Investment opportunities in Vietnam are diverse and offer significant potential for growth. Benefiting from the country’s favorable geographical location, Vietnam’s economy has rapidly developed, in turn attracting foreign investment. Many local and foreign investors are interested in investment opportunities in Vietnam thanks to the advantages of the country’s geographical location, potential for economic development and effective government.
Overview of Vietnam
Favorable geographical location
Vietnam is in the center of Southeast Asia and borders Laos, Cambodia and China, making it convenient for road, sea and air freight transportation. Moreover, Vietnam is adjacent to the East Sea and has 3,444 km of coastline. The country’s terrain offers great potential for developing marine-related sectors, including tourism and fishery, and is suitable for maritime transport and seaport construction. This favorable location offers many investment opportunities in Vietnam.
Young population and cheap labor costs
As of April 2023, Vietnam has a population of 100 million with a high proportion of young and enthusiastic people of working age. Vietnam thus has abundant human resources for economic development.
According to the Ministry of Planning and Investment (MPI), in 2022, the labor productivity of the whole economy was estimated at VND188.1mn per worker (equivalent to USD8,083 per worker), increasing 4.8% YoY. Notably, the labor quality improved compared to 2021 as the number of qualified workers in the country advanced.
Furthermore, labor costs in Vietnam are quite low compared to other countries in the region and the world. This is a very advantageous strength to attract foreign investors as they compare investment opportunities in Vietnam with other countries in the region and Asia.
According to the Ministry of Planning and Investment (MPI), in 2022, the labor productivity of the whole economy was estimated at VND188.1mn per worker (equivalent to USD8,083 per worker), increasing 4.8% YoY. Notably, the labor quality improved compared to 2021 as the number of qualified workers in the country advanced.
Furthermore, labor costs in Vietnam are quite low compared to other countries in the region and the world. This is a very advantageous strength to attract foreign investors as they compare investment opportunities in Vietnam with other countries in the region and Asia.
Steady GDP growth
According to the General Statistics Office of Vietnam (GSO), Vietnam’s GDP in 2022 was estimated at VND 9,513 trillion (USD 409 billion), increasing approximately 8.5% YoY and ranking fifth in ASEAN and 14th in Asia. Vietnam is only behind major economies such as China, South Korea, Japan and Indonesia. The government targets Vietnam’s GDP to increase 5.8%-6.2% YoY in 2023.
GDP growth in 2009-2019 was 5.2%-7.4% per year. During the pandemic period from 2020 to 2021, Vietnam’s GDP only edged up 2% per year.
GDP growth in 2009-2019 was 5.2%-7.4% per year. During the pandemic period from 2020 to 2021, Vietnam’s GDP only edged up 2% per year.
Diverse economic structure
The GSO also reported that the service sector accounts for the highest proportion of Vietnam’s GDP at 41.33%, followed by industry & construction at 38.26%, agriculture, forestry & fishery at 11.88%, and product taxes of all kinds at 8.53%. GDP in all sectors increased in 2022 compared to the previous year. Notably, the service sector was a bright spot as its GDP increased 9.99% YoY, which was the highest growth rate in the past 10 years.
Solid control of inflation
The consumer price index (CPI) in April of 2023 is recorded to be at a positive level of 2,84% by the GSO. Considering that the U.S. Federal Reserve has continued to employ interest rate hikes and the global inflation situation, the Vietnamese government has shown solid inflation control.
Imports & exports
According to the GSO, Vietnam’s total import-export turnover was estimated at USD 732.5 billion in 2022, increasing 9.5% YoY and reaching a high compared to the previous few years.
Despite many difficulties in the world economy, the Vietnamese market has shown bright prospects, which is demonstrated by the increase in GDP and labor productivity. In addition, the government has implemented inflation control and economic development promotion policies. 2023 is expected to be an optimal time to build the foundations to promote future economic development, which offers significant investment opportunities in Vietnam with great potential.
Despite many difficulties in the world economy, the Vietnamese market has shown bright prospects, which is demonstrated by the increase in GDP and labor productivity. In addition, the government has implemented inflation control and economic development promotion policies. 2023 is expected to be an optimal time to build the foundations to promote future economic development, which offers significant investment opportunities in Vietnam with great potential.
