Vietnam’s Booming Economy: An Attractive Destination for Manufacturing Companies in 2023
By Dr. Amanda Lim & her AI assistant, Leonardo Liu
In 2023, Vietnam’s economy is projected to see 6.7% growth[1], making it an attractive location for investment and trade. The recovery of the economy is driven by positive growth in industries such as pharmaceuticals, logistics, forestry, and personal goods. The major exports of Vietnam include textiles, integrated circuits, broadcasting equipment, and telephones. Its main export destinations are the US, China, Hong Kong, Japan, and South Korea. Due to these elements, Vietnam is a promising market with room for expansion and lucrative investment prospects.[2]
Foreign investment in Vietnam is estimated to reach between $36–38 billion in 2023[3], with a disbursement of $22–23 billion, according to the Foreign Investment Agency. Vietnam is a popular destination for foreign investors seeking to establish manufacturing operations due to its low labour costs and favourable government policies. The country is a major exporter of textiles, footwear, electronics, and other manufactured goods.
Vietnam is a growing destination for foreign investment and offers a range of incentives to entice companies to invest in the country. One of these incentives includes tax benefits, including tax holidays, reduced corporate income tax rates, and exemptions from import duties on machinery and equipment. Companies can enjoy a reduced corporate income tax rate, with preferential rates of 10%, 15%, and 17% [4], which can either apply for the entire lifetime of a project or for a predefined period, as specified in the specific provisions. The Vietnamese government has supportive policies in place to encourage investment in various sectors, including manufacturing. The country also has a large pool of low-cost labour, making it a cost-effective location for companies looking to reduce production costs. In 2021, the average minimum wage in Vietnam was $2.99 per hour compared to $6.50 per hour in China [5].
Vietnam’s location makes it a strategic gateway to the Southeast Asian market and a convenient location for shipping to other regions in Asia. The country’s developing infrastructure, including transport, energy, and communications, also makes it easier for companies to set up operations and connect with suppliers and customers. Vietnam is a party to several free trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the EU-Vietnam Free Trade Agreement, providing access to large and growing markets for exports.
It is important to consider other factors such as market conditions, competition, and cultural differences before making any investment decisions, despite the attractive incentives.
For more information please contact ACH Worldwide at
contact@ach-worldwide.com
References:
[1] Taking Stock: Vietnam Economic Growth. Retrieved from: https://www.worldbank.org/en/country/vietnam/publication/taking-stock-vietnam-economic-growth-update-august-2022#:~:text=The%20reopening%20of%20the%20country,and%206.7%20percent%20in%202023.
[2] Vietnam outlook 2023: Economic prospects in the post-pandemic era. Retrieved from: https://seller.alibaba.com/businessblogs/px0023nrl-vietnam-outlook-2023-economic-prospects-in-the-post-pandemic-era
[3] Foreign investment will flow into Vietnam to reach $36–38 billion in 2023. Retrieved from: https://vietnamnet.vn/en/foreign-investment-flow-into-vietnam-to-reach-36-38-billion-in-2023-2103465.html#:~:text=Foreign%20investment%20inflows%20into%20Viet,Do%20Van%20Su%20told%20baodautu.
[4] Incentives for Foreign Investors in Vietnam. Retrieved from:
[5] Is Vietnam Manufacturing an Option for Your Product? Retrieved from:
