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The Benefits & Risks Everyone Should Know To Invest In Vietnam

Located at the center of Southeast Asia, Vietnam’s ever-evolving urbanization, continual innovation, stable growth rate, greater economic integration, and socio-economic ambitions make it one of the most profitable destinations to invest in the world.

1. What makes Vietnam so Attractive for Investing?

1.1 Ideal Proximity to Other Major Markets

Vietnam serves as a gateway to the Pacific Ocean and the Indian Ocean. To the North, it borders China, the biggest market in the world with a population of more than 1 billion people. To the West, it is adjacent to Laos and Cambodia, the two emerging economies in Southeast Asia.

Vietnam located in the center of Aisa
Figure 1. Vietnam located in the center of Aisa

This strategic location enhances the country’s connectivity because of all major international economic and commercial centers such as Singapore, Kuala Lumpur, Bangkok, Manila, Hong Kong, Taiwan,…

Southeast Asian country Vietnam occupies a region of one million square kilometers on the sea-surrounded Indochinese peninsula. It is the second busiest international shipping route in the world, behind the Mediterranean, and boasts five local and regional marine routes.

In addition, lying parallel to the established sea trade routes of Asia with a long coastal line of more than 3,000 km and world-class deep-water ports. Vietnam becomes a busy transit hub for cargo and passengers across Asia, from Singapore and other southern countries to China, or East Asian, African, and European countries.

Not only does Vietnam enjoy an advantageous geographic location that attracts foreign investment. Vietnam has wisely made use of its geographic location to build a substantial transportation network that includes highways, railways, airports, and seaports. This geographic advantage draws both domestic and foreign investors, making it easier for enterprises to start up and grow in the nation.

1.2 Trade Openness

Vietnam has lots of trade agreements that make it easy to do business here. These trade agreements also promote the country’s economic growth.

Certain trade agreements, like those under the World Trade Organization, make it easier for foreign organizations to invest in Vietnam. Vietnam also offers tariff reductions through trade agreements, such as in the case of the Free Trade Agreement with the European Union.

Vietnam has lots of Free Trade Agreements (FTAs)
Figure 2. Vietnam has lots of Free Trade Agreements (FTAs)

Other trade agreements and relevant memberships include the following, among others:

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

  • Bilateral Trade Agreement (BTA) with the US

  • Trans-Pacific Partnership (TPP)

  • Free Trade Agreement with Japan

  • Free Trade Agreement with Korea

Due to the possibility for expanded market access and trade diversification, investors are attracted to Vietnam's openness in trade. Companies can access local supply chains thanks to the country's strategic location within Southeast Asia, and they can profit from the expanding demand in adjacent countries. Vietnam is also a popular site for businesses hoping to benefit from the country's integration into international value chains. This is a result of its fiercely competitive manufacturing industry. Additionally, Vietnam has a skilled workforce.

1.3 Stable Economic Growth

Vietnam is a desirable area to invest because of its consistent economic growth, which acts as a magnet for luring investors. The nation's constant and strong economic growth gives a favorable business environment and the chance for long-term profitability.

Business and investors can thrive in Vietnam thanks to the country's steady economic progress. For companies looking to expand their operations, Vietnam provides a sizable potential customer base thanks to a growing consumer market and rising income levels. The nation's dedication to economic integration and openness to the global economy also contribute to an increase in its allure for foreign investment.

Vietnam's steady economic growth appeals to investors because of the opportunities it offers. The country's consumer market is expanding, driven by rising income levels and a burgeoning middle class, which favors enterprises looking to expand into new markets. Vietnam's economic stability also boosts investor confidence and reduces the dangers brought on by ambiguous market conditions.

Additionally, Vietnam's consistent economic growth creates a variety of investment opportunities across different industries. The nation has an abundance of natural resources, including offshore oil and gas deposits, arable land, and minerals, making it a desirable location for investments in sectors like mining, agriculture, and energy. These industries benefits from Vietnam's prosperous economic climate and offer opportunities for successful business initiatives.

