Doing Business in Vietnam

Below are links to informative articles about “Doing Business in Vietnam” provided by AmCham members or other reliable sources of information.

The information will be helpful during a company’s review of Vietnam as a site for sourcing operation or a factory, to provide goods or services, or otherwise as a site for doing business. The information is designed to be responsive to questions on a check list for a business development or a site-selection team. The information provided is, of course, only a summary; however, it provides a significant amount of substantial information on which a company can rely in understanding Vietnam’s business environment, including legal, financial, property, information and communications technology infrastructure, logistics and supply chain management, etc.

Reviews of Vietnam’s Investment Policy, Economic Development Framework

OECD Policy Framework for Investment 2015
The Policy Framework for Investment (PFI) is a comprehensive and systematic tool for improving investment conditions, which is neither prescriptive nor binding. The PFI looks at 12 different policy areas affecting investment: Investment policy, investment promotion and facilitation, competition, trade, taxation, corporate governance, finance, infrastructure, developing human resources, policies to promote responsible business conduct and investment in support of green growth, and lastly broader issues of public governance. These policy areas are widely recognised, as underpinning a healthy environment for all investors, from small and medium-sized firms to multinational enterprises.

OECD Investment Policy Review Vietnam, 2018
This review uses the OECD Policy Framework for Investment to present an assessment of the investment climate in Viet Nam and to discuss the challenges and opportunities faced by the government of Viet Nam in its reform efforts. It includes chapters on foreign investment trends and performance, the entry and operations of foreign investors, the legal framework for investment, corporate governance and competition policy, tax reforms, investment promotion and facilitation, infrastructure connectivity, investment framework for green growth and policies to promote and enable responsible business conduct

Taking Stock: World Bank Update on Vietnam’s Economic Development, Dec 2018 An update on Vietnam’s recent economic developments – Special focus: Facilitating Trade by Streamlining and Improving the Transparency of Non-Tariff Measures

World Bank Vietnam development report 2012 : market economy for a middle-income Vietnam, Dec 6, 2011 Factors that have contributed to Vietnam’s success and explores the emerging challenges: restructuring state-owned enterprises (SOEs), the public investment program and how to raise its effectiveness, transparency needed to support Vietnam’s middle income status, a critical issue that needs to be tackled if Vietnam is to achieve its socioeconomic aspirations.

Sustaining Vietnam’s Growth: The Productivity Challenge (McKinsey Global Institute) Feb 2012 Vietnam now needs to boost labor productivity growth by more than 50 percent to maintain its rapid growth. It can do so by (1) Stabilizing the macroeconomic environment; (2) Strengthening productivity and growth enablers to enhance competitiveness; (3) Shaping a coordinated, industry-specific government growth agenda by targeting investment; and (4) Improving government performance to deliver a growth agenda.

Vietnam Competitiveness Report, 2010 – Michael Porter, et. al. Nov 20, 2010 Vietnam’s growth since the mid-1980s has been driven by transition and structural change. Growth has been fueled by these macroeconomic, “systemic” changes. More recently, the policy response mainly focuses on intensifying investment, especially in SOEs and infrastructure, to generate growth rather than on upgrading productivity and efficiency. However, the economic logic behind this growth model ultimately has limited potential. The highest level of prosperity that Vietnam can reach given this approach is defined by the level of productivity unskilled workers can reach in manufacturing. If Vietnam is not able to move beyond this model, it will be stuck at lower middle income level, with poorer economies threatening its position.

Prime Minister’s Official Letter: Time to take stock of foreign direct investment, May 20, 2008 A situation analysis is critical for Vietnam to boost FDI. The analysis will be helpful in drawing conclusions on Vietnam’s comparative advantages and disadvantages, suitable FDI promotion strategies, especially with respect to the FDI leaving or expanding from China to the ASEAN region.

UNCTAD Investment Policy Review of Vietnam, Nov 2007 ~ Oct 2008
Key point: The proposed new policy would shift from promoting labor-intensive, export-oriented manufacturing FDI to promoting international investment in infrastructure (electric power, transportation & distributinon, telecoms, etc.) and in services, to provide higher value-added to Vietnam’s economy, including higher-income jobs for Vietnamese.

