Vietnam has been improving while the rest of the world has been in chaos. Vietnam has shown little to no reaction when it comes to international crises, like the trade war between the United States and China or the coronavirus outbreak.
Vietnam has worked tirelessly toward its goal of attracting more investment in the IT industry in Vietnam. The hope of full digitalization in Vietnam over the next decade is kept alive by the government’s efforts to ease regulations and policies to attract foreign investment in the IT sector. This article talks about how innovations in the information technology sector could benefit investment returns.
Information and Communication Technology (ICT) in Vietnam
Digital transformation and digital-based economic development are effective measures to advance the ASEAN countries’ cooperation agenda. Vietnam, which served as ASEAN chair in 2017, continues its push toward digitalizing all member states with a strong, forward-looking attitude.
With an expected 8% annual growth rate until 2020, Vietnam’s ICT sector is a promising market for Australian businesses. There is widespread agreement that Vietnam’s GDP will rise by another US$1 trillion by 2025 due to the country’s thriving digital economy. Vietnam’s digital economy and other goals can benefit from the country’s success in expanding its online marketplace. The Central Institute for Economic Management of Vietnam predicts that by 2030, Vietnam’s GDP will have increased by US$28.5 billion to US$62.1 billion, a sharp increase of 7-16%.
Why Should One Invest in Vietnam’s Information Technology Sector?
Foreign technology firms interested in branching out into new fields have found Vietnam to be a fruitful expansion market. For instance, the Japanese ICT giant Fujitsu has been actively implementing its new business strategy in Vietnam. Fujitsu has been present in Japan since 1999 and has only sold products to Japanese businesses since then. For the US-backed IT Blue Coat Group, M-Security Technology Pte Ltd is the exclusive distributor of a wide range of security solutions in Vietnam.
In addition, several provisions of the Investment Law and the creation of software products and digital content are spelled out in Decree No. 108/2006/ND-CP. 10% preferential tax rate for 15 years, tax exemption for four years and a 50% reduction for the next nine years are all included in the decision as special incentives to encourage investment.
Vietnam is now seen as one of the most promising markets in Southeast Asia because of this. The information and communications technology industry and the digital economy appear to be cutthroat. The country’s Ministry of Information and Communications wants it to be a top digital destination and economy in Southeast Asia by 2030. This goal is based on the fact that many new digital technologies have already been tested.
Reasons to Invest in Vietnam’s Industry?
Strategic Position for Overseas Capital
Vietnam’s strategic location gives it an economic advantage over its neighbors in Southeast Asia. Vietnam is a good place for foreign investors to invest their money because it is close to major Asian markets and shipping routes.
Vietnam is an important trading link because its two major cities, Ho Chi Minh and Hanoi, are located in the South and North.
Consistent, Steady, and Improved Economic Growth
According to the World Bank Group, Vietnam’s poverty rate plummeted from over 70% to below 6% between 2002 and 2018. The last 30 years have seen incredible economic growth in Vietnam.
Incredible growth rates make it one of ASEAN’s fastest-growing economies. Even though its growth is expected to slow down by 2024, Vietnam is still an attractive market for international investors.
- Economic output (GDP) in Vietnam, 1995-2020
- GDP of Vietnam from 1995 to 2020
Massive Market Potential & Expanding Regional Market Potential
There is significant purchasing power due to the large population size of 95 million. Vietnam’s market has huge potential because of the country’s growing middle class. According to PWC, Vietnam will have one of the world’s 20 largest economies by 2050, making it an excellent location for any business venture.
Doing Business in Vietnam Has Never Been Easier!
The Vietnamese government has made many changes over the years, opening up the economy and making investing easier.
Added openness has enticed more overseas capital. Vietnam’s new rules have made it easier to start a business by making things like getting electricity and filing tax returns easier.
In addition, the low initial investment is a major incentive for businesses to set up shops in Vietnam. There are fewer restrictions on starting a business in Vietnam than in many other countries. This makes it much easier to start, as it’s a relatively inexpensive and adaptable investment compared to others.
The Rising Workforce, Full of Extraordinary Talent
Vietnam’s young population is a major competitive advantage over China. Over half of the population is of working age, and the Ministry of Education and Training reports that 97% of the population can read and write (Source: PWC). A strong and active workforce is the result.
In addition, the government has instituted programs to educate its citizens. Vietnam has added more vocational and technical education to meet the needs of its growing high-skilled industry sector. In other words, this means that foreign companies can tap into a larger pool of young talent to help them grow.
Low Unit Labor Costs
In addition to its convenient location, Vietnam is luring companies away from China with its cheap labor costs. The rising economy and low minimum wage make it a competitive alternative to China, particularly in the manufacturing sector.
Government Spending on Infrastructure has Caused a Boom
The Vietnamese government has successfully created an investment climate by implementing and improving local infrastructure. Vietnam is a great place for international companies to set up an Asia-based headquarters because the government is working to improve transportation.
