Unlocking Opportunities: The Advantages of Doing Business in Vietnam with Zora Consulting

Vietnam has seen plenty of growth across many industries, with textile, exports, tourism and real estate among the top sectors. Overall, the foreign direct investment in Vietnam for 2022 reached the 27.72 billion USD mark.

The constantly rising FDI in Vietnam indicates its high economic growth potential. Foreign investors are more interested in Vietnam's business opportunities than ever today. However, since Vietnam is still a developing country, many investors who want to invest must be sure about the advantages of doing business in Vietnam.

At Zora Consulting, we specialize in helping foreign investors and companies establish their business in Vietnam. We have experienced first-hand the benefits our clients enjoy from doing business in the country. We have compiled a list of all the significant benefits of doing business in Vietnam that you can expect, so keep reading.

Affordable and young labour

One of the most significant advantages of doing business in Vietnam is access to affordable labour. Despite having some of the lowest salaries in Asia, the workers are highly skilled, making it easier for companies to upscale their operations.

Not to mention, the population of Vietnam consists primarily of young individuals with up to 97% literacy rate for the working people. Compared to other Asian countries, the labour costs in Vietnam seem even more affordable.

For example, if you want to establish a manufacturing and distribution business in Vietnam, the labour cost will be 20% lower compared to China. Besides, the current minimum wage in Vietnam is around 106.83-155.80 USD. At the same time, China has a higher minimum wage of 192.91-332.66 USD.

Considering that Vietnam had over 242.4 thousand new university graduates in 2022, it becomes clear why Vietnam's labour market is so attractive to businesses.

Running a business is simple: Another significant benefit of establishing a business in Vietnam is the ease of business operations. The government has changed regulations affecting businesses to make conducting business operations easier.

Vietnam has entered 17 free trade agreements with significant countries from Asia and around the globe. In addition, Vietnam is also a part of the ASEAN (Association of Southeast Asian Nations). There are six active FTAs between Vietnam and other members of ASEAN, including:

• Brunei;
• Malaysia;
• Philippines;
• Singapore;
• Thailand;
• Cambodia;
• Laos;
• Myanmar;
• Indonesia

All the regulatory support by the Vietnamese government and the long list of FTAs with other countries make Vietnam an attractive investment option in Asia.

Special focus on infrastructure growth

Vietnam has put the bulk of its resources towards infrastructure growth. Vietnam can support manufacturing and IT industries with its rapidly growing transport network and elaborate electricity generation and distribution infrastructure.

When you combine low-cost manufacturing with an elaborate infrastructure, it is easy to understand why Vietnam is emerging as the manufacturing hub of Asia. Not to mention, Vietnam has a well-developed port infrastructure, making shipping locally manufactured goods to other countries much more accessible.

The rapid infrastructure growth in Vietnam is owing to the facilities provided to the construction industry by the government. The Vietnamese government has made infrastructure development easier by making it simple to get construction permits and providing uninterrupted access to electricity. So, if you are looking for a country with the ease of business operations, low-cost labour and manufacturing and ease of transportation/shipping, Vietnam is a great option.

Access to the Asian market

When you establish your business in Vietnam, you can access the entire Asian market. Thanks to the FTAs between Vietnam and other ASEAN countries business, you enjoy low tariffs for moving and selling goods in major Asian countries.

In addition to the low tariffs, Vietnam has an important strategic business location in Asia. The country shares its borders with other rapidly growing economies such as China, Thailand, Cambodia, and Laos. This makes moving goods to and from these manufacturing hubs a lot easier for businesses operating in Vietnam.

So whether you want to reach the broader Asian market or are looking for easy access to Southern China's goods supply chain, Vietnam allows you access to all of them.

Easy taxation

Vietnam has approved various changes to taxation for foreign investors over the years. There are many double taxation agreements between Vietnam and other neighbouring countries. This allows businesses to avoid paying taxes on the same earnings more than once.

In addition, companies get to enjoy 0 business taxes if they set up operations in special industrial zones. You can also get unique tax benefits if your business belongs to specific industries. 

What are the challenges for businesses entering Vietnam?

While there are many advantages to doing business in Vietnam, there are still some challenges that you have to overcome. Here is a complete list of all the challenges companies may face when setting up operations in Vietnam:

Unfamiliarity with Vietnamese compliance laws: When establishing a business in Vietnam, you must make sure it complies with local laws. Most foreign businesses aren’t sure about these compliance requirements, which can be a barrier to entry for them.

Zora Consulting can help you set up your business in Vietnam and ensure it follows all the applicable local laws.

Requirement for maintaining documentation in Vietnamese:

Everything from your business's accounting information to the taxes must be maintained and reported in Vietnamese. So, if you are unfamiliar with the local language, it can be challenging to maintain documentation for your business.

A consultant such as us at Zora Consulting can assist with this challenge. We can help you maintain all your accounting records in Vietnamese in the correct formats. So you always have up-to-date and well-kept records whenever you need to report your business documents.

Many different tax rates: Despite tax exemptions, you can avail in Vietnam, there is one challenge that most businesses face: a large number of varying tax rates. Firms and owners have to account for Corporate Income Tax, Personal Income Tax, Value Added Tax, Foreign Contractor Tax, and other taxes that may apply to them.

Each of these taxes has a distinct tax rate, which requires a deep understanding of the Vietnamese tax regulations to report correctly. That is where Zora Consulting can help ensure that all your taxes are filed correctly at the correct tax rate.

Conclusion

Vietnam has one of the most ideal business environments in Asia. And there are many advantages to doing business in Vietnam.

So, if you are still trying to overcome the everyday challenges of entering Vietnam's business environment, you are at the right place. Zora Consulting can help you set up your business in Vietnam, hire talent, and maintain financial records. Feel free to contact our experts if you want to establish a business in Vietnam.