1.4 Vietnam has Rich Natural Resources

Vietnam has an abundance of natural resources including oil, gas, coal, and various mineral resources. Besides that, Vietnam is blessed with other natural resources including hydropower, marine resources, tropical forest, and agriculture. And the Vietnamese government has tried to shift its economic activities from plain natural resource extraction to other higher value-added activities and toughen their environmental protection policy.

Phong Nha Ke Bang is the most beautiful cave in the world
Figure 3. Phong Nha Ke Bang is the most beautiful cave in the world

In term of resources for tourism and related-service development, with 4 UNESCO-designated heritages (Hue Imperial City, Phong Nha–Ke Bang Cave, Hoi An Ancient Town, My Son Sanctuary), lots of stunning beaches, mysterious tropical forests, breathtaking mountainous landscapes, other historic places, and a thousand-years-old culture.

Vietnam's enormous offshore oil and gas deposits also draw energy investors looking for high profits. The nation's dedication to environmentally friendly practices also provides opportunities for ecotourism and renewable energy initiatives. Vietnam offers a favorable environment for investment because of its stable government and business-friendly atmosphere. Its attraction is further increased by the government's focus on infrastructural development and economic integration.

Businesses can unlock the enormous potential of Vietnam's abundant natural resources and support the country's economic progress by making investments in them. This opens up possibilities for successful long-term alliances in this vibrant Southeast Asian country.

Vietnam can allure and fulfill the desire of any visitors. Staying in Vietnam offers tourists a nowhere-to-be-found travel experience that will leave them a lasting impression and enrich their life with new flavors and perspectives.

1.5 The Populace is Young and Active

The population of Vietnam, which now ranks 13th in the world and third among ASEAN nations, was 97 million in 2018 (up from about 60 million in 1986), and it is projected to grow to 120 million by 2050. With a life expectancy of 76 years and a population that is now 70% under 35, Vietnam has a huge market that can make any company investment successful. Vietnam also has the longest life expectancy in the area among nations with comparable economic levels.

Vietnam also does well in general education, as seen by the strikingly high PISA results achieved by Vietnamese students, which are higher than those of several OECD nations. This performance demonstrates a gifted, intelligent, and aspirational populace, which offers the labor force at cheap pay for a clear competitive advantage.

Young Vietnamese workers
Figure 4. Young Vietnamese workers

2. Benefits & Risks You Should Know Before Investing in Vietnam?

Above lots of positive things that encourage you to start investing in Vietnam, there’s still some potential deal-breaker here, you should consider all the benefits & risks might occur before making the final decision.

2.1 Benefits:

Rapid Economic Growth: Investors seeking for developing market prospects may be drawn to Vietnam's economy due to its excellent growth rates.

Southeast Asia's Vietnam benefits from its strategic location with access to major trade routes, which increases the country's potential as a regional center for corporate operations.

Rich Natural Resources: Natural resources like minerals, arable land, and offshore oil and gas deposits are plentiful in Vietnam. Due to these resources, it is a desirable location for investments in sectors including mining, agriculture, and energy.

2.2 Risks:

Greater Risk: Political and regulatory uncertainty, in addition to Vietnam's potential for development, make investing there more dangerous.

These dangers result from both the peculiarities of many industries and the interdependence of the global economy.

About Taxes: Multiple taxes, including company income tax, value-added tax, special consumption tax, and import/export levies, may be imposed on foreign investors. Vietnam's tax system is intricate and time-consuming, and it requires significant financial resources from international investors. Tax regulations need significant time and financial expenses to be met.

Cumbersome procedures to have a construction permit: In Vietnam, obtaining a building permit is difficult. The Department of Construction, the Department of Firefighters Prevention. The Department of Natural Resources and Environment, and the municipality are just a few of the several agencies that foreign investors must cooperate with. These organizations are essential to the process of acquiring permits.

And when disputes are arising out of investment projects during the process of investing in Vietnam. The questions of governing law and dispute resolution forums often make foreign investors frustrated.

Wrapping it up

There’re lots of countries in the world that can be a great place for investing, too. But when you come to Vietnam, especially when you choose to invest after considering the benefits & risks you might have, this will be your best place to invest in many years to come.

Source: Internet

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