Since joining APEC in 1998 and WTO in 2007, Viet Nam has been carrying out its commitments to international economic integration with vigour. The country has opened its door to cross-border trade and investment, and undergone various institutional and policy reforms. New bilateral and multilateral relations have been forged, giving Viet Nam impetus to to adhere to international standards of doing business.
Located next to China, Viet Nam’s proximity makes it an ideal alternative location for investors seeking to diversify their supply chains from China. Investors are able to limit interruptions or delays to existing supply chains in China.
Additionally, Vietnam’s major cities are also strategically located. Hanoi in the north and Ho Chi Minh City in the south are the business and financial hub of Vietnam.
Increasing integration into global economy
Participation in strategic trade agreements, including the AFTA, EU-Viet Nam FTA and CPTPP, demonstrates the commitments of Viet Nam towards trade openness with other countries.
Currently, there are 12 FTAs that Vietnamese exporters can take advantage of including agreements with major markets such as Japan, Canada and South Korea.
Strengthening institutional and regulatory framework
Over the years, the Vietnamese government has improved its legal and institutional framework to create a transparent and fair investment environment for investors. This has been reflected in the improvements in Viet Nam’s Ease of Doing Business ranking from 99th in 2014 to 70th in 2020.
Large market with increasing purchasing power and an emerging middle class
With a population of about 90 million, ranking 14th in the world, Viet Nam has enormous market potential to various types of business investment. According to PwC’s World in 2050 report, Viet Nam is forecast to be among the Top 20 economies in the world by 2050.
Young population and large workforce, with growing talents
Viet Nam is well known for its golden age structure with more than 52% of people of working age and about 97% of the working age population is literate, according to the Ministry of Education and Training. The government has taken steps to meet the demand of high-skilled industries, including increasing vocational and technical training. In 2018, there were more than 1,900 vocational training centres across Viet Nam.
Stable and high- growth economy
Viet Nam is among the fastest-growing economies in ASEAN and is poised for robust growth, projected to expand at 6.4% annually between 2018 and 2022, according to Moody’s Investor Services. International organizations such as the World Bank and ADB have praised Viet Nam for the stable growth of the macro-economy.
Competitive labour cost and increasing productivity
The rise of wages in China, coupled with the recent trade war between the US and China, has forced manufacturers to look for an alternative market. This is an opportunity for which Viet Nam is well positioned.
Vietnamese workers are also producing higher value added goods. Between 2008 and 2016, labor productivity in Viet Nam increased by 22.5%. In 2018 alone, labour productivity rose by 6% compared to 2017.
Continuously improving infrastructure
Viet Nam is investing heavily in infrastructure, such as highways and sea ports, to provide an efficient business environment for investors. From 2012 to 2016, Viet Nam’s infrastructure spending growth was among the fastest in ASEAN, at 11.5% p.a., nearly double its GDP growth.
This has helped boost the country’s World Bank Logistics Performance Index ranking in 2018 by 25 spots to the 39th position among 160 countries, putting Viet Nam ahead Malaysia, Indonesia and the Philippines.