Set as Homepage    Add Favorites

Why Vietnam Is An Attractive Destination For Foreign Investment?
Date: 5/27/2021 3:18:04 PM
There are many reasons why Vietnam is an attractive destination for foreign investment. Some are due to its political stability, steady economic growth, abundant workforce, vast market, increasing per capita income, extensive international integration, competitive incentives, and geographic location in the heart of Southeast Asia, Vietnam has been regarded as a bright spot in ASEAN by investors.

Why Vietnam Is An Attractive Destination For Foreign Investment

There are many reasons why Vietnam is an attractive destination for foreign investment. Some are due to its political stability, steady economic growth, abundant workforce, vast market, increasing per capita income, extensive international integration, competitive incentives, and geographic location in the heart of Southeast Asia, Vietnam has been regarded as a bright spot in ASEAN by investors. Read further to understand the 10 reasons for attracting foreign Investment. Foreign direct investment (FDI) is the acquisition of a lasting management interest in an enterprise operating outside the home country by a resident of another country.

Foreign direct investment, often abbreviated as FDI, is the acquisition of controlling interest in an unincorporated enterprise working outside its home economy. This type of investment by foreigners is also known as overseas direct investment or outward direct investment. 

Foreign Direct Investment has been one pillar for Vietnam’s three-pillar economic system, which also includes exports and domestic capital for economic growth and development.

In Southeast Asia, Vietnam is the third-largest market. It is known to be one of the fastest-growing economies in the whole world. These make the only two reasons foreign investors will want to invest in Vietnam. Below is the list of the most attractive reasons as to why Vietnam is an destination for foreign investment. 

For many decades, foreign firms have been looking forward to investing in many sectors of Vietnam; as a result, it has emerged as an extremely favored destination among them. A lot of potential is offered to the foreign investors, especially to those who are looking to venture into Southeast Asia, by Vietnam. According to the World Bank, over the past three decades, Vietnam has moved into a lower middle-income country, from being one of the world’s poorest nations.

Why is Vietnam attractive for FDI?

Vietnam is an attractive place for foreign direct investment, and with the passage of the Foreign Investment Law in 2009, Vietnam has become a notable location for many international companies looking to grow their business.

Foreign investors have chosen Vietnam as a promising new market because it is the fastest-growing economy in Southeast Asia and one of the largest rice exporters in the world. Additionally, its strategic geographical position also enables easier access to other emerging economies such as China and India.


Top Reasons for Attracting foreign investment in Vietnam:

The reasons of attracting foreign investors are :


1. Strategic location


Vietnam is located in the center of Southeast Asia very strategically. An important fact which is also worth noting, that it shares its borders with China. It is close to many international shipping routes and has a very long coastline. These are some reasons which make Vietnam extremely suitable for trading.

similarly, all of the major cities of Vietnam are also located favorably. There is Hanoi in the north and in the south there is the Ho Chi Minh City. It is easy to do business within and outside the country because they have the major cities on the opposite ends of the country makes.

Hanoi and Ho Chi Minh City are not the only cities where business opportunities are present, but there is also Da Nang which also has many business opportunities.

2. Trade agreements 

Several trade agreements are there in Vietnam which makes it easy to do business there. The country’s economic growth is promoted by these trade agreements.

Trade agreements under the World Trade Organization, are like those certain trade agreements, which make it easier for foreign investors to set their businesses up in Vietnam. Tariff reductions are also offered by Vietnam through trade agreements, one such example is the case with the European Union about the Free Trade Agreement. 

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

  • Member of ASEAN and ASEAN Free Trade Area (AFTA)
  • Free Trade Agreement with Japan
  • Bilateral Trade Agreement (BTA) with the US
  • Trans-Pacific Partnership (TPP)
  • Free Trade Agreement with Korea


 3. Doing business is getting easier every year


Vietnam was ranked 70th out of 190 economies by The World Bank in its Doing Business 2020 report. Vietnam got a score of 69.8, which was 1.44 points higher than the year before that was given by The World Bank

The process to pay taxes involves a significant area of ​​improvement. General Department of Taxation of Vietnam upgraded its IT infrastructure. are now able to settle taxes businesses much faster than before, because of this development.

As the government continues to make processes easier in Vietnam investors can expect further improvements in doing business.


4. Openness to foreign investment


Restrictions on foreign ownership in certain industries are present in many emerging markets but, in Vietnam, foreign direct investment (FDI) s is allowed by most industries. The government also made changes and also put incentives in place to encourage foreign investment. These changes were made to the regulations. Such incentives include:

  •  Exemption from import duties on specific goods like raw materials
  • Reduction or exemption from land rental or land use taxes
  • Lower corporate income tax rate or exemption from the tax for several industries 


Investors by investing in preferred industries can enjoy the above incentives. Incentives to businesses set up in certain locations are also offered by the Vietnamese government.   

