The Potential and challenges of Investment in Viet Nam

Vietnam now has begun to attract the attention of foreign investors. So, the foreign investors should seriously consider Vietnam as a destination for their businesses and investment.
Investment In Vietnam

The requirement of the foreign investor know that how to invest in Vietnam and what potential and challenges with foreign investment in Vietnam is really high now.

With a lot of experience and knowledge as consultant for the foreign investors when they invest in Vietnam and do business in Vietnam..Apolat Legal Law Firm would like to share some key points of attention about the Vietnam investment environment for the foreign investors to consider before they invest in Vietnam

Potential of Investing in Vietnam

Firstly, Viet Nam has a stable and dynamic economy.

Since 1986 and the Doi Moi (renovation) policy, the Vietnam economy has basically changed from a centralised/planned system into a market-based system which has opened up the economy to the greater effects of international integration and globalization. The Vietnamese economy has been continued to grow exponentially. One of the key economic changes was the equalization between State and private rights and ownership in the economy that has been heralded as an important step in promoting and encouraging for investment in Vietnam in general and foreign investment in Vietnam in particular

Secondly, the labour force is young and competitive.

As mentioned, Vietnam has a young but work-ready population with about 80% aged 15 or over who in the near future will make up the primary labour force of Vietnam.  Moreover, Vietnam labours are highly regarded as young, hard-working, highly literate and easy to train. This is one of the competitive advantages of Vietnam in comparison with other labour markets in the region for foreign investment in Vietnam

Most Vietnam labourers have good working skills and are highly adaptable to new working environments. However, to satisfy the requirements of foreign investors in particular business lines and professions, further training is still recommended.

Thirly, the investment policy in Vietnam is open and transparent (in specially is FDI policy in Vietnam)

The economic policies in general and the policies of investment and doing business in particular in Vietnam have been dramatically improved in recent years. The transition from centralised planning to use market-based principles was an important step in developing the economic policy of Vietnam. This laid down a foundation for the stable development of the economy.

Most importantly, the Vietnamese Government has attempted to make the economic system more transparent throughout various measures. The uncertain and risky labels of the investment environment in Vietnam which previously turned away foreign investors have been overhauled. Greater transparency has been strengthened not only in macro-economic policies but significantly has been maintained in projects and plans.

Fourly, the legal system is stable and improving.

In recent years, following the periods of transition, integration and globalization, Vietnam is on its way to build and improving the legal system in general and the laws relating to the investment in Vietnam and business in particular.
Generally speaking, the current legal system of Vietnam has become more comprehensive and stable. The adoption of a series of laws such as the Law on Commerce, Law on Enterprises, Law on Investment, Law on Competition, Law on Intellectual Property, etc. have closed several loopholes and inconsistencies, giving confidence to domestic and foreign businesses and especially foreign direct investment in Vietnam

In short, these legislative achievements have created many opportunities for foreign investors to do business in Vietnam. Together with an open and transparent economic policy system as well as a stable and improving legal system, Vietnam is providing the word several compelling reasons to be the first choice for international investors.

Challenges of investment in Viet Nam

Status inflation of domestic economy

Inflation is one of the major concerns of international investors when they decide to invest into a certain market. As the world economy has changed in recent years, inflation has become one the top risk considerations of a country’s domestic economy, especially developing countries including Vietnam. Nonetheless, notwithstanding the efforts of the Vietnamese Government, inflation is to be considered under the gradually possible lowest control.

Whilst inflation in Vietnam in the years 2011- 2012 was relatively high (around 12% to 18.58%), it rapidly dropped to 6% in 2013 and then continued decreasing by around 1% in 2014 which is considered a good signal for the economy of Vietnam. However, international investors are advised to be cautious and well-prepared in order to face any such volatility in the economy’s inflation rate. The increase of the price of goods, minimum wage, and other market considerations may create challenges for investors.

It should be noted that the Vietnamese Government is aware of the current inflation situation as it promulgate policies to reduce the inflation rate. Such State policies may also unexpectedly affect an investor’s business or operations. Thus, in order for investors to ensure their own economic interests, they should take the initiative in searching and reviewing all policies to control inflation.

Apolat Legal Law Firm hope that our shared points above which will be useful for foreign investors to more understanding about investment in Vietnam, foreign investment policies of foreign investors before the forein in vestor have planning to invest in Vietnam.