July 18, 2023
Benefits of investment in Vietnam in 2023Investment in Vietnam is expected to provide many economic benefits moving forward. Therefore, the Vietnamese market has attracted interest fr om local and foreign investors. However, investors need to understand how to take advantage of the market in order to make appropriate decisions. Here are some benefits and potential fields that investors should keep in mind before investing in Vietnam.
As a powerfully developing country with great potential in many fields, Vietnam offers the potential for huge returns.
Benefits of investment in Vietnam
Potential business environmentVietnam is a market with nearly 100 million people (as of April 2023) and has one of the fastest economic growth rates in the world. According to the General Statistics Office, Vietnam’s GDP in 2022 was USD409bn, increasing 8.02% YoY. In 2023, the government targets Vietnam’s GDP growth at 5.8%-6.2%.
Due to the country’s rapid economic growth, investment in Vietnam is an attractive choice in the eyes of many investors. Consumer demand in Vietnam has been increasing, opening opportunities for investors to research and invest in consumption, tourism and information technology, among others.
Prime locationVietnam's strategic location in Southeast Asia provides several benefits for businesses and investors looking to expand their reach in the region. Here are some key points to consider:
- Gateway to ASEAN: As a member of the Association of Southeast Asian Nations (ASEAN), Vietnam is part of the access to a market of over 420 million consumers, according to data published by ASEAN. Therefore, Vietnam is an attractive location for businesses seeking to tap into the region's growing middle class and expanding consumer markets.
- Proximity to China: Vietnam borders China — the world's second-largest economy. This opens chances for bilateral commerce and investment, as well as access to China's massive supply chains and manufacturing networks.
- Access to key shipping lanes: Due to its extensive coastline and closeness to key shipping lanes in the South China Sea, Vietnam is an important regional trade and logistics hub. In recent years, the country's ports and airports have been modernized, enhancing connectivity and lowering transportation costs.
Infrastructure developmentThe Vietnamese government had made great efforts in promoting investment and development to improve the country’s infrastructure. Notably, the country’s 1,163-km highway system (as of 2022), three international airports and 34 seaports have been constructed. Also, industrial parks are planned to ensure convenient traffic flows and easy movement to arterial roads, saving time and costs for investors. These projects create opportunities for investment in Vietnam by foreign investors.
Vietnam has many high-quality highways, and 3000 km of highways is expected to be completed by 2025. Movement between provinces, cities and regions has become fast and convenient. Some highways connecting key areas are the Hanoi - Lang Son Highway, Noi Bai - Lao Cai Highway, Ho Chi Minh City - Noi Bai Highway and North - South Highway.
Vietnam has three main international airports and one planned international airport:
- Noi Bai International Airport
- Da Nang International Airport
- Tan Son Nhat International Airport
- Long Thanh International Airport (under construction)
Vietnam has very large and modern seaports in Vietnam, contributing to promoting logistics and warehousing development. The convenient and modern transportation system enables investors to save a lot of time and costs of investment in Vietnam.
Low investment costsInvestment in Vietnam requires low costs compared to other countries in the region and the world. Investment costs — including labor, land rent and operating costs — are cheaper than in other countries in the region.
Moreover, Vietnam is abundant in raw materials that can be used in industrial production, including coal mines, minerals, oil and a variety of agricultural products such as rice, pepper and coffee. Therefore, raw materials and fuel are directly available for production, which is more economical than using imported materials.
From the Total Workforce Index report, in 2022, the average labor cost in Vietnam was about USD275 per month, which is relatively low compared to other markets. Also, according to TMZ, a business transformation consulting firm in Asia Pacific, Vietnam is among the markets with the lowest operating cost between $79,280 to $209,087 per month. Hence, choosing Vietnam as an investment destination can optimize initial investment costs as well as operating costs and labor costs.
Favorable investment environment and continuous development
The Vietnamese government has introduced many new policies and laws to improve the country’s investment environment. In addition, Vietnamese authorities have always proactively supported investors coming to Vietnam by easing tax policies, exempting import duties on raw materials and reducing land rental fees, among others.
The government has utilized many tax incentives to attract investment in Vietnam.
Political and economic stabilityVietnam maintains a stable political environment and a developing economy. The country is ranked among the safest countries worldwide, which is supported by a fair but strict legal system wh ere violence is rare.
In addition, the Vietnamese government has always focused on protecting the interests of investors and providing them with supportive policies. Political and economic stability allows investors to feel secure in their investment as well as the long-term development of Vietnam.
II. Potential fields for investment in VietnamHere are some business lines for investment in Vietnam that are currently attracting significant interests from foreign investors:
FintechThe financial technology (fintech) industry is one of the fastest-growing sectors in Vietnam. According to the State Bank of Vietnam and Vietnam Fintech Market Report 2022, the number of Fintech companies in the country was more than 176 in 2022, increasing 13% compared to 156 companies in 2021. Additionally, the online economy in Vietnam was worth USD21bn in 2021, ranking 14th in Asia and 70th in the world, as reported in the Asia Digital Transformation Summit in 2022.
Currently, the fintech market in Vietnam is rapidly growing in strength and size. The rise of fintech enterprises makes it clear that this industry will continue to develop and become one of the fast-growing sectors in our economy.
TourismVietnam has many favorable conditions for the development of the tourism industry, including its favorable geographical location, cultural and landscape diversity, low travel costs, improved hotel and tourism capacity, and upgraded traffic infrastructure. Currently, the tourism industry in Vietnam has many opportunities for future development.
According to the Vietnam National Administration of Tourism, the number of international tourist arrivals in Vietnam was about 2.7 million in the first 3 months of 2023, which is 29.7 times higher than the same period last year. Also, the number of domestic tourists reached 27.5 million. These are impressive figures surpassing the 30% mark in the plan for the year. This shows that the potential of Vietnam tourism remains high after Covid-19.
The retail industry in Vietnam has many opportunities and great potential thanks to the country’s growing economy, large population and increasing incomes.
E-commerceE-commerce is a rapidly growing industry in Vietnam and has the potential to attract significant investment. Vietnam has a large and young population with increasing access to the internet, which presents a huge opportunity for e-commerce businesses.
Some potential fields for investment in the e-commerce industry in Vietnam include:
- Online marketplaces: The largest online marketplaces in Vietnam include Tiki, Shopee and Lazada. These platforms allow businesses to sell their products online, reaching a wider audience than traditional brick-and-mortar stores. Investing in these marketplaces can provide significant returns as they continue to grow in popularity.
- Payment systems: To acquire Vietnamese clients, companies must provide apps that make the payment as simple as possible. Companies such as Momo and ZaloPay offer digital wallet services, enabling users to make purchases online without the need for a credit card.
- Logistics & delivery: E-commerce relies heavily on efficient logistics & delivery systems, so there is a significant opportunity for investment in this field. Companies such as Giao Hang Nhanh and Viettel Post are leading the way in providing reliable and affordable logistics & delivery services to e-commerce businesses.
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