Top 7 reasons why to invest in Viet nam (2020 update):

Top 7 reasons why to invest in Viet nam (2020 update):

Top 7 reasons why to invest in Viet nam (2020 update):

15 December, 2019

1. Tax incentives:

Most companies in Vietnam are taxed at a 20% corporate income tax rate. And compared to other countries :

CountryCorporate income tax rate

However, there are tax incentives available, depending on the industry and location of your business. In other words, sectors and locations that are highly encouraged by the government receive high CIT incentives.

In some industries, the corporate income tax can be reduced or exempted for the whole period of operation or for 10 years,15 years,20 years.

Let’s see at these posts for more detail:

Tax exemption in Vietnam

Preferential taxes in Vietnam

2. Vietnam’s young and growing population:

Firstly, the median age in Vietnam is 30.9 years, according to Worldometers. Furthermore, Nielsen even estimates that 60% of the Vietnamese are under the age of 35. This means that more than half of the population is at its most vigorous working age.

There are more than 96 million people living in Vietnam (2020) and the number is growing rapidly. Vietnam’s population has already exceeded the population of larger European countries.

3. Vietnam’s openness to foreign investment:

Vietnam’s government executes a welcoming attitude towards foreign investment and is continuously changing its regulations to boost foreign investment in Vietnam.

The government of Vietnam offers several incentives to foreign investors who invest in certain geographical areas or sectors of special interest. For example, in high-tech, agriculture, finance, healthcare businesses etc. These tax benefits include:

In July 2015, Vietnam also implemented Decree 60/2015 which allows foreign investors to invest in more areas than before.

Giants like Samsung, Nestle, Intel and LG are among the largest investors.

4. Strategic location:

Located in the center of ASEAN, Vietnam has a strategic location. It is close to other major markets in Asia, the most notable neighbor of them being China.

Its long coastline with more than 3000 kms, direct access to the South China Sea and proximity to the world’s main shipping routes give perfect conditions for trading.

Two major cities in Vietnam are Hanoi and Ho Chi Minh City. Hanoi, the capital, is located in the north and has extremely convenient trading opportunities. Ho Chi Minh City, the largest by population, is situated in the south and is the industrial mecca of Vietnam.

For more information about the advantages of different regions in the country, read our previous articles on how to choose your business location in Vietnam and business oppportunities in other cities of Vietnam.

5. Trade agreements:

Another indication of openness to the global economy are the numerous trade agreements Vietnam has signed to make the market more liberal.

Some of the memberships and agreements:

  • Member of ASEAN and ASEAN Free Trade Area (AFTA).
  • Member of World Trade Organisation (WTO).
  • Bilateral Trade Agreement (BTA) with the US.
  • Free Trade Agreement with the European Union-EVFTA (comes into effect in 2019).

All these treaties show that Vietnam is eager to promote the country’s economic growth and will continue its commitment towards trading with other countries.

6. Relatively low setup and labor costs:

In contrast to many other countries, there are no minimum capital requiremnets for most business lines in Vietnam. In fact, setting a high capital for registering a company in Vietnam is one of the 7 common mistakes foreign investors do here. 

You can start a business in Vietnam without having a great amount of charter capital in your back pocket. Just make sure you have enough funds to cover the planned expenses of your company set up and you are good to go.

Also, note that the amount of capital you stated must be fully paid in within 90 days of the date of your company registration.

Despite the yearly increase of minimum wage, Vietnam is still a country with low labor costs. Minium wages in Vietnam remain less than half of what the wages are in China.

The rise of wages in China has forced manufacturers to look for a market with lower labor costs. Vietnam with its low minimum wage and growing economy is a great low-cost alternative to China and more and more investors decide to set up their manufacturing companies in Vietnam.

7. Stable politics:

Viet Nam is among a few countries in the world that has a stable political environment while the locals are polite and gentle.