Reasons to Invest in Vietnam

Investing in Vietnam makes sense for several compelling reasons, despite its position as the 6th largest economy in Southeast Asia. Many tend to overlook Vietnam as a prime destination for investment and business ventures, often overshadowed by neighboring countries such as Indonesia, Malaysia, the Philippines, Thailand, and Singapore. However, Vietnam has the potential to be your next investment destination. Multiple reasons support the notion that choosing to invest in Vietnam is a wise and prudent decision.

1. Vietnam’s outstanding economic performance.

In the beginning of 2021, while many economies were still struggling with the pandemic, managed to record an outstanding performance. Vietnam General Statistics Office (GSO) reported that the Gross Domestic Product grew 4,48% in the first Quarter of 2021.

In addition, as of 20th of April 2021, Vietnam was able to attract US$12,25 billion worth of Foreign Direct Investment. There are 451 new registered projects with a total capital of $8,5 billion. According to the latest World Bank report, Vietnam GDP is projected to reach 6,6% in 2021 and 6,5% in 2022, outperforming the projected negative global economic growth.

2. Vietnam’s successful control of the pandemic.

As of 6th of June 2021, there has been a total of 8.791 COVID cases with 5.423 still active cases. This number is lower compared to its neighboring countries, specially Indonesia or Philippines. Thanks to a quick and swift respond by the Government, with the imposition of strict social restrictions, massive tests, and the commitment to data transparency.

3. Vietnam has been called a major beneficiary of the US-China trade war.

According to the report from a Japanese Investment Bank Nomura, Vietnam gained 7,9% of GDP in 2019 as the result of trade diversion.

4. Vietnam has been seen as an alternative for companies that want to shift production out of China.

In the past, Vietnam attracted manufacturers in textiles, garments and other low-end industries that have fled China due to rising labor costs. Nowadays, international tech companies such as Samsung, Olympus and Microsoft (Nokia) have relocated their factory to Vietnam. The geographical proximity to China helped companies to relocate their manufacturing plants. In addition, young population and low labor costs also add to its appeal.

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5. Free trade access to the largest economic bloc in the world is another Vietnam major selling point.

Vietnam has bilateral agreements with ASEAN members, Australia, Chile, China, India, Japan, New Zealand, and South Korea. Vietnam also has free trade agreement with the EU, which came into force in summer 2020.

6. Vietnam is rapidly developing its infrastructure.

Vietnam boosted its investment in infrastructure. The improved electric system, national highways, and air and sea ports have boosted the country’s place on World Bank Logistic Index from 64 in 2016 to 39 in 2018.

Majority of Vietnam’s infrastructure spending are coming from public resources. In March 2021, the Vietnamese Government announced the allocation of $120 billion for public investment from 2021 to 2025. This budget will be prioritized to be channeled to major infrastructure projects.

7. Vietnam is showing a welcoming attitude towards foreign investors.

Given the rapid pace of development, relying solely on the public sector for infrastructure investment is not feasible. Both local and foreign investors must contribute to fulfill the infrastructure plans and sustain the high growth rate.

Realizing their own limitation, the Vietnamese government has constantly shown a welcoming attitude towards foreign investors. Both foreign and local investors receive Corporate Income Tax (CIT) incentives as part of the effort to encourage investment in sectors or areas aligned with the Government’s development plan.

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