Should You Be Investing in Vietnam?

Vietnam carries numerous traits of a tempting investment haven with its strong organic growth, surging middle population, and attractive labour costs. It is even more apparent that there will be a tremendous trade expansion after the signing of the EU Free Trade Agreement and the Trans Pacific Partnership – ready to fuel Vietnam’s economic growth in a big way.

Furthermore, this dynamic growth has brought Vietnam the largest foreign direct investment inflows compared to other countries, making Vietnam indisputably attractive. So should you be investing in Vietnam? We would say you should and this article tells you why by shedding some light on the Vietnamese market.

Market and Economic Background of Vietnam

When we talk about emerging markets, Vietnam has become one of the shiniest stars in the last couple of years, taking the lead among ASEAN countries. Many businesses in Vietnam have been launched and some have already joined the pool of investors and gained handsome profits.

The population of Vietnam is over 95 million with a high percentage (about 62%, the highest in ASEAN) of young working adults of an average of 35 years of age. More than half of the population have been living in the cities with exposure to information and technology from the western hemisphere. With this demographic structure and young population, Vietnam’s economy is forecast to grow further and enjoy huge momentum over the long term.

According to Bloomberg Consensus, the current GDP growth of Vietnam (about 6.8%) will remain until 2020 and is considered one of the best performances among the emerging markets in ASEAN. Service and industrial sectors are regarded as the major contributors to the country’s GDP and GDP per capita growth.

Read also Becoming Second China? 7 Reasons Why You Should Start Your Business in Vietnam

Reasons You Should Invest in Vietnam

1. Vietnam is in a Strategic Location

With a strategic location at the center of ASEAN, Vietnam is endowed with all the convenience in terms of resources and logistics. The country’s long coastline, its position facing the South China Sea and its world’s most important shipping routes accounting for at least 40% of global trade, all make up for its strategic importance for trading.

2. Low Costs

Many foreign companies have recently switched their businesses, especially manufacturing, to Vietnam. This has been driven by many factors, particularly the wage rates increase in China, making Vietnam’s labor costs much lower in comparison.

As a result, companies from China, Japan, South Korea, the United States and other European countries are now establishing better relations with Vietnam and setting up their manufacturing hubs in the country.

3. Trade Agreements

This is definitely the best time to invest in Vietnam with the realisation of several trade agreements in just a few years. Vietnam is now open its door to global economy and has continuously signed trade agreements to make the Vietnamese market even more liberal and profitable.

Some of the agreements and memberships that Vietnam is currently part of are listed below:

• Free Trade Agreement with the European Union (EUFTA)
• A member of ASEAN and ASEAN Free Trade Area (AFTA)
• Bilateral Trade Agreement with the United States (BTA)
• A member of the World Trade Organisation (WTO)

4. Decreased Red Tape and Bureaucracy

Vietnam used to be a place that is difficult for investors to participate and set up a business. However, with the government’s efforts and policy changes to attract foreign investments and boost the country’s developments, most of the business procedures for compliance have been streamlined.

For example, many procedures are made paperless through digitalisation, and the processing time for company registration has been significantly reduced by 50%.

Further reading Doing Business in Vietnam: What are the Challenges

 

How Cekindo Can Help

There is no doubt that now is the best time to invest in Vietnam. Seize the opportunity and enjoy a successful business in the country. If you require detailed information on the Vietnamese market, we can provide you with it. Furthermore, Cekindo can also assist you with business incorporation in Vietnam. Talk to us now by filling in the form below.