Why Vietnam

 

 

Vietnam (the Socialist Republic of Vietnam) is located in the South East Asia (SEA) which officially opened the country’s doors to welcome foreign investors by launching a political and economic renewal campaign (Doi Moi) in 1986.  Almost 22 years later, Vietnam took part in an important agreement with World Trade Organization (“WTO”) in 2007, followed by its participation the ASEAN Economic Community (“AEC”) in December 2015, other 66 bilateral trade agreements to enhance its integration and business opportunities in the world economy.

Due to the geographic location and natural conditions, it favors Vietnam for agricultural activities which account the workforce capacity for over 60%.  Even so, the country is now gradually shifting to be a popular destination for manufacturing and services, particularly in the northern region.  The result of this transition has revealed the country’s growth of its consumption and wealth creation which becomes one of the key factors to draw investors’ attention to expand their business in Vietnam.  Another key competitive advantage to attract foreign investment is a highly well-educated and easy-to-train labour force since there are numerous of educational institutions located around the region, especially in Nghe An province which is home to 7 universities, 6 colleges, 4 professional schools and 61 vocational training schools.

Furthermore, down to the EU-Vietnam Free Trade Agreement (EVFTA) signed on June 30, 2019 in Hanoi, Vietnam and EU have agreed to almost eliminate 99 percent of custom duties of various kinds of goods in a certain period (For EU exporting to Vietnam, 65 percent of duties will be eliminated while the remaining will be gradually phased out over a period of 10 years.  Vice versa, 71 percent of duties will be eliminated on Vietnam exports to the EU, with the remaining being eliminated over a period of seven years).  
Source: https://www.vietnam-briefing.com/news/evfta-eu-vietnam-trade-relations.html/

Also, Free Trade Agreements (FTAs) plays a significant role in moving up the value chain in numerous sectors such as textile and hi-tech sectors like electronics together by supporting high-skilled jobs and knowledge transfer.

Besides, the local authority himself announced the new regulations to facilitate foreign investment by allowing foreigners to hold 100% stake of public companies in many industries as well as purchase rights in land and houses.  These changes in regulatory are more business friendly and help to enhance the economic growth for the country.

11 Signed and Effective FTAs

1.ASEAN – AEC

2.ASEAN – India

3.ASEAN – Australia / New Zealand

4.ASEAN – Korea

5.ASEAN – Japan

6.ASEAN – China

7.Vietnam – Japan

8.Vietnam – Korea

9.Vietnam – Chile

10.Vietnam – Eurasian Economic Union

11. Vietnam-European Union
     Free Trade Agreement

Signed but Not Yet in Effect FTAs

1. ASEAN-Hong Kong, China

2. Comprehensive and Progressive
    Agreement for Tran-Pacific Partnership

 

In Negotiation FTAs

1. Vietnam-Israel

2. Regional Comprehensive Economic Partnership
    Vietnam-European Free Trade

3. Association Free Trade Afreement

 

Foreign Direct Investment

The foreign direct investment in Vietnam seems very promising.  In 2016, it has been a successful year for Vietnam, continuing its achievement to be a leading ASEAN economy and a global player.  Although the early in the year, falling commodity and energy price caused Vietnam’s failure to reach its goal of 6.7 percent GDP growth, the country can still manage to go beyond most of its neighbors with 6.2 percent of GDP. In 2017, the government targets 6.7 percent of GDP growth but reach 6.81 percent in the end of the year. By primarily increasing trade together with signing a free trade agreement last year with the European Union (EVFTA) to eliminate trade tariffs by 2018, real GDP expanded nearly 7.4 percent during the first quarter of 2018.

Vietnam has been developing strongly after joining the WTO 10 years ago. Vietnam has attracted 27,353 FDI projects with a total registered capital of nearly USD 340.16 billion. Particularly, many global leading groups such as Samsung, LG, Toyota, Honda and Canon have selected Vietnam as a manufacturing base.

Summary of FDI in Vietnam 2018 vs 2017

 

Year  Realized Capital (Bilion US$)  Export (Bilion US$)  Import (Bilion US$)  Registered Capital (Bilion US$)  Industry  Investor  Investment Area 
including crude oil  excluding crude oil Top 3  Total Registered Capital (Bilion US$) Top 3  Total Registered Capital (Bilion US$)  Top 3  Total Registered Capital (Bilion US$) 
1st half of 2018  7.72
(estimated as of 20 June 2018) 
70.81 69.25 60.59 11.8
1,366 new projects 
1. Processing and Manufacturing  9.48 1. Japan  5.08 1. Thanh Hoa  3.06
2. Electric Power Generation and Distribution  5.25 2. Korea  4.95 2. Bac Ninh  2.85
3. Mining  1.28 3. Singapore  3.48 3. Nam Dinh  2.19
1st half of 2017 7.25
(estimated as of 20 June 2017) 
58.565 57.434 47.296 11.83
1,183 new projects 
1. Processing and Manufacturing  8.06 1. Korea  3.99 1. Hai Phong  1.742
2. Real Estate  0.6048 2. Japan  1.229 2. Hanoi  1.63
3. Professional and Scientific-Technical Activities  0.5623 3. Singapore  1.129 3. Binh Duong  1.07
2018 vs 2017 %Change  6.50% 20.90% 20.60% 28.10% 57.80%  ­ ­ ­ ­ ­ ­

 

 

 

Vietnam Geography

Vietnam is located in the South East Asia, also known historically as Indochina occupies about 331,688 square kilometers and has its boundary with Laos, Cambodia and China.

View more