What makes Vietnam a good market for SIngapore companies to venture into?

CNA
Making Business Sense
Why Vietnam?
ROBUST GROWTH
Vietnam’s economy has enjoyed significant growth in the last few years, attracting substantial foreign investments in many sectors, such as processing and manufacturing, real estate and wholesale trade.
Domestic demand is expected to rise in the next few years, fuelled by:
  • Rapid wage growth
  • Booming tourism sector
  • Reformative government policies to encourage private-sector investment


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SUSTAINED ECONOMIC REFORMS
Economic liberalisation continues to gain momentum in Vietnam. Besides attracting more foreign direct investments (FDIs), the government is taking steps to improve the business environment and create a more level playing field through pro-business policies and privatisation of State-Owned Enterprises.
Benefits for Singapore companies:
  • More open and predictable investment environment with changes to Vietnam’s Investment Law
  • Ability to purchase land and buildings more easily (subject to certain conditions) with changes to the country’s real estate laws
  • Less red tape in eight sectors, including food retail, electricity and e-commerce, with the signing of Decree 8 by Vietnamese Prime Minister Nguyen Xuan Phuc on 15 January 2018. The decree eliminates 675 out of 1,216 business and investment conditions under the Ministry of Industry and Trade (MOIT).


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STRONG BILATERAL RELATIONSHIP WITH SINGAPORE
  • Bilateral trade has grown steadily. It amounted to S$21.6 billion, which was a 8.9% increase year-on-year.
  • Singapore is Vietnam’s largest investor in Southeast Asia, and third-largest worldwide. In 2017, Singapore’s cumulative investment reached US$43.2 billion across 1,800 projects.
  • Numerous initiatives have spurred greater collaboration across sectors. For example, the Singapore-Vietnam Connectivity Framework Agreement, launched in 2006, covers six sectors of cooperation:
    • EDUCATION AND TRAINING
    • FINANCE
    • INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS
    • INVESTMENT
    • TRADE AND SERVICES
    • TRANSPORTATION
  • The annual Connectivity Ministerial Meetings (CMM) are co-chaired by Singapore’s Minister for Trade & Industry and Vietnam’s Minister of Planning and Investment.


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WIDENING TRADE LINKS THROUGH FTAS
The Vietnamese government has made significant efforts to deepen the country’s strong economic growth. One way is through Free Trade Agreements (FTAs), such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the European Union-Vietnam FTA and the ASEAN Free Trade Area (AFTA). With these FTAs, Singapore companies are able to enjoy preferential trade access to the Vietnamese market.

Vietnam is one of the fastest-growing
economies in Asia today
Strong annual growth of over
6 %
since 2010
US$ 38.2
billion
Total foreign direct investments (FDI) into Vietnam in 2019. a 7.2% year-on-year increase compared to 20181
Singapore was Vietnam’s third largest investor in 2019 with total investment of US$4.5 billion.
Singapore’s Direct Investments Abroad (DIA) into Vietnam has more than tripled in the last decade.
The seven Vietnam-Singapore Industrial Parks (VSIPs) have attracted over US$12.9 billion in investment from more than 800 companies as of 2018.
1 Source: Vietnam Ministry of Planning and Investment, Brief on FDI of 2019 (published on 6 January 2020).
Investment Opportunities
Top Industries to Consider
MANUFACTURING

Vietnam is a choice location for manufacturing due to:

Competitive wages and manufacturing costs

A viable alternative for manufacturing activities.

Good network of FTAs

Strengthens Vietnam’s position as a manufacturing export hub.

Well-connected to existing consumer and manufacturing hubs in Asia

Easy for Singapore companies to integrate Vietnam into existing supply chains.

Continued investments by multinational corporations (MNCs) in the textile, garments, furniture and electronics sectors

Singapore companies may provide supporting services such as access to water and power, as well as logistics infrastructure and services, to these MNCs.

