ABOUT VIETNAM

Amongst all the countries in Southeast Asia, Vietnam, officially the Socialist Republic of Vietnam, is a rapidly emerging economy renowned for its dynamic growth, strategic location on the Indochinese Peninsula, and vibrant culture. Having undergone significant economic reforms since the “Doi Moi” (Renovation) policy in the late 1980s, Vietnam has transformed into a leading manufacturing hub and an increasingly attractive destination for foreign direct investment. Hanoi is the capital, serving as the political and cultural heart, while Ho Chi Minh City (formerly Saigon) is the largest and most dynamic economic center. According to the World Bank, Vietnam is classified as a Lower-Middle Income Economy, with a strong trajectory towards becoming an Upper-Middle Income country in the near future.

The currency of Vietnam is the Vietnamese Dong (VND). As of today’s exchange rates (June 2025), 1 Indian Rupee is approximately 305 Vietnamese Dong. The population of Vietnam is estimated at approximately 100.9 million in 2024, making it one of the most populous countries in Southeast Asia. Vietnam shares land borders with China to the north, Laos to the west, and Cambodia to the southwest. It has extensive maritime borders along the South China Sea and Gulf of Thailand, bordering China, the Philippines, Indonesia, Malaysia, and Thailand. The official language is Vietnamese. English proficiency is rapidly increasing, especially among the younger generation, in major cities, and in business and tourism sectors. The majority of the population adheres to traditional Vietnamese folk beliefs, often blended with Buddhism, while Catholicism also has a significant following. Major international airports include Noi Bai International Airport (HAN) in Hanoi and Tan Son Nhat International Airport (SGN) in Ho Chi Minh City, offering extensive global air connectivity. Vietnam’s long coastline is dotted with crucial commercial seaports, including Cai Mep-Thi Vai Port (a deep-water port handling large container ships), Hai Phong Port, and Da Nang Port, all vital for its export-driven economy.

The standard corporate income tax rate in Vietnam is 20%. To attract foreign direct investment and promote economic growth, the Vietnamese government offers a comprehensive range of investment incentives, primarily managed by the Ministry of Planning and Investment (MPI) and relevant provincial authorities. These incentives are often tailored to specific sectors, investment sizes, and geographical locations. Key incentives can include:

• Tax Holidays: Corporate income tax exemptions for a specific period (e.g., 2-4 years from the first profitable year), followed by reduced tax rates for subsequent years (e.g., 50% reduction for 9-15 years).
• Reduced Corporate Income Tax Rates: Preferential rates (e.g., 10-15% for a specific period) for projects in high-tech industries, R&D, large-scale manufacturing, or those located in industrial parks, economic zones, or disadvantaged areas.
• Import Duty Exemptions: On machinery, equipment, specialized vehicles, raw materials, and components not produced domestically, used in promoted investment projects.
• Land Rent Exemptions/Reductions: For projects in encouraged sectors or locations, or for large-scale investments.
• Support for Hi-Tech Parks and Industrial Zones: These zones offer ready-to-use infrastructure, streamlined administrative procedures, and additional incentives.

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Establishing a business in Vietnam has become increasingly streamlined, reflecting the government’s commitment to improving its business climate and attracting foreign investment. The most common legal entities for foreign investors include a Limited Liability Company (LLC), a Joint Stock Company, a Branch Office, or a Representative Office. While 100% foreign ownership is generally allowed in many sectors, some specific conditional business lines may require a joint venture with a local partner or are subject to specific licensing conditions. Vietnam’s robust legal framework, increasing regulatory transparency, and active participation in numerous free trade agreements (e.g., CPTPP, EVFTA, RCEP) enhance its appeal as an investment destination.

