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An Introduction to Doing Business in Vietnam

Despite a weak global economy, major foreign investors continue to prioritize their investments into Vietnam. The country is steadily becoming an important manufacturing base for electronics makers who are searching for the next location in the world that is able to provide a well-educated and low-cost workforce. On the heels of major investments from the likes of Samsung, Foxconn Technology Co., Intel Corp., LG Electronics and Canon Inc., investors are also beginning to drastically expand their investments into the country. The steady inflow of capital sends a strong signal that Vietnam not only looks attractive from the outside but can retain value for investors at a variety of locations on the value chain.

Vietnamese businesses are optimistic about the economic future of the country and are also looking to grow their businesses to meet upcoming demand. A prime example is VietJet, a discount airline that is aggressively expanding its operations throughout the country. In a groundbreaking move, and one that is highly indicative of Vietnam’s rapidly emerging business environment, Vietjet has chosen to raise capital via IPO rather than through conventional debt markets.

The country has a growing workforce; however, there is still a noticeable lack of high-tech skills among job seekers. The Vietnamese government is pushing ahead with skills training programs. Foreign companies are also investing in the future of the country’s workforce. Intel is leading a group of technology companies, including Siemens, to train Vietnamese workers by funding training programs intended to develop a high-tech workforce within the country.

Nonetheless, research shows that the efforts to improve the ease of conducting business in Vietnam are seeing mixed results. Vietnam ranks 90 out of 183 countries in the World Bank’s “Doing Business 2016” overall ranking, down 1 position from 2015. While doing business as a whole remained stagnant in 2016, several aspects of Vietnam’s investment environment show significant movement:

  • “Paying taxes” Vietnam rose 4 positions year-on-year to 168,
  • "Protecting investors" ranks lower at 122 (rising 1 position year-on-year),
  • "Starting a business" is ranked at only 119 (falling 6 positions year-on-year), while
  • "Resolving insolvency" ranks at 123 (rising 2 position year-on-year).

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Content provided by Picture: Dezan Shira & Associates
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