“Doing Business in Vietnam”—provided by AmCham Member Companies

Setting Up and Operating in Vietnam, Russin & Vecchi, May 2016, 85 pages plus appendices. pdf file The information in this booklet will be helpful during a company’s review of Vietnam as a site for a factory, to provide a service, or otherwise as an investment venue. The authors have emphasized material that would normally be on a site selection team’s check list. While the information is only a summary, it provides a significant amount of information on which a company can rely to understand Vietnam’s legal context.

 A Country Commercial Guide Vietnam-2018, prepared by the U.S. Commercial Service in Vietnam

Doing Business in Vietnam 2018, prepared by PricewaterhouseCoopers

Doing Business in Vietnam 2018, Rodl & Partner

Visas and Work Permits for Expats in Vietnam, Russin & Vecchi, 2018, 17 pages

Outlines regulations governing the entry and immigration of expatriates to work for a foreign or Vietnamese entity in Vietnam

Employment Manual for Businesses in Vietnam, Russin & Vecchi July 2016, 59 pages

Intended to be an easy desk-top reference for the Chief Representative, the General Director, the Human Resources Manager and any person who wants a good understanding of Vietnam’s labor laws. It is designed to orient management to issues with which it must be familiar. Even though the law on each subject has considerably more depth within the Labor Code and the many implementing and companion laws, decrees and circulars, this Manual should provide the reader with a good basic understanding. However, the Manual is a guide; it is not a substitute for a comprehensive understanding of the labor laws.

One recommendation for best addressing labor issues before they become problems would be to consider adopting a set of simple internal labor regulations (“ILRs”), and to have them registered with the local labor authorities. The importance of ILRs in more detail is discussed in this Manual.

Telecommunications in Vietnam, Russin & Vecchi, April 2015, 24 pages

Vietnam entered into a Bilateral Trade Agreement (“BTA”) with the United States in December 2001, in which Vietnam agreed to gradually open the telecommunications sector to United States entities. This commitment also set a schedule. Vietnam became a member of the WTO on 11 January 2007. In its WTO commitments, Vietnam agreed to open telecommunications services to foreign investors under a prescribed schedule. As such, there was a need for a more comprehensive legal framework to manage a fully liberalized market.

Vietnamese telecommunications law has undergone several reformations in order to meet its international obligations. On 25 May 2002, the first Ordinance on Post and Telecommunications was approved by the Standing Committee of the National Assembly and became effective on 1 October 2002 (“Ordinance”)1. The Ordinance was then replaced by the Law on Telecommunications (“LOT”) which came into effect on 1 July 2010. The Law on Telecommunications presents the first time that regulations on telecommunications were compiled in a separate comprehensive law. It provides a legal framework for all telecommunications activities.

Document Preservation in Vietnam, Russin & Vecchi, July 2015, 18 pages

To what extent does the law impose an obligation to retain documents beyond their current usefulness? Vietnamese law has fairly specific rules identifying documents that must be preserved and the periods for which they must be preserved. This article discusses the requirements to preserve accounting and business documents. Additionally, separate sections address the preservation of anti-money laundering documents, documents that relate to transfer pricing, and client and patient files.

Insurance Law & Regulation in Vietnam, Russin & Vecchi, June 2015, 26 pages

Many foreign insurance companies (particularly in the life segment) are present in Vietnam, and treat Vietnam as a natural extension of their regional or global footprints. New products are being developed. Agency networks are being built. In the non-life segment, the local companies have generally shown more pricing discipline than have their counterparts elsewhere in the region. Motor insurance – so often a thankless and profitless line in emerging markets – accounts for about one third of the premiums written in the non-life segment in Vietnam.

Companies are also beginning to provide innovative products tailored to Vietnam. 2014 was seen as a successful year for the insurance sector even though the domestic economy faced many difficulties. Insurance continued to grow at a double-digit rate. The non-life insurance sector posted premiums growth of around 10% while life insurance premiums grew by almost 22%. Premiums collected through brokerages rose by 13%. Insurance companies invested around VND 130 trillion (equivalent to US$ 6 billion, at the current exchange rate of US$ 1 = VND 21,600), up 17%. This includes investment in government bonds2.

