Vietnam has experienced phenomenal growth in the last three decades and the government is strongly committed to future sustainable growth and further expanding its global trade.
With a stable political and macroeconomic environment, young, low-cost workforce and outward-looking reforms, Vietnam has transformed itself into one of the strongest developing economies in the world. Its Doi Moi policy, implemented by the government in the late 1980s, has featured a range of tactics aimed at increasing its attractiveness to foreign investment and building a resilient, modern economy.
Today, the government continues this commitment to world trade with numerous treaties, including the EU-Vietnam Free Trade Agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and strategies to continue reforms to legislation and bureaucracy. In the last few years, Vietnam has also shown impressive ambition to get ahead of digitisation and industry 4.0. The country is hoping to be the first ASEAN nation with a 5G network, has a thriving ecommerce sector and is currently in the process of a variety of e-government initiatives.
HSBC has had a presence in Vietnam since 1870 and, in 2009, became the first wholly-owned foreign bank to incorporate in the country and the first to operate both branches and transaction offices. In the years since, HSBC has secured numerous awards across both products and services, including Best Foreign Bank and Best International Retail Bank. HSBC has a long history in Vietnam and can provide a comprehensive range of cross-border and financial services to suit both your personal and business needs, whether you are moving to the country, working in the area, or purely investing or doing business in Vietnam.
Please get in touch to find out how HSBC can support you and your business in Vietnam.
1 Worldometers, 2020
2 World Bank Group, 2019
3 Trading Economics, 2019
4 PwC, 2019
Vietnam is the easternmost country on the Indochinese Peninsula, with a prime position bordered by China, Laos, Cambodia and the South China Sea.
Since 1986, Vietnam has been slowly but successfully changing from a highly centralised, agrarian economy to a more industrial and marketbased economy. As the country has expanded its political and economic horizons, it has raised incomes substantially and experienced decades of GDP growth.
Vietnam is a member (and 2020 Chair) of ASEAN, the Association of Southeast Asian Nations, formed in 1967 and made up of 10 nations: Singapore, Malaysia, Vietnam, Thailand, Philippines, Indonesia, Brunei, Laos, Myanmar and Cambodia.
Today, a young population, relatively low inflation and stability in both Vietnam’s currency and its political system, are all contributing to continued economic growth.
Between 2002 and 2018, more than 45 million people were lifted out of poverty in Vietnam, thanks to economic and political reforms that have seen the country strengthen its ties with the outside world.
Rapid growth and industrialisation in Vietnam have been a powerful economic driver, but these have not been kind to the environment or the country’s natural assets.
for ease of doing business (in a survey of 190 measured economies by The World Bank)
Vietnam’s food is famous all over the world and thousands of tourists journey here each year to enjoy the unique and varied geography, climate and extensive coastline. But this rapidly developing Asian nation is much more than a tourist hotspot.
The largest firm in Vietnam is not the state oil firm PetroVietnam, it’s Samsung. The Korean company produces a third of its global output in its Vietnamese factories, one of which churns out more mobiles per day than any other facility in the world. The presence of companies from Samsung to LG shows the strong commitment the government has made to opening the country’s borders to trade. The government has worked hard to reform the financial sector and streamline business regulations, as well as offering competitive financial incentives to businesses looking to set up in the country. The result is that foreign direct investment was worth 14% of GDP in 2018, led by companies from Japan, South Korea and Singapore.
Trade isn’t just flowing one way either. Vietnamese firms are becoming increasingly competitive and, as of 2017, the country became the largest ASEAN supplier to the US. Bilateral trade with the US is expected to surge to USD57 billion by 2020. Manufacturing is Vietnam’s strongest industry, encompassing its growing smartphone and electronics production industries and textiles and garments. But the country is also a strong exporter of coffee, second only to Brazil. Some experts predict that Vietnam could surpass the South American coffee giant in the future, due to more favourable climate conditions and lower-cost production.
A growing middle class and youthful population have helped contribute to a big push for ecommerce in Vietnam. Three of the top ten sites in Southeast Asia are based here – Tiki, Thegioididong, and Sendo – and the market is expected to hit USD10 billion by the end of 2020.
Read on to discover more about the dos and don’ts of doing business in Vietnam and how trading in or with the country could help boost the future growth of your business.
Medical facilities in Vietnam can be quite basic and there are not many English-speaking hospitals. There are some international or private hospitals and clinics, but the fees are normally very high. Medivac to Singapore or Thailand for more complicated treatments can be very expensive.
Vietnam’s strong manufacturing base and reliance on interconnectivity makes trading across borders attractive. However, the process can be complicated, with a high volume of documentation required for both importing and exporting.
As part of its commitment to a variety of FTAs, Vietnam is reforming its laws to bring them in line with international standards, but grey areas remain that make understanding the legal framework difficult. The judicial system is also notoriously slow-moving.
According to the World Bank’s Ease of Doing Business Survey, the administrative requirements of paying taxes in Vietnam are some of the most demanding in the region and the world. The average Vietnamese company can spend about 500 hours on tax reporting activities throughout the year (compared to Singapore’s 50 hours). However, digitisation initiatives and tax law reforms are underway that should reduce this burden in future.
While Vietnam has regulations in place to protect intellectual property rights, the enforcement is weak and IP abuse remains a problem in Vietnam; the country ranked in the top 10 of countries using pirated software in 2019. Again, the government is taking steps to remedy this, but foreign businesses with IP to protect are advised to ensure it is looked after before exporting or setting up in Vietnam.
1World Bank Group, 2019