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Which Are The Best Sectors For Investment In Vietnam?

Investing in Vietnam has drawn around 27 billion USD in investment across all economic sectors by 2022. Manufacturing accounted for 61% of total registered foreign direct investment (FDI) in Vietnam. Real estate operations (16%), power, gas, and air conditioner supply (8%), wholesale, retail commerce, motor vehicle repair (4%), transportation (1%), and building (1%), are the other major industries.

According to The Business Times, Ho Chi Minh location will be the third most desired location for cross-border investment in 2023, up from ninth in 2022, due to its investors' opportunistic approach. According to the Harvard Growth Lab, Vietnam's GDP will be sixth in ASEAN this year, fifth in 2023-24, and third in 2025-27.

Furthermore, thanks to the developing e-commerce business, Vietnam is forecast to have the fastest-growing digital economy in Southeast Asia in 2022, with a projected 28% increase in gross merchandise value to US$23 billion. With lofty objectives of attracting half of the Fortune 500 by 2030, Vietnam might become one of Asia's most valuable marketplaces for international investment.

Inflation, rising interest rates, and the Ukraine-Russia crisis are all expected to make this year difficult. However, there are chances and encouraging signs for 2023. According to Harvard's Growth Lab, Vietnam will become one of the world's five fastest-growing economies, with China and India, during the next decade.

Let's have a look at some of the finest investment sectors in Vietnam in 2023.

Common sectors for investment throughout our country

1. Luxurious hotels

In recent years, the tourism revenue of our nation reached $9.3 billion. It is even calculated that the number can double until 2027. Accommodation businesses in the tourism sector can thrive in our country, but the luxury hotel industry remains untapped in Vietnam. Thus, those upscale tourism accommodations display a big investment potential.

Besides, luxurious hotels have particularly prevailed from the big foreign brands like Hilton and InterContinental group. Therefore, joint ventures with other nearby developers can be the ideal choices for international investors to move into the background.

Luxurious hotel in Vietnam
Figure 1. Luxurious hotel in Vietnam

2. Business processing outsourcing (BPO)

BPO (Business processing outsourcing) is well-known for the sub-sector of ICT. On the other hand, BPO is a popular sector throughout our nation. ICT’s revenue was estimated at $60 billion five years ago.

It is not negative that the BPO industry can keep growing super quickly from Vietnamese surging skills and the talent pool. In addition to it, BPO might be expanded to assist the potential producing industry around Vietnam.

The effective solution to begin with the BPO sector is to install a new plant and partnership.

3. Wind Energy

The electric generation’s origins throughout our nation can be coal, hydropower, and gas turbine. However, those pure sources aren’t renewable and the Vietnamese communist party is trying to boost the usage of renewable energy. In other words, the government targets to make the most of our nation’s solar and double its share for electric manufacturing by 2030.

Next, the southern zone throughout our nation is more appropriate for a lot of investors to put their pennies into solar campaigns. Meanwhile, the mountainous zones of middle Vietnam in the south-central area are proper for wind energy campaigns.

Implement offshore wind energy in Vietnam
Figure 2. Implement offshore wind energy in Vietnam

4. Retail banking

Our country has a percentage of the population that remains unbanked, indicating a prevalent lack of access to banking services. This situation presents numerous opportunities for potential investors in a rapidly growing nation where the banking and financial sectors are still underdeveloped. Among the various segments within the financial industry, retail banking with payment cards stands out as an especially competitive field. Fintech emerges as a promising sector to explore, considering our nation's foundation and potential for transitioning into a cashless society. The high degree of flexibility and widespread adoption of digital payments makes it feasible to embrace this transformation successfully.

The prevalence of the unbanked population highlights the need for enhanced financial inclusion, and this demand creates a favorable environment for investors in our country's banking and financial sectors. The retail banking sector, particularly the realm of payment cards, presents a competitive landscape with numerous prospects for innovation. Moreover, our nation's favorable conditions make fintech an attractive area to explore further. With its groundwork, Vietnam’s well-positioned to advance towards a cashless society, facilitated by the widespread adoption of digital payment methods. This transformative shift offers opportunities for investors looking to capitalize on the growing trend toward a more technologically-driven financial landscape.

5. Modern agribusiness

Although the agricultural products export throughout our nation has risen throughout some years, that sector has developed slower because of its low modernization and performance. Next, agriculture dedicates 20% of the national export and we’ll witness a big potential benefit in the modern agribusiness sector.