Investment in Vietnam
In 2022, the MPI recorded a total of USD 27.72 billion in foreign direct investment (FDI) in Vietnam — especially in electronics manufacturing, pharmaceuticals, biotechnology and tourism.
High-quality FDI inflows pour into Vietnam
Vietnam has emerged as a prime destination for high-quality FDI inflows due to its favorable business environment, strategic location and abundant resources.
The COVID-19 pandemic has accelerated the trend of companies looking to diversify their supply chains and reduce their dependence on a single country or region. Vietnam has been one of the main beneficiaries of this trend as companies look to relocate production from China to Southeast Asia. Vietnam’s low labor costs, favorable tax policies and abundant resources make it an attractive destination for manufacturing and other industries.
Some high-profile FDI projects in Vietnam in 2022 include a USD 920 million project in Thai Nguyen by Samsung Electro-Mechanics Vietnam and Goertek Vina increasing its investments for its factories in Bac Ninh and Nghe An by approximately USD 306 million and USD 400 million, respectively.
The COVID-19 pandemic has accelerated the trend of companies looking to diversify their supply chains and reduce their dependence on a single country or region. Vietnam has been one of the main beneficiaries of this trend as companies look to relocate production from China to Southeast Asia. Vietnam’s low labor costs, favorable tax policies and abundant resources make it an attractive destination for manufacturing and other industries.
Some high-profile FDI projects in Vietnam in 2022 include a USD 920 million project in Thai Nguyen by Samsung Electro-Mechanics Vietnam and Goertek Vina increasing its investments for its factories in Bac Ninh and Nghe An by approximately USD 306 million and USD 400 million, respectively.
Investment support policies of the Vietnamese government
The Vietnamese government has established an investment incentive program for local and foreign investors. This program includes the following investment incentive policies:
Furthermore, the Vietnamese government often works with investors in dealing with procedures for granting investment licenses. This enables investors to promptly register their businesses.
Also, improvement in legislation and regulations contributes to maintaining an objective business environment, ensuring fairness and soundness for all enterprises operating in the nation and creating more investment opportunities in Vietnam. This will bring more confidence to investors to make investments and develop businesses in Vietnam.
The government also provides other support such as dealing with business issues, encouraging the establishment of business groups and creating favorable conditions for mutual support among enterprises in the same locality. Other activities include training employees, supervising the operating contracts of enterprises and helping enterprises in difficult situations.
- License tax credit and reduction policies in the first year of incorporation
- Land rent discount
- Tax withholding and/or reduction of import tax on raw materials
Furthermore, the Vietnamese government often works with investors in dealing with procedures for granting investment licenses. This enables investors to promptly register their businesses.
Also, improvement in legislation and regulations contributes to maintaining an objective business environment, ensuring fairness and soundness for all enterprises operating in the nation and creating more investment opportunities in Vietnam. This will bring more confidence to investors to make investments and develop businesses in Vietnam.
The government also provides other support such as dealing with business issues, encouraging the establishment of business groups and creating favorable conditions for mutual support among enterprises in the same locality. Other activities include training employees, supervising the operating contracts of enterprises and helping enterprises in difficult situations.
Infrastructure development
Investment in infrastructure in Vietnam has been increasing, including for highways, railways, seaports and air routes to facilitate cargo transportation. The Vietnamese government also encourages and supports the establishment of industrial parks, industrial clusters and export processing zones to promote investment. As a result, investment opportunities in Vietnam are becoming more attractive to both local and foreign investors.
In the energy sector, Vietnam has been investing in renewable energy sources such as wind and solar power to reduce its reliance on fossil fuels and meet its growing energy demand. The government has set a target of increasing the share of renewable energy in the country's total electricity generation to 67.5 - 71.5% by 2050 in the 8th National Power Development Master Plan .
Furthermore, Vietnam has been investing in the construction and modernization of its telecommunications infrastructure to increase internet and mobile connectivity. This has made it easier for the nation's digital economy to expand and provided opportunities for startups.
