Vietnam

Why trade or invest in Vietnam?

Solid foundation

In 1986, the Communist Party adopted “economic renovation” (DoiMoi) policy which laid the foundation for a market-based system to replace the planned economy model. Under this “economic renovation” policy, private sector participation and ownership was encouraged in industries, commerce and agriculture. The accession of Vietnam into the World Trade Organization (WTO), the establishment of the Securities Market and the equalization of private sector with the state owned sector has created huge opportunities to participate get exposure to the business environment and market in Vietnam. Additionally, with the Enterprise Law passed in 2000 and amended in 2005, the Vietnam Stock Exchange established in 2000 and the Government policy on privatizing State Owned Enterprises (SOEs) passed has resulted in the establishment of a number of new private enterprises and created opportunities for foreign investors to invest in Vietnam through partnerships with local private firms.

Strategic location

Vietnam's proximity to Southeast Asia's other major and developing markets is one of the key components to attract foreign investors. Vietnam is located at the centre of Southeast Asia; this location provides it a lot of trade benefits. Due to its close proximity to China and most other Association of South East Asian Nations (ASEAN) countries, it is a potentially big trading partner for these countries.

Growing economy

Vietnam has been one of the most impressive growth stories in the global economy over the last few decades. In Southeast Asia, Vietnam has been only second to China in terms of economic growth during the first decade of the 21st century. Vietnam's GDP has grown about 10 times from that in 1991. Given the past trends of economic development and the current trends of recovery from the global financial crisis, Vietnam’s future long-term economic prospects are for investment and development.

Favourable investment climate

Over the past 3 decades, Vietnam has emerged as one of the most attractive destinations for foreign investors. Foreign investors have been regarding Vietnam as a key strategic investment location to achieve cost-effectiveness in their global supply chains. Some of the investment incentives for Vietnam include tax incentives for investments in “Preferential Investment Sectors”, liberalised economic structure, transparent investment environment, investor friendly legal and regulatory environment with well-established legal and regulatory frameworks including the Labour Code, Land Law, Civil Code, Law on Securities, Law on Competition, Enterprise Law and Investment Law, low cost labour, favourable Foreign Direct Investment (FDI) policy, clearly defined and user friendly Banking and Foreign Exchange Norms and clearly defined Licensing process for foreign investors investing in Vietnam for the first time.

Increasing exports

Vietnam has been one of the most open economies in international trade as highlighted by its high import and export volumes. Vietnam has applied sequenced trade liberalisation, a two-track approach opening some sectors of the economy to international markets while protecting others.

Vietnam is now a major source of the world's manufactured goods, especially garments, textiles and footwear. Vietnam is also a major exporter of agricultural commodities such as rice, coffee, tea and rubber. Export of services such in tourism, mining and high-technology sectors has been growing at a reasonable pace.

Demographic advantages

One of the major advantages of Vietnam as an investment destination is its young, hard-working, highly literate and easy-to-train labour force. Of the total population of Vietnam, approximately 60% is below the age of 25 years. The literacy rate for the population aged 15 years and above (i.e. the working group) is approximately 94%. This is the result of the importance and priority given by the Government of Vietnam to the development of quality training and education system in Vietnam.

Double tax avoidance agreements (DTAs)

Vietnam has already entered into DTAs with more than 50 countries and others are at various stages of implementation and negotiation.

Some particularities of the Vietnamese law and the Vietnamese legal system you should know

Vietnam has adopted a favourable import duty regime with import duty exemptions available for import of certain goods under certain categories. Raw materials and components imported for the manufacture of goods for export are exempted from import duty provided these goods are exported within 275 days. Additionally, investments in encouraged investment projects, such as infrastructure development projects, are entitled to import duty exemptions for a period of 5 years from the start of operation for importing raw materials, supplies and accessories which cannot yet be domestically produced.

The signature of the FTA with the EU and the TTP with the USA will increase the ongoing trade with Vietnam and relocation of labor intensive industries from for example China will lead to increasing investments and need for legal support.

A-Law law firm Vietnam

A-Law Vietnam desk has been providing legal support to clients in different areas, such as real estate issues, corporate and civil (family) law, traffic law, migration law, liability law and debts recovery (bankruptcy, administrative fines).

An in-depth approach of the different legal aspects of cross border cooperation and trade, commercial agency, distribution and franchising of a wide variety of products exported from or imported into Vietnam have been assessed through A-Law dedicated team.