Vietnam's rising international business rankings signal a thriving economy, attracting foreign investment. Notably, the strengthening Vietnam-India business ties, spanning economic, commercial, and strategic realms, foster growing opportunities for Indian businesses in Vietnam. Today, Let's discover the evolving landscape of Business In Vietnam for Indian in this article!
The economic and trade relations between Vietnam and India is one of the highlights in the comprehensive relations between the two countries. Vietnam and India have established a trade joint subcommittee mechanism.
Therefore the two countries have seen positive signs in their investment relationship which is expected to prosper in the near future. Because many leading India Groups have been coming to Vietnam to look for investment opportunities in many sectors.
As Vietnam has signed many new-generation FTAs, especially the Trans-Pacific Partnership agreement, and enjoyed many other profits, the country has gradually become an opponent of regional countries. In attracting investment from other countries, especially from Indian enterprises.
Until now, Vietnam has had a total of 270 projects invested in by India. The total capital of these 270 projects is estimated at nearly 2 billion USD. In Soc Trang, India is building a thermal power project of up to $2.2 billion to develop this field. Here, the plant will meet about 2% of the electricity demand of the Vietnamese people.
The plant is expected to come into operation officially in 2030. In the same thermal power sector, in 2017, India's Tata Power Group signed a contract worth $54 million to build an energy park. 49 MW solar energy plant in Binh Phuoc province.
India companies now have 118 valid investment projects in Vietnam with the total registered capital of 590 million USD. The figure is expected to increase as many Indian enterprises have expressed their wishes to invest in Vietnam. According to the Foreign Investment Agency under the Ministry of Investment and Planning, investment capital poured by Indian enterprises into Vietnam has increased sharply in recent years.
Business cooperation opportunities between India and Vietnam are increasingly open. Especially in the fields of electronic manufacturing, vehicles, and information technology, ... In India, the electronics manufacturing industry plays an important role in the economy. Because the country mainly produces electronic products, computers, and optical products for export to many countries around the world, not to mention being deeply involved in the global supply chain.
Meanwhile, manufacturing vehicles and transportation components is also an important sector of the country. Vietnam's market is a potential business destination when attracting countless foreign investors in this field. For example, Honda or Toyota, the success of the two brands makes foreign suppliers trust to pour capital into the country. Facing the Covid-19 pandemic, Vietnam's information technology industry is also a bright spot when it has many contributions to the country's GDP growth.
In particular, there are a number of businesses that have made a name for themselves in the international market such as Viettel, FPT, … Thanks to the above, businesses from India, Vietnam, and Southeast Asian countries can expand information exchange and better understand each other's needs, thereby enhancing cooperation and full participation. New-generation free trade agreements (FTAs) have been signed.
There have been considerable developments in economic relations: Bilateral trade increased by 5 times from 1 billion USD in 2006 to over 5 billion USD in 2015. India’s investment in Vietnam was also threefold, from 200 million USD in 2007 to 750 million USD in 2015. Recently, India has not joined the Regional Comprehensive Economic Partnership (RCEP) of 15 countries. This is because the country's problems and concerns are not adequately handled by the existing provisions of the convention.
Main items imported from Vietnam:
Main items exported from India:
India is currently one of the 10 leading trade partners of Vietnam. It ranks 28th of 110th countries and territories making investments in Vietnam. Since establishing a strategic partnership in 2016, trade between Vietnam and India has grown at an average of 20 percent annually, higher than Vietnam's overall growth rate with the world.
According to incomplete statistics, it is expected to reach 3 billion USD in 2021. Trade and investment are one of the main pillars of the bilateral relationship between the two countries. In November 2021, the first container shipping route directly connecting Vietnam, Malaysia, and India was officially established.
This service route directly connects the two largest seaports in Vietnam, the port of Ho Chi Minh City and the port of Hai Phong, to the largest gateways of India. This shipping route shortens the time by 10 days compared to the previous transshipment route.
In the context of the COVID-19 pandemic, the global economy has been facing certain obstacles. Therefore, both Indian and Vietnamese governments are actively addressing this. These efforts came to fruition when Vietnamese and Indian airlines Vietjet Air & Indigo launched direct flights, connecting India's New Delhi and Kolkata with Vietnam's Hanoi and Ho Chi Minh City.