In the energy sector, Vietnam has been investing in renewable energy sources such as wind and solar power to reduce its reliance on fossil fuels and meet its growing energy demand. The government has set a target of increasing the share of renewable energy in the country's total electricity generation to 67.5 - 71.5% by 2050 in the 8th National Power Development Master Plan .
Furthermore, Vietnam has been investing in the construction and modernization of its telecommunications infrastructure to increase internet and mobile connectivity. This has made it easier for the nation's digital economy to expand and provided opportunities for startups.
Increasing consumer demand and rising middle class in Vietnam
As Vietnam’s economy has grown and the population’s living standards and incomes have improved, consumption demand has soared. This is an investment opportunity in Vietnam that should be seized. Most industries — including retail, financial services and tourism — have the potential for development in the near future in order to satisfy increasing consumer needs.
In particular, the emergence of a new middle class in Vietnam is creating major enhancements within Vietnamese society as people’s changing habits and ways of consumption are leading to a shift in demand for certain types of products and services.
As the Vietnamese middle class grows and incomes rise, those with more disposable income tend to seek out higher-quality goods and services that are associated with a higher standard of living. The increasing demand for sustainable products and a healthy lifestyle among this new middle class is causing businesses to adjust their strategies and offerings to meet this demand. This shift is creating opportunities for companies that specialize in sustainable products or services to enter the market and gain traction with consumers.
In addition, the rise of e-commerce in Vietnam is creating new opportunities for businesses to reach consumers outside of traditional brick-and-mortar stores. This is particularly important given the country's large and rapidly growing number of internet users.
All of these changes are attracting foreign investors to Vietnam. As businesses look to expand and tap into this new market, they are finding that Vietnam is an attractive destination due to its growing economy, favorable business climate and large consumer base.
Challenges to the economy and investment in Vietnam
Although the country offers great opportunities, investment in Vietnam is still a challenge. Investors should be aware of potential risks that may come during investment.
Legal issues
Many legal regulations and investment policies in Vietnam have not been agreed on and are in the process of being completed, which could have an impact on potential investors.
However, the government is taking action to improve and simplify administrative procedures to make them more convenient for people, investors and enterprises.
However, the government is taking action to improve and simplify administrative procedures to make them more convenient for people, investors and enterprises.
Capital and profitability risk
Investment in Vietnam or any other country has potential risks in terms of market, capital and profitability. This is an important issue that should be considered when seeking investment opportunities in Vietnam or elsewhere. However, with knowledge and experience, investors can reduce risks and improve profits.
Labor market
Vietnam has established itself as a country with high-quality labor. However, there are shortages of high-quality labor in some important fields, which is an issue that needs to be addressed. Moreover, the brain drain has been a concern for a long time as many skilled Vietnamese people have taken their talents to other countries.
To enhance Vietnam’s workforce, foreign experts have been brought in for some new and innovative professions that require a high level of competence. In addition, training for Vietnamese workers and sending workers abroad to enhance their skills have been promoted.
Vietnam’s economy has been rapidly developing and attracting great amounts of foreign investment. Investment opportunities in Vietnam are abundant and have the potential for great returns. The country’s economic development has enabled Vietnam to achieve remarkable results. However, Vietnam still possesses many challenges that can impact the business and investment environment. Thanks to investment support policies and development potential, Vietnam is establishing itself as an attractive destination for investors.
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Labor market
Vietnam has established itself as a country with high-quality labor. However, there are shortages of high-quality labor in some important fields, which is an issue that needs to be addressed. Moreover, the brain drain has been a concern for a long time as many skilled Vietnamese people have taken their talents to other countries.
To enhance Vietnam’s workforce, foreign experts have been brought in for some new and innovative professions that require a high level of competence. In addition, training for Vietnamese workers and sending workers abroad to enhance their skills have been promoted.
Vietnam’s economy has been rapidly developing and attracting great amounts of foreign investment. Investment opportunities in Vietnam are abundant and have the potential for great returns. The country’s economic development has enabled Vietnam to achieve remarkable results. However, Vietnam still possesses many challenges that can impact the business and investment environment. Thanks to investment support policies and development potential, Vietnam is establishing itself as an attractive destination for investors.
Read more: