In recent years, the prospect of attracting foreign direct investment (FDI) in Vietnam has been bright, as many large, medium, and small investors from developed countries have gradually diverted investment into Vietnam. Among them, overseas Vietnamese are receiving increasing attention and encouragement from the Vietnamese government to not only promote Vietnamese products and services but also to invest directly in Vietnam.

Support for Overseas Vietnamese Investors

Although there is no specific investment incentive policy for overseas Vietnamese investors, according to current regulations, overseas Vietnamese investors still have advantages over foreign investors. Overseas Vietnamese have the right to choose to apply investment conditions and procedures to domestic or foreign investors. Specifically, for overseas Vietnamese, when investing and doing business in Vietnam under the Investment Law 2020, if they still have Vietnamese nationality, they are considered as Vietnamese citizens and will follow the same mechanisms, policies, and procedures as for Vietnamese. However, for overseas Vietnamese who possess both Vietnamese nationality and a foreign nationality, the Law stipulates that the investors are allowed to choose investment incentives as prescribed by law. 

Investment procedures applied to domestic investors are simpler and more convenient than those for foreign investors, as domestic investors are not required to apply for investment registration certificates in advance when setting up a business. Despite this, investors can still choose to follow investment procedures applied to foreign investors as they are accompanied by incentives such as exemptions from import duty or land rental fee exemptions. 

In addition, Vietnamese expatriates also enjoy other preferential policies such as visa exemption and are allowed to buy houses in accordance with the Housing Law.

The new Investment Support Forum for Overseas Vietnamese (Invesfov), established by the Association for Liaison with Overseas Vietnamese in early 2021, is set to materialize Conclusion No. 12-KL/TW of the Politburo on overseas Vietnamese affairs in the new context, attract more resources from Vietnamese abroad and create optimal conditions for them to contribute more to national development.

Potential Sectors for Investment

According to data from the Ministry of Planning and Investment, as of the end of 2021, overseas Vietnamese from 29 foreign countries and territories had invested in 376 investment projects in the form of foreign direct investment (FDI), with a total registered capital of 1.72 billion USD.

Overseas Vietnamese investors have invested in 42/63 localities across the country, in which Hanoi led with 79 projects and registered capital of 476.8 million USD (accounting for 21.8% of total projects and 29.7% of registered capital), followed by Long An, Binh Thuan, Hai Phong and Dong Nai. FDI projects of expatriates have operated quite effectively, significantly contributing to the socio-economic development of localities.

Most of the projects of overseas Vietnamese invested in the processing and manufacturing industry, with 143 projects and registered capital of 725.14 million USD, accounting for 39.5% of projects and 45.2% of registered capital. Next in line were real estate, accommodation services, construction, science and technology activities, and information and communication. With the goal of taking advantage of the momentum and opportunities in the 4.0 era, the Vietnamese government has had policies and initiatives to connect with the overseas Vietnamese intellectual community as well as attract investment in high-tech industries.

Food Processing

Food processing is one of the sectors that Vietnam is prioritizing to develop by 2025, with a vision to 2035. Despite the impacts of the COVID-19 pandemic, the Index of Industrial Production of the industry in 2020 still increased by 5.3% compared with 2019, as did the quality of the products and number of companies. 

Being considered as the food basket of the world, Vietnam has many advantages for the processing industry with a diverse range of products, from rice, vegetables, coffee, and pepper to cashew, tropical fruits, seafood, and many more. With many M&A cases within the sector recently, the Government expects foreign investment in general and investments from overseas Vietnamese in particular, to play a major role in enhancing the country’s food processing industry. Incentives and favorable conditions are given, with priority over projects with advanced and environment-friendly technologies and those creating high-added-value products. High-tech integrated production chains are completely tax-free. In addition, investors are entitled to a 5% lower corporate income tax compared to the normal tax rate (25%). Prioritized projects will be tax-free for up to 4 years, after which they will enjoy a 50% lower tax rate than usual over the next 9 years.

In addition, the Government also wants the overseas Vietnamese business community and businesses to play a leading role in bringing Vietnamese goods abroad and, together with domestic enterprises, to create a supply chain of Vietnamese people in the global market.

Real Estate

According to experts, the end of 2021 was the time when Vietnam witnessed high remittance flow, leading to more active real estate transactions at that time. Along with direct transactions, most expatriates can ask their relatives to buy houses or invest in real estate projects. These real estate products, in addition to being used for living and relaxation, can be bought and sold by overseas Vietnamese owners or rented as a long-term investment.

Instead of just focusing on big cities, this cash flow is now flowing to potential new markets, notably resort real estate. The sought-after resort real estate products are often located in localities with clean air, calm and clear seas, ideal temperatures, and are suitable for year-round relaxation and health recovery. 

The development of infrastructure systems, similarities in architecture in developed countries, and significantly lower prices than in foreign markets all entice more and more overseas Vietnamese to buy a home in Vietnam.

Embracing the Startup Spirit at Home

Although Vietnam’s startup market was formed later than other countries in the world, Vietnam now has a complete startup ecosystem, supporting startups with component actors such as funds, investors, incubators, startup support programs, and service providers. All these factors have created opportunities for startups to form and develop. At the same time, Vietnam is one of the countries that strongly encourages the development of startups, with the spirit of entrepreneurship being adopted by the Government, as well as all ministries and agencies.

Social distancing during the Covid-19 epidemic has changed all aspects of people’s lives and work. Social distancing and then the restriction of face-to-face contact have contributed to the growth of many tech-focused industries such as e-commerce, online payment, online training, online working, and so on. Now, as Vietnam moves into the new normal, this trend is likely to continue, attracting more and more foreign investors to come and write inspirational stories about entrepreneurship. Among them are the energetic and talented overseas Vietnamese, as well as Vietnamese international students.

Born in Vietnam, then adopted and raised in Sweden, having worked in many countries around the world, Denise Sanquist recently returned to her homeland, Vietnam, to realize her long-standing wish: create a safe dating and friendship platform for women, now known as Fika. The dating app was launched in the Vietnam market at a difficult time, when the Covid-19 epidemic was still raging. However, with Vietnamese youth forced to go through quarantine and find new ways to communicate and have fun, Fika quickly rose to prominence, becoming one of the most downloaded dating apps on both App Store and Google Play. After a year since its launch, Fika now has over 1 million downloads and is ranked as the #1 Free Dating app on Google Play as well as the #4 Lifestyle app on App Store in Vietnam. In particular, recently, Fika was also lucky to successfully raise $1.6 million in a seed round led by VNV Global, continuing Sanquist’s ambition to turn Fika into the #1 dating app in Vietnam.

Conclusion

With positive growth and suitable solutions during its fight against Covid-19, Vietnam continues to become a promising land for high-quality FDI inflows and ambitious overseas Vietnamese looking for a new market to invest in. As one of the country’s most prestigious consulting firms for FDI projects, Viettonkin is delighted to accompany and support overseas Vietnamese investors in their search for good and suitable opportunities in Vietnam. Please send us an inquiry, and our team of experts will gladly assist you.