Top 10 Reasons to Invest in Ho Chi Minh City, Vietnam
If Hanoi is the political center of Vietnam, Ho Chi Minh City, formerly known as Saigon, is then the heart of all economic activities in Vietnam. For people coming to the city for the first time, the hustle and bustle of the city life, the non-stop traffic, the abundance of offices, banks, stores and shopping centers, and the mingling of people coming from everywhere can easily make them feel young and excited that the same time. In the past recent years, Ho Chi Minh City’s economy has developed rapidly, outpacing other major cities in Vietnam and attracting foreign investors’ attention. Here are the 10 reasons why investing in Ho Chi Minh City is a smart move for your money.
City key demographics
- Region: Southern Vietnam
- Population: 8,1 million
- Gross City Production: $ 36 billion (2013)
- Labor Force: 4.7 million (2012)
- Latest Unemployment Rate: 4.83% (2013)
- Per Capita Personal Income: $4,300
- Administrative units: 24 districts (rural, suburban and urban)
- An International Geographical Exciting Destination
Ho Chi Minh City lies in the heart of the Southeast Asia Region, the place with the fastest growth in the world and a market of more than 600 million people. From Ho Chi Minh City, it is also a short distance to other promising nearby markets such as other ASEAN countries, China and India. For example, Ho Chi Minh City is 1,700 km south of Hanoi, 297 km east of Phnom Penh, Cambodia, 881 km east of Bangkok, Thailand. Within the radius of 3,500 km from Ho Chi Minh City is a market of almost 3 billion people with an abundant of labors, natural resources and knowhow. For businesses, location is obviously the king because a convenient and strategic location helps them to save a lot of money and time for transportation.
An economic hub of Vietnam
Ho Chi Minh City, together with other provinces including Dong Nai, Binh Duong and Ba Ria-Vung Tau, forms the Southern Key Economic Zone which makes up 50% of the national economic capacity. Ho Chi Minh City alone contributes 20% of Vietnam’s GDP. In the period of 2006-2010, the average growth rate of the city was 11%/ year, and in 2013, despite the global economic recession, its growth rate sill maintained at 9.3% much higher than the national average of 5.6%.
In terms of foreign direct investment, as of September, 2014, with 5,080 FDI projects and a total investment capital of 36,207 million USD, accounting for 16% of total FDI capital in Vietnam, Ho Chi Minh City remains the most attractive destination for foreign investors in Vietnam. In the first 10 months of 2014, Ho Chi Minh City attracts 327 new FDI projects with 2,667.7 million USD, the highest among provinces and cities in Vietnam. The biggest investors investing in Ho Chi Minh city come from Singapore, B.V.I, Japan, South Korea, Hong Kong and China.
History of favoring economic activities
The dynamism of Ho Chi Minh City’s economy can be traced back to centuries ago when the booming trading activities along the Mekong Delta made the city thrive. Saigon’s residents were open-minded, embracing relationships with foreigners and welcoming trade. When the French occupied the city, they increased agricultural production in the Mekong Delta and built advanced infrastructure in Saigon to use it as a transportation hub to trade with France, further reinforcing the role of Saigon as a major seaport and commercial hub in the Indochina Peninsula. Moreover, after the American left Saigon, they still left an enormous influence on the business culture in the city. Doing business in Ho Chi Minh City is more straightforward and less bureaucratic, and people have to deal with less restrictions and regulations than in other Northern cities.
Thriving local market
With a population of more than 8 million, accounting for more than 10% of the total Vietnamese population, Ho Chi Minh City itself has enormous market potential to make any business investment a lucrative one. The population growth rate in Ho Chi Minh City is also among the highest in the country, and immigration, averaging about 2.9%/year; in which, immigration accounts for more than 50% of the total growth. About 83.1% of the population resides in the urban areas, and the majority of them are young people under 35 years old. With the highest per capita income in the country (approximately USD 4300/person/year, doubling the national average), the people in Ho Chi Minh City go shopping not only to satisfy basic needs, but also to have fun and show off their style. Ho Chi Minh City’s people are big consumers of high quality products and luxury brands. The city is also the entry point of many international brands. In fact, most major international luxury brands in Vietnam including Gucci, Louis Vuitton, Prada, Dior, Yves Saint Laurent, and so on have their stores opened first in Ho Chi Minh City. Although the consumers want big names with highest quality and most affordable price, they do not have strong brand loyalty yet, so there are still many opportunities for new investors to invest in Ho Chi Minh City and seize this promising market.
