9 reasons why foreign investors should invest in Vietnam
In Southeast Asia, Vietnam is considered an attractive destination for the investors from various countries. According to the statistics of the Foreign Investment Department (Ministry of Planning and Investment), upto August 20, 2020, there have been 32,539 valid projects with a total registered capital of nearly 381.2 billion USD. The accumulated realized capital of foreign direct investment projects was estimated at 223.1 billion USD, equal to 58.5% of total valid registered capital with Korea being ranked first, Japan second, followed by Singapore, Taiwan and Hong Kong.
“To illustrate the above, Asia Legal lists out 9 reasons why the foreign investors (Hereinafter referred to as “the Investors”) select Vietnam as their potential investment destination:”
First, Vietnam has a particularly favorable geographical position with the possession of a long coastline (3,260 km) and many deep-water seaports, as well as a gateway to international goods trade by sea. Besides, the mainland is bordered by China, one of the world's top economies today.
Second, the political situation is stable
Vietnam's political stability is one of the most attractive factors for the Investors to Vietnam and this is also highly appreciated by international friends. If you look at a number of countries in the region, it can be easily seen that most countries have experienced political coups or crisis, meanwhile, Vietnam's politics is always stable, ensuring consistency in economic development policy and in attracting foreign investment.
Third, Vietnam is considered as a country with a stable and dynamic economy
Despite the general difficulties of the world economy, in the first 9 months of 2019, Vietnam is still considered a country with the leading stable and fast-growing economy in the region and the world. Specifically, GDP in the first nine months of 2019 is estimated to increase by 6.98%, the highest compared to the same period in the last 9 years. Processing and manufacturing increased by 11.37%. Consumption market is expanding, supply of goods is abundant. Total retail sales of consumer goods and services increased 11.6%; international tourist arrivals increased by 10.8%. Total export and import turnover were estimated at 382.72 billion USD, of which, export turnover of goods reached 194.3 billion USD, an increase of 8.2% and trade surplus was 5.9 billion USD, with 26 items with export turnover of over 1 billion USD.
Fourth, Vietnam has open foreign investment policy.
Vietnam always opens its market and encourages and attract the foreign investors through administrative procedure reform and investment incentives. Typically, the Investment Law 2020 and Enteprise Law 2020, coming into force since January 1, 2021 further strenthens Vietnam’s open foreign investment policy by cutting some administrative investment procedures.
Fifth, the business environment is constantly improving
In 2019, many indicators on the business environment and competitiveness of Vietnam are improved. 4.0 competitiveness jumpled by 3.5 points (from 58 points to 61.5 points), increased 10 places (from 77th to 67th). The Global Innovation Index (GII) increased 3 places with 6/7 key groups gaining points. Competitiveness in travel and tourism increased 4 places (from 67th to 63th). Ministries and other state authorities have become increasingly aware of their responsibilities and actively participated in improving scores and index rankings in the business areas which are under their state management.
Sixth, young and abundant labor force
Vietnam is a country with a young population structure, with nearly 88% of the population aged 25-59 joining the workforce, of which nearly 40% graduated from high school; 23.1% have been trained with a degree or certificate. In addition, the Vietnamese workforce is also appreciated for its hard work, high level of education and ease of training. Vietnam has also been and will continue to invest more in education and training than other developing countries. This is one of Vietnam's competitive advantages compared to other labor markets in the region.
Seventh, competitive labor costs
Despite the annual increase in the regional minimum wage, Vietnam remains a low labor cost country. Wages in Vietnam are still less than half the wages in China. The rise in wages in China has forced manufacturers to look for a market with lower labor costs. Vietnam with a low minimum wage and a growing economy is a low-cost alternative to China.
Eighth, the day infrastructure and technology are synchronized.
Previously, the limited technical infrastructure, especially the transport infrastructure, was identified as one of the reasons creating an invisible barrier in the process of attracting foreign investment capital into Vietnam. However, in recent years, in order to remove these barriers, the government and localities have been actively deployed to attract all resources to invest well in infrastructure, traffic roads. circuits, airports, routes to border gates, economic zones, industrial zones, hi-tech parks, ...
Ninth, Vietnam is a member of many trade agreements.
Another evidence to prove Vietnam's economic openness is that Vietnam has been participating in many bilateral and multilateral free trade agreements with many countries and regions to attract foreign investment into Vietnam such as the bilateral trade agreements with the US, Korea, Japan, ASEAN Economic Community, CPTPP, etc. . and more recently the Free Trade Agreement between Vietnam and the European Union (EVFTA).
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