Capital allocation. Why Vietnam is the best choice in Southeast Asia.
Placement of capital in Southeast Asia. When choosing a country, Vietnam can be distinguished due to many factors. This country, with a rich history and rapid economic growth, provides unique opportunities for investors. Let's take a closer look at what advantages make Vietnam an ideal place for investment.
The first and most important question is money and inflation in Vietnam
The very first and most important factor in choosing a country is the stability of the currency.
Let's look at the volatility of Vietnam's currency over the past 10 years. As of October 2013, the cross rate was 21.080 VND per 1 US dollar. Today it is 24.360 VND per 1 US dollar. It’s easy to calculate that over 10 years, the Vietnamese dong has lost only 13% against the US dollar. Just remember the events of 2023 - in just a few days, the national currencies of some countries lost up to 40% of their value.
I would like to note that an important factor when choosing a country to place capital is the purchasing power of money. We also compare 2013 and 2023. The food basket in Vietnam has remained virtually unchanged for 10 years, and inflation was only 30%.
No less important for a business owner is the administrative system of Vietnam. This is an opportunity to work and earn money
You most likely will not be able to open a company and complete all the necessary procedures in Vietnam on your own. There is a need to know the language. In Vietnam, all administrative processes are carried out in Vietnamese. However, there are companies that will do everything “turnkey” for an understandable fee. And then they will support your business in accounting and legal matters.
Compared to Thailand or Indonesia, it is much easier, more profitable and faster to open a business in Vietnam. In most business segments, you, as foreign founders, can be 100% owner of the company. And at the same time hold the position of director. And after going through a simple procedure, you will receive a residence permit in Vietnam for 2-3 years. Now you can work and earn money in a comfortable, safe environment and excellent climate.
Labor resources in Vietnam
Labor resources are also very important when choosing a country to place capital. Vietnam is a country with a population of about 100 million inhabitants at the end of 2023. That's 1.25% of the world's population! About 55% of the population are people under 45 years of age. If you dig deeper, 85% of this number of labor resources have secondary education, and 45% of them have higher education. There is a very noticeable tendency among young people to learn English in order to be able to find a job in a foreign company. Young people want to work with foreigners because the culture in the team is completely different and this is considered prestigious.
A lot of Vietnamese people recently returned to Vietnam. And this is a whole layer of educated, broad-minded people who speak English. They have an understanding of Vietnamese traditions and want to find good jobs in their homeland. Our company has several such employees on its staff. Their effectiveness is many times higher than that of invited foreign specialists.
Vietnam infrastructure
Let us consider in more detail the issues of logistics, the possibility of locating enterprises and working with the bureaucratic apparatus. All these components play a significant role in the allocation of capital.
Features of logistics in Vietnam
In Vietnam, there are 3 zones with major international ports. One of them is located in the north, the port of Hai Phong near the capital Hanoi. And 2 ports in the south are Ho Chi Minh City Port and Long An Port, which will soon be put into operation.
Over the past 5 years, many highways and road junctions have been built. Highways connect the whole of Vietnam, from cities with a population of over a million to the smallest mountain villages. Air travel within Vietnam is affordable both in price and time. For example, a flight from Ho Chi Minh City to Hanoi takes about 2 hours and costs around $60.
On the issue of cargo transportation - in Vietnam they use motor transport more than railway transport. For example, cargo from the port of Hai Phong in the north of the country to Dalat, a city in the mountains in the center of the country, will arrive in 1.5-2 days. Our company, for example, often uses mail to send documents, since we have three offices - in Hanoi, Ho Chi Minh City and Nha Trang. And the delivery time for a parcel from Hanoi to Ho Chi Minh City in 1 day is quite realistic. The cost of such shipping is approximately $10.
Location of production and relocation of enterprises in Vietnam
Since 2007, Vietnam officially became a member of the World Trade Organization (WTO). Flows of foreign investment began to increase rapidly. And one of the most important investment needs is the location of production.
Since 2008, Vietnam began to create Industrial Zones (IZs). IZs are practically free economic zones within the country, but with their own original Vietnamese sauce. At the beginning of 2023, there were more than 500 IZs in 65 provinces, that is, throughout Vietnam. The main idea of IZ is to give investors the opportunity, incl. foreign, develop business areas in Vietnam. Placing an enterprise in IZ provides significant tax benefits. Such as complete exemption from income tax and VAT for up to 4 years. And then 50% exemption for another 7-9 years, depending on the IZ.
Industrial zones in Vietnam are divided into various segments: manufacturing, IT sector, trade and others. This topic is quite broad and deep. We recommend consulting with our specialists regarding locating your business in IZ in Vietnam.
The work of the bureaucracy
Since 2022, Vietnam has been actively introducing an electronic window to facilitate the passage of various administrative procedures. This speeds up obtaining permits, licenses and registration actions. Our company is actively mastering these innovations. For example, we provide accounting and legal support to an enterprise located on the island of Phu Quoc without our presence there.
Our experts will advise you on all issues related to capital allocation in Vietnam.
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