Despite the economic crisis in the global environment, while the economic growth of many countries is negative, Vietnam is one of the few countries recording positive growth. The Vietnamese economy has been hit hard due to the COVID-19, but it demonstrates remarkable resilience. According to the World Bank, the macro-economic and fiscal framework are recorded with a stable increase of 1.8% in GDP in the first half of 2020. Thanks to rapid control of COVID-19, businesses in Vietnam have chances to recover their operation and find strategies to attract foreign investors. If investors have an eye on the Vietnamese market, what would they be aware of? This article provides you with useful information to support investment activities or business expansion.
Vietnam has a strategic location which is in the center of Southeast Asia and has a long coastline closing to international shipping routes. Sharing the border with China is also another advantage of the location. Investors, in lieu of finding suppliers in China, can consider Vietnam because of its cheaper labor cost.
Moreover, Vietnam now takes a lot of benefits from international free trade agreements that make it easier to do business in the country. The biggest achievement of the Vietnamese economy in 2020 is to succeed in signing FTAs with Europe.
Doing business in Vietnam is becoming easier every year. Tax payment is the most important improvement in terms of the ease of doing business. IT infrastructure has been upgraded in inserting, recording and submitting data, so taxpayers and authorities are able to manage and check the tax payment conveniently.
Another significant reason for investing in Vietnam is that the country is open to foreign investment. The government has amended some regulations and put incentives into practice to encourage investment activities from foreigners. Such incentives consist of lower corporate income tax rate or exemption from the tax for several industries, exemption from import duties on specific goods like raw materials, reduction or exemption from land rental or land use taxes.
Last but not least, Vietnamese labor is more skillful and educated, especially in specialized fields namely IT and medicine. The young workforce is also a plus point. Therefore, investors find it easy to seek for talents or workers to work in a variety of industries.
Essential things you should know to expand a business in Vietnam
Choose your business structure
In Vietnam, there are three main types of businesses: 100% foreign-owned enterprises, joint-venture enterprises, and limited liability companies. Some sectors are encouraged to invest by the government including items that are produced for export purposes, technology, R&D, raw material processing, construction for industrial production, and infrastructure facilities. Nevertheless, the government certainly restricts projects that affect national security, historical and cultural preservation, traditions and customers, and natural environment.
Mandatory documents to set up a business in Vietnam
To start a business in Vietnam, foreigners have to prepare and submit these following documents:
- Valid passport or identification
- Certificate of the registered company
- Article of association
- Previous audited financial statement
Restrictions in terms of currency for foreign investors
Foreigners are able to transfer their money into Vietnam in the following cases:
- Import payments
- Investment earning payments
- Interest or principal payments on loans or offshore credits
In conclusion, foreign inventors can eye on Vietnam as an emerging market to start their businesses. There are a lot of reasons that convince investors to invest in Vietnamese sectors and open branch offices in Vietnam such as the strategic location, the government’s incentives, competitive labor cost, skilled and educated workforce and so forth. Moreover, investors had better prepare compulsory documents in advance as well as be aware of Vietnamese regulations regarding encouraged and forbidden sectors. If you would like to expand your business in Vietnam, contact Viettonkin’s consultants and we will offer you the most rapid and accurate advice which is the best fit for your business situation.