6. Technology

With an increasing number of Internet businesses establishing operations in the nation, Vietnam’s emerging as a hub for technology startups. This industry is predicted to grow further in 2023, providing chances for investment in fields such as software development, mobile apps, e-commerce, and others.

Minister of Information and Communications Nguyen Manh Hung stated at a conference that 2023 will be the year when the telecoms sector will focus on commercializing 5G and combating spam calls.

Technology investment
Figure 3. Technology investment

IT enterprises will continue to grow by double digits, according to stock companies, and key corporations such as the military-run Industry and Telecommunication Group (Viettel), the Vietnam Posts and Telecommunications Group (VNPT), FPT, and CMC have plenty of opportunity to expand.

According to HSBC, 51% of Vietnamese programmers are between the ages of 29 and 30. In Vietnam, the hourly wage for IT outsourcing software development is roughly 18 USD, which is equivalent to 64% in other Asian nations and 10% in the United States. As a consequence, clients from the United States, Japan, the European Union, and Asia-Pacific have picked Vietnam as a good place for IT development partnerships.

Furthermore, 2025, Vietnam hopes to have 80,000 digital technology businesses and 100,000 by 2030. By 2025, the technology industry is estimated to contribute between 6% and 6.5% of the country's GDP.

7. Manufacturing

With its cheap labor costs, advantageous trade agreements, and rising pool of trained employees, Vietnam is well-positioned to capitalize on the worldwide move toward outsourcing. These inherent features are bolstered further by the country's numerous free trade agreements (FTAs) and the quickly changing e-commerce sector. Manufacturing is an important investment industry in Vietnam, with an emphasis on sectors such as electronics, textiles, and equipment.

According to S&P Global Market Intelligence, Vietnam's industrial production would expand 6.6% in 2023. "Although demand conditions for Vietnamese manufacturing firms remained challenging at the start of 2023, leading to further declines in output, new orders, and employment, there were some more positive signs from the latest PMI survey," said Andrew Harker, Economics Director at S&P Global Market Intelligence. One of the primary positives in January was a continued increase in new export orders, which softened the fall in overall new business.

Furthermore, global technological behemoths have continued to develop operations in Vietnam as the nation emerges as a trusted sophisticated technology manufacturing hub. According to authorities, Vietnam is aggressively expanding its chipmaking business, pursuing international companies in the three categories of assembling, testing, and packaging; manufacturing with labs; and designing.

Furthermore, when more sophisticated technology (such as robots, IoT, and cloud-based software) becomes available, manufacturers will almost certainly fully embrace the fourth industrial revolution. It has the potential to significantly enhance traditional manufacturing lines through waste reduction and automation, resulting in a far more resilient supply chain.

8. Healthcare

Last year was another challenging year for the healthcare industry. The epidemic remained unexpected on a global scale. Vietnam was dealing with an increase in dengue fever and the threat of deadly new illnesses. More obstacles have surfaced after three years of combatting the epidemic.

Vietnam's healthcare spending increased from $16.1 billion in 2017 to $20 billion in 2021, and it is expected to climb to $23.3 billion in 2025 and $33.8 billion in 2030. According to a November analysis issued by Vietnam Analysis, a Vietnamese business rating organization, the predictions are based on a compound annual growth rate (CAGR) of 7.6%.

Why investors should be optimistic about Vietnam's healthcare industry
Figure 4. Why investors should be optimistic about Vietnam's healthcare industry

However, the primary concerns confronting the healthcare business are supply chain risks, increased logistical costs, rising raw material prices, exchange rate pressure, and increased competition. As the middle class grows and expects better healthcare, the government is investing in new hospitals and clinics, and Vietnam's healthcare industry is expanding rapidly. This area offers opportunities for investing in medicines, health insurance, and medical equipment and supplies.

Vietnam, according to KPMG, is creating the groundwork for a smart healthcare business that comprises illness prevention, medical assessment and treatment, and health management. Advances in these areas will allow overseas investors to join in Vietnam's digital health transition.

Closing Ideas

We hope that you can gain a deeper insight into which are the ideal sectors to invest in in Vietnam. Lastly, it is a suitable time to make a perfect move to tap into the attractive Vietnamese market. Get in contact with us if you have any queries. Thanks!

Source: Internet

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