5 Reasons Why Start Business in Vietnam During Pandemic
Start Business in Vietnam – Vietnam has strong fundamentals of a young, dynamic, and tech-savvy population, a growing domestic market, a rising middle class, and an open economy to offer exciting investment opportunities. Many start-ups and multinational corporations have set up their operations in Vietnam to leverage its strategic connectivity and proximity to Asian economies as a gateway to grow their businesses. While COVID-19 is likely here to stay for a while, it should not prevent us from exploring the new opportunities that Vietnam can offer and attempting new strategies to build and sustain growth in the country.
Reasons to Choose Vietnam
1. Tax incentives
Starting a business in Vietnam will offer you great benefits. You can receive some tax advantages for doing business in Vietnam. New investment projects can enjoy tax incentives depending on the sector, location, and scale.
- Annual net profits suffer a flat corporate income tax rate of 20%. A new tax incentives policy for a company that promoted a 30% reduction in corporate income tax payable in case an enterprise has a turnover of not more than VND 200 billion and the revenue in 2021 decreases compared to the revenue in 2019 tax period.
- The maximum VAT rate is 10%
- Vietnamese withholding tax on overseas payments from 5% to 15%.
- Certain sectors being promoted by the Vietnamese government enjoy 10% corporation tax including high technology and software production, environmental and renewable energy, infrastructure development and scientific research, agriculture, health care, and education. Meanwhile, there are four years of zero tax for health and education investments.
2. HR Needs
Based on data from the World Bank, Vietnam’s Capital Index (HCI) reached 0.67, ranked 48th out of 157 countries. Vietnam has a young population and a potential workforce. Remarkably, the country’s average wage cost is more competitive than the neighboring countries like China, Malaysia, Indonesia, Singapore.
Vietnam sets a different minimum wage level across its four regions, raking from VND 3,070,000 (US$132) in non-urban area to VND 4,200,000 (US$181) in urban area. Moreover, employees that have had vocational training must be paid at least seven percent higher than the applicable minimum wage rate.
On the other hand, Vietnam is included in the category of countries that have the least number of holidays, this certainly benefits from business priorities. This form of openness makes Vietnam the right choice for investment.
3. Open to Foreign Investors
This country is one of the most open in the form of foreign investors. Vietnam has officially joined 15 FTAs, including six ASEAN FTAs with regional partners (China, South Korea, Japan, India, Australia, and New Zealand) and the Regional Comprehensive Economic Partnership:
- AFTA (ASEAN Free Trade Area)
- PRC (South Korea, Australia, New Zealand, India, Chile and Japan)
- CPTPP (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Singapore)
- EVFTA (Europe-Vietnam).
The EVFTA Report 2018 by the European Chamber of Commerce (EuroCham) in Vietnam revealed that 72 percent of EuroCham members believed that the EVFTA will make Vietnam more competitive and turn it into a hub for European businesses.
4. Infrastructure Development
With its emergence as a low-cost manufacturing hub, Vietnam is continuously investing in infrastructure. The majority of Vietnam’s planned infrastructure spending is earmarked for improving the country’s transportation network and boosting its electricity generation and distribution capacity.
Vietnam ranked at 25th and 27th in Dealing with Construction Permits and Getting Electricity topics of World Bank’s Doing Business indicators.
5. Macro Business Stability
Since 2010, Vietnam’s GDP growth maintained around 6-7 percent, this trend made Vietnam become more and more attractive in the world’s eyes of foreign capital. It is true that the pandemic outbreak in the 3rd quarter of 2021 has abruptly disrupted the distribution chains and heavy restrictions have led us to some uncertainties. However, Vietnam is ready to bounce back in 2022 with the amendment of a variety of important laws that help improve its business climate.
All these factors have proven Vietnam as an attractive destination for businesses in 2022.
How can Double M help?
To offer investors insights into key aspects of the undertaking and doing business in Vietnam and help you make an informed decision entering Vietnam, Double M is providing different market entry solution services in Vietnam and other South-East Asia countries. In case you have any inquiries, please contact us at firstname.lastname@example.org
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