We use cookies to personalise the website and offer you the greatest added value. They are, among other purposes, used to analyse visitor usage in order to improve the website for you. By using this website, you agree to their use. Further information can be found in our data privacy statement.

Successfully investing in Vietnam

last updated on 19 May 2021 | reading time approx. 2 minutes



How do you assess the current economic situation in Vietnam?

The So­cial­ist Re­pub­lic of Vi­et­nam has ex­per­i­enced a rap­id and re­mark­able eco­nom­ic growth and de­vel­op­ment over the past three and a half dec­ades start­ing with the “Doi Moi” eco­nom­ic and polit­ic­al re­form of 1986. Since then the trans­ition of the eco­nomy fol­low­ing “Doi Moi” has fueled an im­press­ive growth with rising eco­nom­ic in­dic­at­ors in Vi­et­nam.

In the re­cent years, Vi­et­nam has emerged as a prom­ising des­tin­a­tion for many re­gion­al and in­ter­na­tion­al in­vestors thanks to its strong an­nu­al eco­nom­ic growth (cur­rently of around 6 to 7 per cent) and un­der­ly­ing factors that con­trib­ute to such pro­gress, namely stable polit­ic­al sys­tem, young and dy­nam­ic work­force, low wages eco­nomy and a grow­ing middle class.

In 2020, des­pite sig­ni­fic­ant im­pacts of the un­pre­ced­en­ted and on­go­ing Cov­id-19 pan­dem­ic, Vi­et­nam is among a few coun­tries that are likely to post pos­it­ive GDP growth while most eco­nom­ies will con­tract. Vi­et­nam is also es­tim­ated to be the fourth largest eco­nomy in ASEAN this year, be­hind In­done­sia, Thai­l­and and the Phil­ip­pines. Ac­cord­ing to the Gen­er­al Stat­ist­ic De­part­ment, GDP growth in Vi­et­nam in 2020 is 2.9 per cent and 6.7 per cent fore­cast for 2021.

How would you describe the investment climate in Vietnam? Which sectors offer the largest potential?

Since its ac­ces­sion to the World Trade Or­gan­iz­a­tion in 2007, Vi­et­namese mar­kets have been ex­tens­ively open to for­eign in­vestors in many sec­tors. Sim­ul­tan­eously, the gov­ern­ment has is­sued vari­ous policies eas­ing busi­ness con­di­tions and re­lax­ing ad­min­is­trat­ive bur­dens. In ad­di­tion, Vi­et­nam has also inked sev­er­al new free trade agree­ments, such as EU-Vi­et­nam FTA and UK-Vi­et­nam FTA, which are prom­ising to boost trade flows and to cre­ate at­tract­ive con­di­tions for busi­ness ven­tures in the coun­try.

For­eign in­vest­ment in­to Vi­et­nam is largely open and lib­er­al­ised, save for very lim­ited areas sub­ject to for­eign in­vest­ment re­stric­tions, ex­ample.g. fin­an­cial ser­vices, cer­tain as­pects of lo­gist­ics, tele­com­mu­nic­a­tions and util­it­ies. Es­pe­cially ac­quir­ing equity in­terests in ex­ist­ing do­mest­ic or state-owned en­ter­prises re­quires the in­vestor to go through an ap­prov­al pro­cess. Vi­et­nam’s lib­er­al mar­ket eco­nomy holds great po­ten­tial for for­eign in­vestors, par­tic­u­larly in the fields of man­u­fac­tur­ing, re­new­able en­ergy, high-tech and IT, the last be­ing sub­ject to at­tract­ive tax in­cent­ives. The coun­try’s in­tern­al mar­ket also of­fers a good basis for for­eign in­vestors due to its rap­idly grow­ing middle class and a high num­ber of con­sumers. The fo­cus on tra­di­tion­al ag­ri­cul­tur­al and labor-in­tens­ive in­dus­tries, such as tex­tiles and tim­ber, is still there, but is cur­rently shift­ing. Re­new­able en­er­gies are still very un­der­developed in Vi­et­nam and of­fer good op­por­tun­it­ies – a fact that has been re­cog­nised by the coun­try’s gov­ern­ment, which is pro­act­ively try­ing to at­tract in­vest­ment in this area.