5. Relatively low setup costs


For most businesses in Vietnam there are no minimum capital requirements. But there is need to present a reasonable amount relevant to the planned business. Costs to set up by the business must be covered by the capital. In addition to that, operating expenses must also be covered by the capital until the business becomes self-sustaining.


6. Stable GDP growth


 Vietnam is one among the fastest-growing economies in the world. Vietnam has seen the last few decades due to economic growth in 1986. Vietnam was the 60th largest economy in the world in 2000, and by 2019 rose to the 44th place. Estimate of the projections say that by the year 2050, Vietnam will be the 20th largest economy.

GDP growth in Vietnam averaged 6.5% every year since 2000. Vietnam’s economy still showed growth in 2020, at about 3% despite the pandemic. The GDP growth of Vietnam could reach 3.8% by the end of 2020, according to the Vietnam Institute for Economic and Policy Research (VERP).

   7. Infrastructure developments


 Improvements to the country’s infrastructure are being made by the Vietnamese government. Funds are being put towards building and improving airports, ports and expressways by the government. Doing business in Vietnam will be made easier by easy transportation and shipping. Opportunities for foreign investors are also created by such projects to work with the Vietnamese government.

Expressways in Vietnam

Easy travel between regions and even neighboring counties are possible because of Vietnam’s many expressways.

Some notable expressways in Vietnam:


  • Hanoi-Lang Son expressway. Hanoi is connected to the different cities in the north by this is part of the system of expressways. Hanoi connects with the International Border Gate in Lang Son province by this. Plans to connect China’s Nanning-Youyiguan Expressway to this are also there.


  • Ho Chi Minh City-Moc Bai. This expressway also connects Vietnam to neighboring countries similar to the previous item. Plans to connect Cambodia’s Phnom Penh-Bavet Expressway to the Ho Chi Minh City-Moc Bai expressway are there.


  • North-South expressway. Its construction began in 2019. This expressway will connect Hanoi in the north to Can Tho in the south, once completed. The highway will run through Da Nang and Nha Trang also.



8. Tax Incentives for Foreign Investment in Vietnam


To stimulate investment tax incentives are applied consistently, especially for the inflows of FDI in Vietnam. It is often seen that reductions in tax obligations while increasing tax incentives in some investment sectors and locations have created favorable conditions for the enterprises to increase capital accumulation, expand manufacturing and speed up the process in Vietnam within the past quite 20 years of economic reform.

FDI enterprises enjoy an honest range of incentives when operating in Vietnam, including tax incentives that allow them to pay only 10.7% in corporate tax on the typical , compared to one-fifth for normal businesses.

In the upcoming revision of its incentive for FDI enterprises, Vietnam will specialize in attracting foreign investment into areas of manufacturing with high added value and technological content. Many world big corporations start pouring investment into Vietnam lately. Here are some samples of companies having their presence/ going to invest in Vietnam:
In Vietnam, Indian firms strengthen renewable energy investment in April 2018. Indian giants such as TATA Group, Suzlon Energy Ltd. and Adani Green Energy Ltd. set their foot in Vietnam very early after the country opened its doors for foreign investment. TATA Group’s solar power projects in Binh Phuoc province is the newest Indian investment project. 

Forty-nine megawatts is its total capacity and is found in the southern province on 55 hectares in Loc Ninh district. To date, India has 176 projects in Vietnam with the whole investment of $814 million. Its three canteens serve some 13 tonnes of rice every day. It churns out more mobile phones than the opposite facility within the planet. A 3rd of the Samsung Electronics’ global output produce in Vietnam. The company has invested a cumulative $17bn within the country.

Its local subsidiary’s $58bn in revenue last year made it the foremost important company in Vietnam, piping PetroVietnam, the state company. It employs quite 100,000 people. It’s helped to make Vietnam the second-biggest exporter of smartphones within the planet, after China. Samsung alone accounts for nearly 1 / 4 of Vietnam’s total exports of $214bn last year. In November 2018, Thailand’s TCP Group required an edge of US$120 million in Vietnam in 3 years.

The opening of the office in Vietnam may be a component of the group’s five-year plan announced in 2017 to triple its total sales to over US$3 billion annually, said Yoovidhya.

In March 2019, American Universal Alloy Corporation and Alton International Enterprises were approved to make technology parks.

The city center of Da Nang said it licensed two projects of american giants – leading global manufacturer of aircraft components American Universal Alloy Corporation and electronics manufacturer Alton International Enterprises – to line up their production bases at its hi-tech parks while some others also from the US, like KeyTronicEMS, are also projects within the park.

