 2023, the total Vietnam population is near 100 million. Vietnam has a growing educated workforce and is now in a period of “golden population structure” where 67,8% of the population are between the ages of 15 – 64. The labor force in Viet Nam is cost-competitive, educated and increasingly skilled. This offers greater value and serves as an ideal production base for companies thinking of shifting or diversifying out of larger economies.

#5. The World’s next hub of manufacturing and supply chains?

Further geopolitical tensions among major global powers could worsen supply disruptions. In its 2023 business climate report, the American Chamber of Commerce in China said 24% of surveyed members were considering or had started moving production capacity out of the country, a 10% rise over the year before.

A recent trend has emerged with large-scale multinational companies looking to diversify their supply chains into other regions around Southeast Asia, Vietnam being top of the list. Apple has moved 11 factories of Taiwanese enterprises in its supply chain to Vietnam. Other firms such as Foxconn, Luxshare, Pegatron, and Wistron are expanding their production facilities in Vietnam. Samsung built its largest research and development center in Southeast Asia (worth US$220 million) in Hanoi and plans to expand its existing factories in Vietnam.

As a result, Vietnam has risen to the challenge and has proven itself ready to assist foreign businesses seeking to establish new production facilities at a fraction of their previous manufacturing cost.

To prepare for new investment wave, the Vietnamese Government is actively in:

• Reviewing the industrial park land fund;
• Promoting a wide disbursement of public investment capital;
• Setting up a special government agent to welcome “eagles” to invest in Vietnam;
• Building action programs to train human resources to meet rising demand;
• Building an increasingly favorable legal framework with an open and transparent mechanism

#6. Expanding middle-class and consumer market

A research report by World Data Lab, UK recently indicated that Vietnam will have 23.2 million more middle-class residents by 2030. At the same time, Vietnam is set to improve significantly in rankings in the top 30 markets with the largest consumer class in the world. Income per capita was reported to be US$3,654 in 2023 and is estimated to grow to US$7,500 by 2030. Leverage the fastest-growing middle-class population amongst SEA economies, with opportunities for companies offering higher value-added products and services. (More positive than exploit).

Which Countries Invest Most in Vietnam?

According to the statistics in 2022, here are the top 5 countries that invest most in Vietnam based on capital investment size:

• Singapore: 6,46 billion USD
• South Korea: 4,88 billion USD
• Japan: 4,78 billion USD
• Mainland China: 2,52 billion USD
• Hong Kong: 2,22 billion USD

What are the Best Investment Opportunities in Vietnam?

Choosing which industry to invest in, of course, depends largely on the specific needs and capacity of the investor. However, understanding recent investment trends might help an investor utilize and leverage the best advantages Vietnam has to offer. In terms of investment capital size, the top 5 industries that attract foreign investment are currently:

• Manufacturing and Processing: 11,8 billion USD
• Electricity production and distribution: 5,5 billion USD
• Real Estate: 1,7 billion USD
• Wholesale and Retail Business, (aka Trading Companies): 750,6 million USD
• Warehouse and Transportation: 744,6 million USD

For small businesses, check out: 10 Business Opportunities in Vietnam for Foreigners

Where Should I Invest in Vietnam?

In order to make the right decision, you should begin by asking yourself the following questions:

• What type of business am I looking to conduct?
• What geographic location will offer me the most advantages?
• Will my business operations be in one city or multiple locations?

From a strategic perspective, it is wise for foreign investors to narrow their focus to large cities that offer convenient infrastructure and an educated workforce, which are most easily found in Ho Chi Minh City, Hanoi, and Bac Ninh.

If you are able to answer the preliminary questions above, we will begin to understand your specific goals and be able to help you navigate the best decision to achieve your desired result.

How to Invest in Vietnam

Any qualified foreign individual or company is allowed, protected, and encouraged to invest in Vietnam, which offers many diverse opportunities for international businesses eager to invest. Here are the 5 forms of foreign investment in Vietnam, according to Article 21 of the Law on Investment 2020:

• Setting up a new business (most popular choice), such as: establishing a representative office or opening a new company
• Acquiring existing businesses
• Implementation of investment projects
• Investment in the form of a Business Cooperation Contract (BCC)