Singapore manufacturers may also leverage established industrial zones or parks, such as the seven integrated Vietnam-Singapore Industrial Parks (VSIPs), to facilitate entry into Vietnam. With a potential expansion of 1,500 hectares and new parks in the pipeline, industrial ties between Vietnam and Singapore are set to grow even stronger.

LIFESTYLE AND CONSUMER SECTOR

Vietnam’s huge population of 92 million with a fast-growing middle class will create opportunities for Singapore companies in sectors such as F&B and retail. The increasingly-sophisticated Vietnamese consumer is open to new and foreign brands. The country’s retail scene is vibrant, with the development of numerous new malls.

As Vietnam continues digitalising, more online shoppers may be expected. Singapore companies may collaborate with local partners, as well as offer related services such as e-payment solutions or fulfilment options.

With rapid development, demand for education and vocational training is also set to grow. Singapore companies providing certified training programmes may offer skills development courses in standalone institutes or as part of programmes with MNCs and industrial park tenants.

INNOVATION AND STARTUPS

The rapidly-growing technology community in Vietnam has attracted a wave of foreign investors, including venture capital funds and co-working space providers.

With Vietnam’s fast-growing startup ecosystem, Singapore technology companies and startups can tap on the vibrant ecosystem to find partners, co-innovate and offer solutions.

INFRASTRUCTURE AND URBAN SOLUTIONS

Vietnam is rapidly urbanising and looking to improve the quality of life for its people. The Vietnam government is putting in place frameworks and regulations for public-private partnerships to attract private sector investment. This includes introducing project development funds and gap financing options, as well as actively promoting flagship projects.

Singapore companies can contribute their know-how in:

  • know how icon 1
    MASTER PLANNING AND SMART CITY INITIATIVES, SUCH AS INTELLIGENT TRANSPORT SYSTEM, PUBLIC SAFETY AND SECURITY, AND SMART UTILITIES
  • know how icon 2
    WATER TREATMENT
  • know how icon 3
    WASTE TREATMENT
  • know how icon 4
    ALTERNATIVE ENERGY SECTORS SUCH AS SOLAR, WIND AND LIQUEFIED NATURAL GAS (LNG)

Singapore companies could partner local privately-owned enterprises with good government links, and explore projects promoted by the Ministry of Planning and Investment or other specialist ministries.

Support for Businesses
Opening Doors for Singapore Companies
When venturing into Vietnam, key challenges may include:
  • venture icon 1
    Navigating the business and regulatory landscape
  • venture icon 2
    Finding local partners and talent who understand the business culture and market dynamics
Although most sectors in Vietnam are open to majority or full foreign ownership, partnerships still work well. Singapore companies should consider working with reliable Vietnamese partners, who have strong local networks, are able to help navigate the local business landscape, and minimise language barriers.
  • Singapore companies may learn more about the markets through Enterprise Singapore’s workshops and seminars. Through its offices in Hanoi and Ho Chi Minh City, Enterprise Singapore:
    • Shares on-ground developments and insights with Singapore companies.
    • Advises on set-up and regulations.
    • Connects Singapore companies to partners and potential projects.
    • Engages local governments to discuss potential projects that Singapore companies can cooperate in.
    • Offers financing schemes with banks, for Singapore companies seeking capital or financing.
  • Small- and medium-sized enterprises (SMEs) may tap on Enterprise Singapore’s network of partners who provide pre-market entry advice, business matching, in-market consultations and co-working spaces. This eases initial challenges when entering the market, such as leasing an office space, and finding business mentors and consultants.
  • Enterprise Singapore expanded its Global Innovation Alliance (GIA) network to Ho Chi Minh City in July 2019. This serves as an entry point for Singapore startups and SMEs to connect with the local innovation and business community.
  • Enterprise Singapore is working with Saigon Innovation Hub (SIHUB) and Quest Ventures to organise programmes for Singapore-based startups to better understand the innovation landscape and connect with partners. It also encourages Vietnamese startups to leverage Singapore’s established innovation ecosystem and connect with MNCs and leading Asian enterprises based in Singapore to scale their business further.
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