Early 2019, Ikea planned to require an edge US$450 million Hanoi City also expected to receive Ikea because the Swedish furniture giant plans to require an edge of US$450 million during a retail center and warehouse system within the capital.

2019 - Lenovo Group proposed a thought building a computer factory here are some facts updated in 2019 proving why Vietnam has become more of an attractive destination for investment.


9. Young and educated workforce


The median age in Vietnam is 32.5 years old, according to Worldometers. About 70% of Vietnam’s population is under 35 years old as per the World Bank. The highest labor force participation rate in Asia at 76% is also in Vietnam according to Trading Economics.

About 20% of its annual budget towards education is also allocated by the Vietnamese government. A young and highly educated workforce is present in Vietnam.



10. Competitive labor costs

Vietnam still has one of the lowest labor costs in Southeast Asia’s top emerging markets despite yearly increases to minimum wage rates. In addition to that, in China are twice than that of the minimum wage rates in Vietnam  

Many manufacturers are looking at markets with lower labor costs due to rising labor wages in China. Vietnam is a more cost-effective alternative to China with its low labor costs and a stable yet growing economy.



11. Vietnam is becoming the next China


Vietnam rose from being one of the world’s poorest countries to a lower-middle-income country over the last three decades. China’s a decade ago economic development is comparable to that of Vietnam’s now.

Many industries are moving production and manufacturing operations to Vietnam due to the rising labor costs in China. In Vietnam manufacturing of textiles and clothing is booming. In the country the manufacturing of high-tech products is also rising.



12. Swift Government responses to COVID-19


Government’s swift response to COVID-19, has kept Vietnam’s economy open. Regulations of the Government to contain the virus have kept infection numbers low in Vietnam.

For Vietnam’s businesses to reopen by April following a lockdown in March was possible because of these measures. Vietnam has been made even more attractive to investors by being able to bounce back quickly. Vietnam was still able to show some slight growth even when the economic expansion contributes in the second quarter of 2020, unlike many other countries. The government of Vietnam has shown that it has the ability to handle crises


How does foreign direct investment affect Vietnam? 

This is a question that many people often ask about Vietnam. Foreign direct investment, more commonly known as FDI, plays an important role in the economy of the country. There are various ways in which FDI affects economic development and growth in the country.

The first way through which FDI affects the economy of Vietnam is through the process of technology transfer. The globalization and internationalization of production-line technologies have been welcomed by many countries since they increase competitiveness and productivity levels for production firms located in these countries. However, it also causes firms to purchase patents as well as shop around for cheaper licenses from different technology providers based on their related products and markets that they operate within.

Can a foreigner invest in Vietnam?

If you have been considering investing in Vietnam, but don’t know how to do it, then we can help you. 

Get in touch with us through a call or email and we give a general overview of what investing in Vietnam entails and what the benefits involved. 


There are 2 scenarios that will be given: one where a foreigner has 5 million Euros available to invest and can invest up to 30% of their funds; and one where a foreigner wants to open up an office or business in Vietnam but cannot put any money on the ground. 

The third section will go into different types of investments that require approval from Vietnamese authorities.


Vietnam has become Asia’s hottest investment destination.

According to a Forbes report; Vietnam has become Asia’s hottest investment destination with a record US$19.1 billion in foreign direct investment (FDI) Distributing in 2018.
The Ministry of Planning and Investment showed foreign investors registered to pour US$8.47 billion into Vietnam in the first two months of 2019 following this, data from the Foreign Investment Agency . It was 2.5 times higher than the same period of last year. FDI projects Disbursement also rose by 9.8 per cent, hitting a three-year record high year-on-year to $2.58 billion. Helping it notably, for the first time to rank third in the hottest sectors in the country’s FDI attraction foreign investment in science and technology surged sharply. Many provinces and cities consecutively positive licenses for high-quality projects continuing the move is remarkable. Thus, all this makes Vietnam an attractive destination for foreign investments.

About Us - VIIPIP


VIIPIP is a boutique consulting organization led by a main consultant with more than 20 years of practical expertise aiding international firms in practical business possibilities in Vietnam. Our mission is to help businesses overcome challenges and conduct business in Vietnam. We assist our customers in navigating international investment initiatives through our network of well-established local partners.

Contact us for any queries related to foriegn investment in Vietnam

Email: [email protected]

Phone number: +84 9824 191 63



   Other news
Homepage | News | Search | Comparison| Terms Of Use | Contact | User

HO Add: 62L/36 Nguyên Hồng, Ward 11, Bình Thạnh District, HCMC - Vietnam
Biz Office Add: #48 Road No 11, Quarter 6, Hiệp Binh Chánh Ward, Thủ Đức, HCMC - Vietnam
®Source: should be clearly quoted for any use of information extracted from our website.
Publication permit No: 60/GP-TTĐT , April 05, 2010.