Well-qualified human resources
It was estimated that the labor force in Ho Chi Minh City reached 4.7 million people in 2012, making up more than 50% of the total population. The percentage of trained labor increased from 40% in 2005 to 55% in 2010, and was forecast to reach 70% in 2015. Ho Chi Minh City also has the most modern and comprehensive educational system with hundreds of kindergartens, primary schools, secondary schools and high schools which can accommodate up to 1.3 million children. In addition, the city is home to more than 72 universities and colleges admitting more than 116,000 students/ year, 370 vocational centers and professional secondary schools. Many foreign universities such as RMIT (Australia), American International School (USA), Singapore International School (Singapore), etc. have campuses here. Nearly 30% of all people holding postgraduate degrees in Vietnam are currently living in the city. The city government also aims to increase the number of qualified personnel working in such fields as hi-tech industries, IT, and other services. With the high concentration of qualified and trained labors as well as general labors, companies investing and doing business in Ho Chi Minh City can easily recruit suitable employees in a short period of time.
Friendly investment environment
Ho Chi Minh City has a unique start-up culture with a great investment environment and a strong entrepreneur community. In 2013, an estimated of more than 25,000 new domestic businesses were established with a total investment capital of VND 114.6 thousand billion (or USD 5.46 billion). The city also granted investment certificates to 440 FDI projects with a total committed capital of USD 963 million. These numbers are not only significant on their own but also reflect the fast growth of the number of businesses in the city. The city government has implemented various programs to facilitate the investment process. For example, ISO 9000 standards are applied to public administrative procedures. Many procedures such as business registration, customs declaration and clearance can now be done online. The government also holds regular dialogues with domestic and foreign investors to answer their inquiry and help them to solve their problems. Investment and Trade Promotion Center (ITPC) and Department of Planning and Investment are contact points for foreign investors to set up their businesses in Ho Chi Minh City.
When investing in Ho Chi Minh City, investors can benefit from the most modern and comprehensive Infrastructure system in Vietnam including transportation and telecommunication systems.
+ Tan Son Nhat International Airport: Just 6km north of the city center, Tan Son Nhat Airport is the largest and busiest airport in the country with the capacity to accommodate 20 million people a year. From Tan Son Nhat Airport, there are 50 flight routes to other countries and territories all over the world such as China, Japan, Korea, Singapore, European countries, etc.
+ Saigon Port: Saigon Port is a network of ports in Ho Chi Minh City mainly along Saigon River. It serves as a gateway to the Mekong River Delta, the South China Sea (83 km away from the sea) and the Asia continent. Throughout the history of foundation and development of Saigon, Saigon Port plays an important role in making Ho Chi Minh City a flourishing trading center. The port has a total area of 500,000 m2 with 5 terminals meeting the international standards, and it handles about 8.3 million tons of cargo annually. According to the Journal of Commerce, it is the 26th busiest container port in the world.
+ Road system: The road system in Ho Chi Minh City consists of almost 4,000 internal roads with a total length of about 4,000km, ring road systems and National highways No. 22 (connecting to Tay Ninh Province), No. 20 (connecting to Da Lat), No. 51 (connecting to Vung Tau), No. 1A (connecting to the west and central provinces). In order to meet an increasing demand of a growing population, the city government has invested to expand the road system and complete numerous projects such as Vo Van Kiet Road (the East-West Highway), the Thu Thiem Tunnel, Thu Thiem Bridge, Phu My Bridge, and several national highways and inter-region roads. The Ho Chi Minh Metro project is currently implementing the first construction phase to build the first metro line from Ben Thanh Market to Suoi Tien Park, which is expected to compete in early 2018.
+ Telecommunication and IT infrastructure: The system of post and telecommunication in Ho Chi Minh meets international standard, providing fast, reliable and high quality services such as ADSL, rapid data transfer, wide broadband MAN. The Internet service in Ho Chi Minh city is also among the cheapest in the world.
+ Industrial zones: The city has 12 industrial parks with a total area of nearly 3,000 ha, 03 export processing zones, and one hi-tech park. When investing in the industrial zones and export processing zones, businesses can benefit from various incentives policy such as lower tax rates and other investment supporting services.
Ho Chi Minh hi-tech park
Established in 2002 with a total area of 913 ha, Ho Chi Minh Hi-tech Park is one of the three hi-tech parks in Vietnam. As of May, 2014, there were 77 projects in force in the Hi-tech Park with the total investment capital of 2.4 billion USD. Many big multinational corporations such as Intel Corporation, Microchip (USA), Nidec (Japan), Sanofi (France), Sonion (Denmark), etc. have invested and established their operation here.
Urban innovative center with young and creative people
It is no coincidence that many big cities in the world such as Boston, Las Vegas, Singapore, and many other European cities are the hub for innovation, opportunities and new ideas. It is the combination of the city’s cultural vibe, modern facilities, flourishing start-up environment, and the concentration of cutting-edge firms and technology that draw talented people to the urban areas; and this is exactly what is happening in Ho Chi Minh City. There is no other city in Vietnam where you can easily meet and work with many other aspiring young professionals who are ambitious, highly qualified, and love trying new ideas and sharing thoughts and experiences with one another at shared working spaces, and even bars, coffee shops and other social meeting places. This vibrant environment encourages innovation and helps entrepreneurs investing in Ho Chi Minh City take advantage of knowledge spillover and have quick access to capitals, technologies and skills.