On Forbes, there is an article to explain why we should talk more about Vietnam
In 2019, Vietnam reached a GDP growth rate of 7.02 %, among the world’s best. This is also the second year that the economic growth rate in Vietnam was more than 7%
The 2019 Global Competitiveness Index showed that Vietnam soared from last year to 67 points, rendering it the most elaborated nation in 2019. Vietnamese leadership, which focuses on building a friendly, free business climate and speeding up economic reform, encourages this development.
The industrial and engineering industry grew by 8.9 % and continued to be a significant driver of global economic growth. In terms of sales, Vietnam exports have earned USD 500 billion US dollars this year and enjoyed the export surplus in many countries for the four consecutive years despite downward trends of declining income.
Vietnam has taken significant strides in changing the market climate over the past decade, according to the World Bank.
Vietnam was listed 70th out of 190 economies by the World Bank’s 2020 Doing Business survey. Compared to the past as Vietnam was over 90th in 2010, this rank is fairly strong compared to economies with equal per capital income.
The World Bank is also optimistic that Vietnam will start to make significant progress in 2020 and in the years ahead. This assessment is based on two main reasons. Firstly, Vietnamese authorities have worked on improving access to credit information through retailer data distribution. This would continue to reduce the quality of operation and improve pricing efficiency.
Vietnam has signed 12 free trade agreements with external partners so far, including “new-generation” deals with higher and broader commitments.
Impressively, the European Union signed a landmark free trade agreement with Vietnam in June, 2019, the first of its kind with a developing country in Asia, paving the way for tariff reductions on 99% of goods between Vietnam and this bloc. As mentioned by Reuters, the European Union described the EU-Vietnam Free Trade Agreement (EVFTA) as “the most ambitious free trade deal ever concluded with a developing country”. The EU is also Vietnam’s second-largest export market after the United States.
Vietnam has an important success in how the government fights the coronavirus epidemic.
Previously, the popular Financial Times, headquartered in London, claimed that “Vietnam has proved a model in containing the disease in a country with limited resources but determined leadership”.
Vietnam has concentrated on isolating sick people and monitoring their second and third connections, instead of implementing the South Korean-style approach to the epidemic that involves widespread testing. Sharing a 1,100-kilometers long frontier with China; nevertheless, the nation registered only 326 people who had been contaminated and no death until May 25, 2020. A majority of those came back from abroad.
In addition to combating the disease internally, Vietnam has provided research kits and masks to several nations, including Laos and Cambodia, its immediate neighboring countries, and its extensive and diplomatic allies are the United States, United Kingdom and Spain.
Vietnam is the new offshore IT outsourcing heaven
Vietnam has ranked 20th of the top nations known as an outstanding destination for outsourcing, for now.
After Covid-19, until May 2020, with no death case and 272 cases recovered and only 54 cases on treatment, Vietnam is the rising star in Asia.
Additionally, famous U.S. tech firms such as Intel, IBM, Apple and Microsoft etc. have been investing significantly and consistently in Vietnam. Many tech companies from other developing countries have already built offices and recruited software developers in the past few years to work on their ventures in Vietnam. The trend is getting increasingly popular.
If you are still wondering why? Here’s a shortlist of why Vietnam is turning into a profitable market:
Vietnam holds a strategic position in the middle of ASEAN. It is connected to other big markets in Asia, China being their most important neighbor.
The long coastline, easy access to the South China Sea and proximity to the world’s most significant trade routes offer ideal trading conditions.
Two big Vietnamese cities are Hanoi and Hochiminh. Hanoi, the capital, is situated in the north and provides incredibly convenient opportunities for trade. Hochiminh city, the largest by population, is located in the south, and it is Vietnam’s industrial mecca.
Vietnam population is much bigger than people realize
Vietnam has more inhabitants than most of the major countries in Europe. The population of Vietnam has now outgrown the following European countries:
Growing population together with a booming economy hide bigger investment opportunities in Vietnam than most people would realize at first.
Vietnam has a population of over 90 million and more than 60% of the population is under the age of 30. With this being one of the countries with a young population, the Vietnamese – or especially the Vietnamese workforce – are considered to be fast learners, diverse, creative and adaptable to change.
In addition, Vietnamese creativity in the software development industry is prestigiously admired for its hard-working heart, earnestness and modesty.
All things together, foreign investors could lift and shine high expectations for the Vietnamese workforce.
For more details visit: https://www.worldometers.info/demographics/vietnam-demographics/
High quantity and quality of IT education in Vietnam
As the increase of technology has a huge effect on generations, more and more STEM majors, schools and academies are being opened up to inspire young people to develop their skills of technology and related industries and to fine-tune their ability.
The rapid growth of both quantity and quality of IT education in Vietnam provides Vietnam outsourcing companies with an adequate supply of software developers in the years to come.
On the other hand, students in Vietnam are also evaluated for their quick knowledge absorption, most of whom have decent to excellent academic record as validated by standardized tests, endorsements from global recruiters, honors and awards.
Potential Human Resource
Human capital is the backbone of every project, business activity and the entire corporate system. The ability of software engineers is of great concern particularly in offshore IT outsourcing, where techies and the expertise equipped with them are the commodities.
In Vietnam meanwhile, human capital is seeing positive trends. Some of the most notable highlights of the IT workforce in Vietnam in recent years are:
• Top 10 Asian countries with the fastest English-skill growth.
• Top 10 Asian countries with the highest EF Average EPI.
• Top 10 countries with the most degree of engineering in the world.
Countries with the most engineering graduated in 2017
Countries No. of Engineering Graduates (approx.)
Low-cost high-quality software maker
According to Innotech, software technology outsourcing in Vietnam also costs 50% less than India and China’s rivals. Anderson Vietnam also reports that outsourcing is just $20,000 per person per annum in Vietnam relative to $40,000 per person in India. These estimates are reasonably compelling to position Vietnam as the top possible candidate for offshore construction projects.
Outsourcing to Vietnam is gaining popularity in Asia as a high-quality, low-cost tech manufacturer. CIO magazine says that outsourcing to Vietnam is around 90 % cheaper than software production in the US. Developing applications in Vietnam costs between a third and a seventh-fold cheaper than in India.
These are very compelling figures for businesses beginning to explore offshore development into Vietnam.
The various trade agreements Vietnam has agreed to make the market more competitive are another symbol of transparency for the global economy.
Several Memberships and Accords:
– Member of ASEAN and ASEAN Free Trade Area (AFTA)
– Member of the World Trade Organization (WTO)
– Bilateral Trade Agreement (BTA) with the US
– Free Trade Agreement with the European Union (comes into effect in 2018)
All of these treaties indicate that Vietnam is keen to promote economic development in the country and will continue its commitment to trade with other countries.
These were more than enough reasons to invest in Vietnam. There can of course also be risks, as there will be in any other country when investing. These risks can be reduced with a well-developed strategy, make sure you choose the best market entry strategy when entering Vietnam as it is one of the top contributors to the potential success of your company.
Please have no hesitation in contacting us for a consultation. Our consultants will help your business thrive alongside with Vietnam.
Preference from Forbes and Wiki