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The best reason why to invest in Vietnam after the pandemic 2020?

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Posted by Iris Data Driven Agency

3 months ago

Although the COVID-19 epidemic is causing certain difficulties in relocation decisions and activities, Vietnam is still considered an attractive investment destination for many multinational companies in the world. Here are some reasons why invest in Vietnam if you do not want to miss the opportunities to create valuable profits.

Overview of the investment status in Vietnam recently

Data from the United States Census Bureau shows that the volume of U.S. goods imported from Vietnam in 2019 increased by 35.6% over the same period, in contrast to a 16.2% reduction in imported goods from China. This year's data will be affected by the impact of COVID-19 on global supply chains, but production trends will shift from China to countries in Southeast Asia.

According to economists, in recent years, a number of multinational companies have been planning to expand operations in Vietnam to reduce the pressure of new tariff barriers on goods exported from China to China. States and seek alternative markets in case prices rise. Besides, according to JLL's first quarter 2020 report, the North attracts the majority of large corporations who want to diversify their product segments next to their facilities in China.

Top reasons why invest in Vietnam

Mr. Stephen Wyatt - General Director of JLL Vietnam - assessed that Vietnam has been a promising destination since the wave of factory relocation from China began. Although the COVID-19 epidemic is causing certain difficulties for decisions and relocation activities, investors are still confident to choose Vietnam as the best destination in the future. See the top reason why invest in Vietnam below.

1. Strategic location

Located in the center of ASEAN, Vietnam owns a strategic position. Not only located close to other major markets in Asia, the most notable neighbor - China, Vietnam also owns a long coastline, direct access to the South China Sea, and close to the world's main shipping routes also provide perfect conditions for trading with other countries.

The two major cities in Vietnam are Hanoi and Ho Chi Minh City. Hanoi capital is located in the north and has extremely convenient trading opportunities. Ho Chi Minh City is located in the south and is the industrial mecca of Vietnam.

2. Trade agreements

One sign of openness to the global economy is that many Vietnamese trade agreements have been signed to make the market freer. Some agreements that Vietnam has signed or organizations that Vietnam has participated in as a member:

- Member of ASEAN and ASEAN Free Trade Area (AFTA)

- Member of the World Trade Organization (WTO)

- Bilateral trade agreement (BTA) with the United States

- The free trade agreement with the European Union (effective in 2018)

All of these agreements show that Vietnam wishes to boost the country's economic growth and will continue to commit to trade with other countries.

3. Openness to foreign investment

Geographic advantages and a developing economy are not the only reason to be convinced about why to invest in Vietnam, but also because Vietnam always welcomes foreign direct investment (FDI) and encourages it by constantly renewing regulations and encouraging FDI.

The Government of Vietnam offers a number of incentives for foreign investors to invest in certain geographical areas or areas of special interest. For example, in high-tech or healthcare businesses. These tax benefits include:

- Reduction of corporate income tax or tax exemption

- Exempt from import duties, such as raw materials

- Reduce or exempt from land rent, land use tax

In July 2015, Vietnam also implemented Decree 60/2015 / ND-CP which allows foreign investors to invest in more fields than before.

4. Growing population & Young demographics

With over 95 million people, Vietnam ranks as the 14th largest population in the world. By 2030, the population will grow to 105 million, according to Worldometers.

Along with its growing population, Vietnam's middle class is growing faster than any other Southeast Asian country. Steady economic growth means greater income, in turn, will lead to a growing middle class. A Nielsen market research firm estimates that the middle class in Vietnam will grow to 44 million by 2020. And it makes Vietnam quickly become a hot labor market with cheap labor cost on the world, compete with China.

5. Low setup costs

In contrast to many other countries, there is no minimum capital requirement for most industries in Vietnam. In fact, there is no need to own a high capital to establish or register a company in Vietnam. You can start a business in Vietnam without having a large charter capital in your back pocket. Just make sure you have enough money to cover your company's planned expenses. Besides, note that the amount of capital you have stated must be paid in full within 90 days of your company registration.

6. Competitive labor costs

Despite the annual minimum wage increase, Vietnam is still a country with low labor costs. Wages in Vietnam are still less than half of the wages in China.

An increase in wages in China has forced manufacturers to seek a market with lower labor costs. Vietnam with low minimum wages and a developing economy is a low-cost alternative to China.

Conclusion

The above are reasons for foreign investors why invest in Vietnam. The investment in Vietnam is now much easier thanks to the investment support, preferential policies of the State for investors. To get support in human resources consulting and RPO services, choose Navigos Search solutions by contacting us by filling your requirements on the Contact Page or visit us directly on the 20th floor, e.town Central Tower, 11 Doan Van Bo Str., Ward 12, Dist. 4, Ho Chi Minh City, Vietnam