In order to attract international investors, Vietnam has introduced a lot of policies to encourage attractive economic development for foreign businesses. Benefits can include:
According to the most recent assessment of the Asian Development Bank, although Vietnam is a small country in terms of both territory and economic growth, it is a leader in the race for infrastructure. Because in recent years, infrastructure investment in the public and private sectors of Vietnam has averaged 5.7% of gross domestic product per year. This is also the highest investment rate in Southeast Asia. So most of the foreign investment here is in the import and export sector.
In the current economic context, especially as the globe has just experienced the COVID-19 pandemic, Vietnam has proven its sustainability in economic development. Vietnam's economy maintains growth at a steady rate. GDP is estimated at 2.91%. In 2020, Vietnam was one of the few countries to record GDP growth in the face of the pandemic. Over a decade of great fluctuations, our GDP per capita increased 3.6 times, reaching nearly $3700. This is why Vietnam is one of the countries that attract foreign investors.
Vietnam is one of the fastest-growing economies in the world today. In 2019 its growth was only beaten out by a selection of far smaller and far more unstable national economies. With these strategies, Vietnam made the country rank 9th to 70th out of 190 economies in the World Bank's Business 2020 report.
Recently, veteran economist Charlie Robertson of the global financial investment group Renaissance Capital has "revealed" the secrets to help Vietnam not only rise to a middle-income country but also a destination. attractive to attract investors from all over the world to come and do business.
In it, he mentioned the favorable demographics of the country. Currently, Vietnam is witnessing a golden age of the "golden population" and will continue for many years to come. Besides, not only possessing an abundant labor force, the qualifications of workers in Vietnam are also being improved day by day to be suitable for different fields. Government spending on education was over 4% of GDP in 2018.
Unlike other countries in the world, most business sectors in Vietnam do not have minimum capital regulations. This offers many potential opportunities for new businesses in Vietnam. Note, however, that the declared capital must be paid in full within 90 days from the date of registration of the company.
Regarding labor, although the minimum wage increases annually, Vietnam is still a country with low labor costs. In the long term, wages for employees are expected to increase steadily. But for the time being, low wages will complement the growth of the manufacturing sector.
With the strength that the land is alluvial and fertile, agriculture is the main sector of Vietnam's production. As a resource-rich country, ideally located geographically, Vietnam has a suitable climate for agricultural production. Therefore, this is a very open opportunity for investors to pay attention.
As a country located on the Pacific Coast, Vietnam is a country with great potential for seafood processing. Recognizing this potential, Indian seafood processing companies have quickly established chains of units, production, and trade in Vietnam, especially in the Mekong Delta area. Indian companies can benefit greatly from a number of incentives for investment, credit, insurance, and preferential taxation for organizations operating in the fisheries sector.
Information technology is developing rapidly in Vietnam. It is one of the key industries, contributing to the outstanding development of science, technology, and socio-economics globally in Vietnam. In Vietnam, the government's push for digital transformation in the 4.0 era will make the technology market more vibrant than ever.
Vietnam is becoming a new destination with stronger investment by major technology corporations in the world with the goals of training, recruiting, and developing quality IT human resources. Along with that, large companies and corporations in Vietnam also accelerate digital transformation.
Recognizing the potential of the automobile industry, Vietnam is increasingly focusing on development in this sector. So it's growing faster and faster. Typically Vinfast car brand has made a reputation in Vietnam. However, the development of industries supporting the supply of spare parts and components is slow. Therefore, this is an opportunity for India's automotive component manufacturers, who are already among the world's leading exporters.
Vietnam has always attached great importance to the agricultural sector. Our country has many different incentives in this field. Therefore, experts in the field always try to find out, research, and develop machines for the specialty. This is one of the potential fields in Vietnam.
Vietnam is increasingly focusing on infrastructure development to increase the attraction of foreign investors. Because the potential of this development is huge. Our country has continuously ranked at the top of the countries with the best infrastructure in Southeast Asia in recent years. Therefore, Indian businesses can fully consider this as a potential for investment.
>> Learn more: Doing Business In Vietnam: Overview, Advantages And Challenges
Vietnam is an attractive investment destination with endless potential and opportunities for foreign businesses. Possessing tremendous economic growth over the past decade, Vietnam is gradually asserting its name in international trade. Therefore, business in Vietnam for Indians will promisingly be an open opportunity in the next years.
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