If a business is exploring opportunities to expand into Asia, it could be forgiven for assuming China to be the sole country to offer major economic growth and a wealth of opportunities. However, economic forecasts reveal that, while China does offer investment opportunities, another Asian country is poised to offer much in terms of tech, renewables, healthcare, and a skilled workforce: Vietnam.
This Southeast Asian republic still has a foothold in natural resources like timber and agriculture, but is experiencing growth in its rubber and plastics manufacturing sector, as well as a booming tech sector. According to the U.S. Department of Commerce’s International Trade Administration, there are many other reasons why investment in Vietnam is a smart business decision, including a young, well-educated workforce, and growth in infrastructure which can make the country even more appealing to domestic and international investors. The economy is strong and costs are low—attractive conditions for pursuing business opportunities in Vietnam.
Information and Communications Technology (ICT) in Vietnam
This was the first sector cited by The Leader, an online resource and news outlet created by the Business Leaders Forum of Vietnam Association of Corporate Directors. It highlighted five sectors that have potential for the most growth by 2020. ICT, with a focus on business process outsourcing, was seen as a prime area that is projected to continue growing. ICT revenue was estimated to be $59.9 billion in 2016, a figure that increased nearly 10% in recent years. The telecom area employs more than 14,000 people, and the business processing sector has grown 35% in the last decade, with Japan as its largest trading partner.
Sustainable industries like solar and wind power have plenty of room to grow worldwide, and Vietnam is no exception. The sector has strong support from the government, which sees energy efficiency as something that provides jobs and boosts the economy. It recently revealed a power plan that aims to triple the amount of renewables-produced electricity and a 26% increase in household solar energy use by 2030.
Vietnam’s healthcare sector is growing—and poised to continue growing. Its Ministry of Science and Technology performs regulatory functions for medical devices made in Vietnam, while the government oversees the management of medical equipment, as well as production, dissemination, procurement, and supply of medical equipment. However, there exists the need for an increase in medical device development; it is predicted that the medical device market will exceed $1 billion by 2019—a $250 million increase since 2014.
Tourism and Hospitality
As the political instability of the last few decades fades, Vietnam is positioning itself as a popular tourist destination. The country offers modern hotels and amenities, enticing cuisine, and natural beauty. The country could receive as many as 20 million international visitors by 2020. By the end of 2016, the country was estimated to have 420,000 rooms available for visitors in 21,000 visitor facilities, an 11% increase in facilities and an 18% increase in rooms since 2015. Growth in these sectors will require a large labor pool for construction, as well as employees to work at the various hotels, restaurants, tourism companies, and other related businesses.
Accounting for 18% of its GDP in 2016, Vietnam still boasts a strong agriculture sector—and employed roughly 17% of Vietnam’s population. With agriculture making up such a large proportion of GDP and providing a source of income for many, there’s much room for companies to further develop technologies that will provide modern tech applications to improve farmers’ output and conditions.
Vietnam’s Booming Startup Sector
Vietnam’s startup sector has been gaining traction over the last half-decade—and it’s showing no signs of slowing down. Several Vietnamese startups have received hundreds of millions of dollars from a variety of investors, ranging from Chinese retail giant JD.com to Korea’s STIC Investment and Vietnamese startup accelerator VIISA. 2017’s TechFest (a yearly event endorsed by Vietnam’s Ministry of Science and Technology and co-organized with other actors in the startup scene) showed that not only is the startup scene maturing, but that there’s an emphasis on attracting investment for these existing startups, rather than solely introducing new ones. And while international investment is already streaming in, the government is making efforts to continue this trend; the Law on Technology Transfer was in 2017 changed to promote advances in tech and promote and commercialize these new technological advances.
Vietnamese Manufacturing on the Rise
From generating over US$45 billion in mobile phone exports in 2017 to eclipsing global trade averages, Vietnam’s trade has grown from 70% of GDP in 2007 to 190% just a decade later. This monumental trend has created roughly 1.5 million manufacturing jobs between 2014 and 2016. While still technically a communist country operating under state-sanctioned capitalism, Vietnam has managed to capitalize on its young workforce, half of which is under the age of 35—as well as taking advantage of its proximity to other major trading partners. And, as the cost of doing business in its northerly neighbor China continues to rise, Vietnam’s openness to foreign direct investment (which accounts for roughly 90% of manufacturing exports) will likely continue to attract outside investment.
Rely on Global Expansion Expertise
Vietnam offers opportunities for foreign direct investment in a number of sectors—many of which are projected to grow over the coming years. If your company is considering pursuing business opportunities in Vietnam, contact Velocity Global today to learn how we can help you achieve your global expansion goals.