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Types of Business which can be started in Vietnam:

• Manufacturing: Vietnam is a global manufacturing hub, particularly for electronics (smartphones, components), textiles, footwear, and machinery. Opportunities exist in advanced manufacturing, assembly, and supporting industries.
• Digital Economy: A rapidly growing sector including e-commerce, fintech, IT services, software outsourcing, and digital content. Vietnam has a young, tech-savvy population and a burgeoning startup ecosystem.
• Infrastructure Development: Significant government investment in improving transport networks (highways, railways, airports, seaports), energy infrastructure (power plants, transmission lines), and smart city development.
• Renewable Energy: Ambitious targets for increasing renewable energy share. Opportunities in solar, wind (especially offshore), and hydropower projects.
• Tourism: A major growth sector with diverse attractions from stunning beaches to historical sites. Opportunities in hotels, resorts, specialized tours, and eco-tourism, especially with post-pandemic recovery.
• Agriculture & Agro-processing: A strong agricultural base (rice, coffee, seafood, fruits). Opportunities in value-added processing, modern farming techniques, organic agriculture, and export of processed food.
• Retail & Consumer Goods: A large and growing middle class with increasing disposable income presents opportunities in modern retail, branded consumer goods, and e-commerce.

Advantages of Starting Business in Vietnam:

• Rapid Economic Growth: One of the fastest-growing economies globally, offering a dynamic market.
• Strategic Location: Proximity to major Asian markets and key shipping routes.
• Competitive Labor Costs: Attractive labor costs combined with an increasingly skilled workforce.
• Strong FDI Inflow: Consistently attracts significant foreign direct investment due to favorable policies.
• Extensive Free Trade Agreements (FTAs): Access to numerous major markets through a network of FTAs.
• Improving Business Environment: Ongoing reforms to streamline regulations and enhance transparency.
• Large Domestic Market: A young, growing population with rising consumption power.

Imports & Exports: Vietnam is a major global trading nation, known for its strong export performance driven by manufactured goods.

Major items which are exported from Vietnam:

• Telephones, Mobile Phones, and Parts
• Computers, Electronic Products, and Components
• Textiles and Garments
• Footwear
• Machinery, Equipment, Tools, and Spare Parts
• Seafood (e.g., shrimp, pangasius)
• Coffee, Rice, and other agricultural products

Major items which are imported in Vietnam:

• Electronic Components (for manufacturing)
• Machinery, Equipment, Tools, and Spare Parts
• Fabrics, Yarns, and Fibers (for textile industry)
• Petroleum Products
• Plastics
• Chemicals
• Iron and Steel

Major items traded between Vietnam and India (as of June 2025): Trade between Vietnam and India has been steadily increasing, reflecting growing economic ties and complementary sectors.

• Exports from Vietnam to India: Include mobile phones and components, electronic components, machinery, chemicals, rubber products, and coffee.
• Imports in Vietnam from India: Predominantly consist of pharmaceuticals, iron and steel, machinery and equipment, cotton, animal feed, and seafood.

Manufacturing: Manufacturing is the primary engine of Vietnam’s economic growth, with significant foreign investment driving its expansion.

• Electronics Assembly: A key global hub for assembling smartphones, tablets, computers, and other electronic devices for major international brands (e.g., Samsung, Apple suppliers).
• Textiles and Garments: A traditional strength, involving spinning, weaving, dyeing, and garment production for global fashion brands.
• Footwear: Major global producer of athletic and casual footwear.
• Automotive Assembly & Parts: Growing industry with local assembly and component manufacturing.
• Food Processing: Value-added processing of agricultural and aquatic products (e.g., coffee, rice, seafood, fruits).
• Machinery and Equipment: Production of various industrial machinery and components.

Mining: Vietnam has a diverse but largely underdeveloped mining sector, with some key resources.

• Coal: Significant reserves, primarily for domestic energy consumption.

• Bauxite: Large reserves, especially in the Central Highlands, with potential for aluminum processing.

• Rare Earth Elements: Possesses substantial reserves, attracting growing international interest.

• Titanium: Found in coastal areas.

• Oil and Gas: Offshore fields in the South China Sea contribute to energy production, though domestic production has fluctuated.

• Other minerals include iron ore, apatite, and some precious metals.

• GDP = $469.7 billion (nominal, 2024 est. IMF)

• GDP Growth = 5.8% (2024 est. IMF); 6.5% (2025 forecast, IMF)

• Ease of doing business rank = The World Bank’s ‘Doing Business’ report has been discontinued. In its last edition (2020), Vietnam ranked 70th out of 190 economies, reflecting continuous improvement due to ongoing government reforms aimed at creating a more favorable business environment.

• GDP per Capita = $4,657 (nominal, 2024 est. IMF)

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