Vietnam is an exciting emerging economy that offers both challenges and opportunities to those seeking to start their business in the country.
TMF Group Vietnam offers flexible services that help you navigate challenges and maximise opportunities.
The challenges that you might face:
Starting a business: It takes an average of 18 working days to set up a business and, while the cost is relatively insignificant, local government procedures can be laborious. Employees need to be mindful of local taxes, as well as registering with the Municipal Department for Labour, Invalids and Social Affairs.
Protecting investors: There are very weak security regulations protecting investors in Vietnam. The lack of enforcement is a hurdle for investors looking for a transparent market, fairness and government efficiency. The Vietnamese government recognises the issue and is working to establish greater transparency.
Trading across borders: Exporting and importing can be a daunting experience for investors. Procedures can take at most 21 days to complete, and involve many documents that can be time-consuming and costly to complete. The inefficient processes and slow clearance of goods can put traders at a disadvantage to their regional and global competitors.
Enforcing contracts and resolving insolvency: It takes approximately 400 days to enforce a contract in Vietnam, incurring sizeable costs and involving multiple procedures. Insolvency cases take an average of five years, with an estimated recovery rate of about 16.2 cents to the dollar, compared to the OECD average of 70.6 cents.
Culture: Vietnam ranks poorly in international measures of transparency, accountability and media reform. Government salaries are low and there is a dearth of systems in place to hold officials accountable. Business and investment disputes are common, as is confusion within jurisdictions about bureaucratic procedures and approvals. There is an entrenched and endemic system of informal charges in Vietnam.
Opportunities that Vietnam offers:
Economic growth: The economy has expanded at an average rate of 6.5% per annum over the last decade, driven largely by the emerging private sector. That, of course, has brought with it some challenges, the biggest being extremely high inflation, which tipped 23% in 2008. The government is focusing on rebalancing the economy and GDP growth is now a much more manageable 5.5% YoY.
Investment incentives: There are numerous incentives for domestic and foreign investment. Some are targeted at individual sectors and guarantee returns for investors. The key sector incentives are applicable to specific projects and investments that are viewed as capable of delivering economic benefits to Vietnam.
Cheaper operational cost (labour and rent): The country’s property is relatively affordable and property rental is comparatively cheap. Though Vietnam has tight labour laws, its workers remain regionally cost-competitive. Vietnam's young labour force is regarded as diligent, with a record of delivering high-quality work.