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  • News
  • 28 July 2021

5 reasons why Vietnam attracts foreign capital

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Many foreign investors know Vietnam as an ideal business and investment destination. Described by the World Bank as one of the most dynamic emerging countries in East Asia, the transition from a centralized to a market economy has transformed Vietnam into a middle-income country developed.

The first is the favorable geographical location. Vietnam is the connectivity hub of the region and a gateway to penetrate regional economies. Vietnam also shares a border with China. Besides, Vietnam also owns a long coastline, close to the world’s leading shipping routes. This is the perfect condition for the commercial process. In which, the capital Hanoi, located in the North, has very favorable business opportunities. Ho Chi Minh City, which has the largest population, is located in the south and is the industrial center of Vietnam.

Next is the open-door policy for foreign investors. Vietnam is continuing to implement preferential policies to attract foreign investors, such as corporate income tax exemption and reduction, import tax exemption for many commodities, land use, and rental exemption and reduction. The Government is also committed to continuing to reform administrative procedures to create all favorable conditions for investors.

In addition, the stable economic development helps Vietnam to score points in the eyes of foreign investors. In addition, the fact that the State Bank of Vietnam keeps the VND stable against the USD, tightened bank credit, and low inflation are a series of factors that help Vietnam win the trust of investors.

Besides, competitive labor cost is also an essential factor. Despite the annual minimum wage increase, Vietnam is still a country with low labor costs. Wages in Vietnam are still less than half of wages in China. Rising wages in China have forced manufacturers to look for a market with lower labor costs. Vietnam, with its low minimum wage and growing economy, is a low-cost alternative to China.

Fifth, Vietnam actively participates in commercial activities. Up to now, Vietnam has officially joined, signed, and implemented 14 FTAs with effect, and 01 FTA has formally been signed, coming into effect, and is currently negotiating 02 FTAs. Among the 14 FTAs that have been in development and are being implemented, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is the first new-generation FTA that Vietnam has joined, followed by the Trade Agreement Free Vietnam – European Union (EVFTA).