Stat­ist­ic­ally, man­u­fac­tur­ing is still the most pop­u­lar area of dir­ect for­eign in­vest­ment in Vi­et­nam with a total in­vest­ment cap­it­al of over 3 bio. US Dol­lar (55.7 per cent of the total for­eign in­vest­ment cap­it­al) in 2021, fol­lowed by dis­tri­bu­tion, power gen­er­a­tion and con­struc­tion.

What challenges do German companies face during their business ventures into Vietnam?

Ac­cord­ing to the Vi­et­namese in­vest­ment in­dex, as of 2020, Ger­man com­pan­ies in­vest­ing in Vi­et­nam ranged at 18th out of 136 coun­tries by volume of in­vest­ment in Vi­et­nam with total 361 or more projects in di­verse fields. Ger­man com­pan­ies op­er­at­ing in Vi­et­nam do face a num­ber of chal­lenges: from in­fra­struc­tur­al prob­lems, such as the un­der­developed road net­work to non-trans­par­ent ad­min­is­trat­ive de­cision mak­ing. Con­tra­dict­ory le­gis­la­tion and in­ef­fi­cient bur­eau­cracy re­main ser­i­ous prob­lems that the coun­try still has to man­age.

Due to the im­pact of vari­ous free trade agree­ments, cus­toms reg­u­la­tions have been sig­ni­fic­antly re­duced. However, cus­toms pro­ced­ures still re­main largely non-trans­par­ent. On the Trans­par­ency In­ter­na­tion­al Cor­rup­tion In­dex, Vi­et­nam just re­cently slipped fur­ther down and now ranks 104th, at the low rate in the re­gion. For for­eign in­vestors, however, it is pos­sible to un­der­take all de­sired and ne­ces­sary pro­ced­ures in a trans­par­ent man­ner. However, suf­fi­cient time should be sched­uled to al­low for fi­nal­isa­tion of com­plex pro­cesses.

What opportunities does the latent US trade conflict with China hold for Vietnam's economy?

Vi­et­nam has con­tinu­ously de­veloped in­to an at­tract­ive sup­ply-chain di­ver­si­fic­a­tion op­tion to China. China's trade con­flict with the United States is lead­ing to in­creased and un­pre­dict­able tar­iffs across the board. Vi­et­nam of­fers a more cost-ef­fi­cient and pre­dict­able trade op­tion with the US through a vari­ety of free trade agree­ments. The lib­er­al mar­ket entry and the fact that de­pend­ence on loc­al part­ners is not man­dat­ory in most areas res­ults in a strong in­vest­ment in­flow.
Vi­et­nam will not be­come a sub­sti­tu­tion­al al­tern­at­ive to China in the fu­ture, but the coun­try will con­tin­ue to be seen as a val­ued di­ver­si­fic­a­tion op­tion. From a risk man­age­ment point of view, sup­ply-chain de­pend­ence on one coun­try such as China should be re­duced, and Vi­et­nam of­fers an op­por­tun­ity to do so.

In your opinion, how will Vietnam develop?

Des­pite no­tice­able de­fi­cits in the areas of le­gis­la­tion, reg­u­la­tions, bur­eau­cracy, cor­rup­tion, in­tern­al pro­cesses and in­fra­struc­ture, Vi­et­nam con­tin­ues to de­vel­op pos­it­ively. Backed by stable and pre­dict­able polit­ic­al frame­work, the short­com­ings are gradu­ally be­ing re­duced in or­der to make the coun­try even more at­tract­ive – es­pe­cially for for­eign in­vestors.

Vi­et­nam will con­tin­ue to work hard on the de­vel­op­ment of its in­dustry and to­wards the coun­tries mod­ern­isa­tion, ef­fect­ive­ness and sus­tain­ab­il­ity, in or­der to gen­er­ate a high­er com­pet­it­ive­ness as a stable basis of an in­dus­tri­al­ised na­tion. The coun­try will be able to ex­ploit and take ad­vant­age of op­por­tun­it­ies from signed Free Trade Agree­ments to re­move trade bar­ri­ers which will in turn sup­port the do­mest­ic ex­port ori­ented in­dus­tries and there­fore open new and ad­di­tion­al op­por­tun­it­ies for trade and for­eign dir­ect in­vest­ment.


Contact Person Picture

Stefan Ewers


+84 28 7307 2788

Send inquiry

Contact Person Picture

Michael Wekezer

Associate Partner

+84 28 7307 2788

Send inquiry

 Article series

Deutschland Weltweit Search Menu