Vietnam’s Stamp of Approval – June 2009, Russin & Vecchi  Mostly of historical and cultural interest, as electronic invoices and electronic signatures are being developed along with Vietnam’s digital economy.

Legal Framework for Franchising in Vietnam, Russin & Vecchi, April 2013, 11 pages. pdf

Franchising is well suited to Vietnam, where there is a strong culture of entrepreneurship. It is a good method for small and medium size entrepreneurs who want to start a new business in a short period of time to have a more limited risk, a modest amount of invested capital, and the promise of a stable income. Although most existing franchise operations in Vietnam are in the fast food and beverage business, franchising has potential to develop in other sectors. A strong surge of interest in franchised businesses is anticipated among local entrepreneurs. So too, interest from franchisors is expected to grow.

Vietnam Provincial Competitiveness Index

Press Release, PCI 2018

On March 28,2019, USAID and the Vietnam Chamber of Commerce and Industry (VCCI) released the PCI 2018 report, which provides an independent, unbiased view on the provincial business environment by surveying over 13,000 firms on a variety of business issues.

PCI 2018 Report

Overall, Vietnam’s median PCI score increased this past year, reflecting the Government’s efforts to improve economic governance with its Resolution 19 and new Resolution 02, policies that focus on improving the business environment and national competitiveness. The PCI 2018 report highlighted three important trends: economic governance continues to improve at the provincial level; informal charges (bribes) are declining; and quality of infrastructure is improving.

AmCham Member Companies Can Help You Set Up and Operate in Vietnam

AmCham member firms would be happy to respond to specific questions, and are prepared to bring the information contained in online pages and downloads to the next level of detail. Read this summary of Who You Need to Know in Ho Chi Minh City and How to Find Them, then click here for a list and links to AmCham member and associate companies and their contact information for the following key business sectors:

List of AmCham Companies

Macroeconomic Trends and Analysis

Below are links to reports on Vietnam’s macroeconomic trends and analysis by international financial institutions (Asian Development Bank, World Bank, International Monetary Fund). Click the links to download the reports (in pdf files)

Asian Development Bank: Development Outlook 2019

Ho Chi Minh City and the “Southern Key Economic Region” (SKER)

Ho Chi Minh City and Southern Key Economic Region: Ports, Industrial Parks, and Other Infrastructure

verview of the region, with maps. Several downloadable powerpoint presentations on: the new deep water ports (Saigon New Port Company: Ports Overview, Mitsui OSK New Port Trend and Outlook, etc.); Industrial Parks in Vietnam and the Southern Key Economic Region; “Ho Chi Minh City & Surrounding Area Master Plan to 2020.” A good overall orientation with maps showing the development plans and actual trends for the Southern Key Economic Region.

Ho Chi Minh City (formerly Saigon) is Vietnam’s economic and business hub, the largest and fastest growing city, with more than two-thirds of international flight arrivals and departures, 80 percent of container shipments, 75 percent of consumption of steel products, and together with neighboring provinces in “Southern Key Economic Region,” account for nearly 40 percent of Vietnam’s Gross Domestic Product. In 2010 a more prosaic indicator was announced when a large beverage can manufacturer planned investments to expand production to 4.7 billion cans/year in Vietnam, of which 3.2 billion would be in the SKER and 1.5 billion in the Northern Key Economic Region. The HCMC city center is 60 km (37 miles) from the Eastern Sea (South China Sea), with a population of about 5.6 million, or 6.7 million including the suburban and rural areas. The “greater metropolitan area,” which consists of Hồ Chí Minh City metro area, Thủ Dầu Một, Di An, Bien Hoa and surrounding towns, is 9 million people..

Background Reading

Books that cover history, cultural and general socio-economic background. In addition, links to online handbooks/country studies with general statistical information (economics, trade, demographics) information, prepared by the U.S. Department of State, U.S. Department of Commerce, U.S. Central Intelligence Agency, and the World Bank. Click this link Books – Reading Before You Go

Posted: Oct 21, 2006; Updated: May 16, 2019