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What are the benefits and risks of investing in Vietnam?

Vietnam's economy has grown spectacularly, growing by 7.5% annually over the past decade. In 2019, GDP growth reached 7.02%. In which, the investment capital of foreign investors reached 38.02 billion USD, the disbursement reached 20.38 billion USD.
This proves that Vietnam is an attractive investment destination with a stable economic situation, substantive tax incentives combined with improved quality of labor and infrastructure. With the current world situation, foreign enterprises can consider Vietnam as a strategic investment location to improve the efficiency of the global supply chain. The Vietnamese government provides a welcoming investment environment for foreign investors who want to set up factories here, including factors such as solid economic growth, political stability, labor force, etc. competitive dynamics, gradually more open and transparent markets, abundant natural resources, and good geographical position in the region.

What are the Government's priorities in attracting investment?

The Vietnamese government is increasing investment attraction in many areas. Currently, high-tech industries and supporting industries are focused on development. In addition, priority is given to ensuring more equitable economic development across the country. Foreign investors are encouraged to invest in specific geographical areas known as “encouraged investment” and “specially encouraged” areas.

How does labor in Vietnam attract foreign businesses?

The factor that makes it attractive is because of the young, hard-working, large number of workers with low costs, especially for labor-intensive industries. According to the General Statistics Office (July 2020), about 75.4% of the population has working age from 15 to 65 years old, ranking Vietnam as the 13th largest labor force in the world. Minimum wages will vary from province to province, and in Ho Chi Minh City and Hanoi, districts will also vary. According to Decree No. 90/2019/ND-CP of the Government issued on November 15, 2019, the regional minimum wages applicable to employees working in enterprises are as follows:

a) The level of 4,420,000 VND/month, applicable to enterprises operating in the area of ​​region I.

b) The level of 3,920,000 VND/month, applicable to enterprises operating in the area of ​​region II.

c) The level of 3,430,000 VND/month, applicable to enterprises operating in the area of ​​Region III.

d) The level of 3,070,000 VND/month, applicable to enterprises operating in the area of ​​Region IV.

Areas where the regional minimum wage applies are determined by administrative units at the district, town, and provincial level. The list of areas to which the minimum wage applies in regions I, II, III and IV is specified in the Appendix to this Decree.

Types of foreign enterprises?

Joint venture can be done in the form of a limited liability company with one or more domestic partners, or a joint stock company. A joint stock company cannot be a 100% foreign owned company. Only the limited liability company form can be wholly owned by foreign capital. Foreign-invested enterprises, whether with all foreign capital or in the form of joint ventures with Vietnamese partners, must be approved by relevant authorities.

Please refer to the 2020 Enterprise Law (officially effective from January 1, 2021).

Land use rights in Vietnam?

All land in Vietnam is owned and managed by the State; Therefore, the private sector has no right to own land, all land is leased under the form of sub-leased from the State. Each province and city has its own land registration system, which is managed at the district/commune level.

The lessee must pay the infrastructure rental and land rent to the infrastructure development companies (Sai Gon VRG) under the land sublease contract and they will be issued with a land use right certificate.

What taxes apply to foreign businesses?

Foreign-invested enterprises are subject to five main types of taxes: corporate income tax (CIT), import/export tax, value-added tax (VAT), excise tax and personal income tax personal (PIT). The government also offers attractive tax incentives to attract investment. In addition, import / export taxes are also exempted to meet commitments when joining the World Trade Organization (WTO), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), The European Union - Vietnam Agreement (EVFTA) and many other Free Trade Agreements.

In addition, enterprises established in the form of export processing enterprises will enjoy CIT incentives and are exempt from import and export tax.

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