Vietnam has emerged as a potential investment market for foreign investors looking to venture into Asia. The country is located on the South China Sea, and it is known for its breathtaking beaches, sceneries, and numerous business opportunities. Its economy has grown in leaps and bounds partially due to its closeness to China and the favorable business environment. This has seen multinationals like Samsung invest in the economy. Below is a comprehensive list of why one should not hesitate to invest in Vietnam.
According to statistics from the World Bank, the Vietnamese economy has been one of the fastest-growing economies the world over. The economy has been growing at an average rate of 6.46% since the turn of the century, and it’s expected to maintain that rate for the foreseeable future. This has seen Vietnam become the third biggest economy in Southeast Asia. The economy is also anticipated to take a structural shift from farming to the industrial sector, thus creating more business opportunities.
Favorable Government Policies
The Vietnamese government has been on a roll, offering incentives to multinational companies investing in the country. For example, companies investing in high-tech or healthcare are enjoying tax exemptions, such as corporate tax, import duty, and land use tax. Also, the government implemented a Decree 60/2015, allowing companies to make several significant investments in different areas. The government uses both incentives and revision of regulations to attract more foreign investors. This has been proved to be a masterstroke as the country recorded $24.4 billion in foreign investments.
The Vietnamese population stands at 95 million people, making it the fourteenth largest country by population. The population is expected to grow to a staggering 105 million people by 2030. A growing population represents a ready market for manufactured goods. Also, with the cost of doing business going up in China, Vietnam’s population is offering an alternative for cheap and available labor. The government has matched population growth by investing in education, which translates into adequate skills.
The country has experienced an infrastructure boom in recent years. This has seen the government invest in new ports, highways, and hospitals, while also upgrading the old ones. This has resulted in more effortless movement within the country. The government has contracted international companies to assist in improving and building new infrastructure. For example, the government is improving the railway line that connects Hanoi and Ho Chi Minh cities, and it is expected to invest $921 million to improve the state of the industrial parks.
The country’s strategic location gives it an upper hand compared to other Southeast Asia economies. Its proximity to most markets in Asia, and specifically, China, makes it an ideal location for foreign investors. Through its massive coastline, the country is close to major shipping routes, thus providing better conditions of trading. Also, the two biggest cities are strategically positioned with Hanoi in the North and Ho Chi Minh in the South, further enhancing the trading conditions.
The country is involved in various trade agreements, mostly with its Asian counterparts. For example, it is a significant player in the Association of Southasian Nations (ASEAN), which aims at lowering intra-regional tariffs. Also, its relationship with EU members and China has improved. This has allowed the country to seal more free trade agreements, hence widening its market. For example, the country is expecting the ratification of the EU-Vietnam Free Trade Agreement soon.
Just like investing in most other countries, investing in Vietnam will carry its share of risks. However, despite the challenges, the country has managed to present itself as an ideal place for foreign investors. For information on how to invest in Vietnam, feel free to contact consultants for assistance.