The writer has a master's degree in economics. She enjoys researching and writing about economic and business issues.
Overview of Vietnam’s Economy in 2017
With its GDP growth rate of 6.81%, exceeding the government’s target of 6.7% and despite an appalling growth rate of 5.15 in the first quarter, Vietnam is celebrating the most economically successful year since 2008. Newly-released statistics by the Vietnamese government for the year 2017 painted a bright picture of Vietnam’s economy. GDP per capita increased from $2,215 in 2016 to $2,385 in 2017. Export turnover reached $213.77 billion, up 21.1% compared to 2016; main export products include electronic devices and components, textiles, equipment, and wooden products. The United States is Vietnam’s top export market, followed by EU, China, ASEAN, Japan, and South Korea. Import turnover reached $211.1 billion, up 20.8% compared to 2016 with main import markets consisting of China, South Korea, ASEAN, and Japan. Labor productivity increased by 6% compared to 2016. Although the inflation rate rose from 2.66% in 2016 to 3.53% in 2017, it is still stable and under control.
In 2017, Foreign direct investment in Vietnam established a new record with a total registered capital of $35.88 billion coming from 115 countries and territories. Japan led FDI in Vietnam in 2017 with $9.11 billion, accounting for 25.4% total registered capital, followed by South Korea (237.7%), and Singapore (14.8%). 44.2% of FDI inflow went to the manufacturing and processing sector; 23.3% of FDI inflow went to electricity production and distribution, and 8.5% went to real estate. FDI inflows in 2017 surged due to the incoming of billion-dollar projects.
Vietnam’s Economic Prospects in 2018
After successfully hosting APEC in 2017, the Vietnam economy experienced considerable economic growth in its last quarter. Gaining momentum, Vietnam’s economy is predicted to prosper with an expected growth rate of 6.5–6.8% according to Asia Development Bank, and of 6.8% according to the Australia and New Zealand Banking Group. With opportunities coming from M&A activities, free trade agreements such as the EU-VNFTA, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), rising income, and improved legal framework, various opportunities exist for investors in Vietnam in the coming years. Here are the top five cities/provinces to invest in Vietnam in the next year.
1. Invest in Ho Chi Minh City
Ho Chi Minh City is praised as the economic hub of Vietnam with a total GRDP of more than $48.2 billion in 2017 and a growth rate of 8.26%. For years, Ho Chi Minh City led Vietnam in terms of FDI attraction. Currently, the city has more than 7,300 FDI projects in operation with a total registered capital of more than $44 billion, accounting for more than 13% of total FDI inflow into Vietnam. One of Ho Chi Minh City’s competitive advantages is its comprehensive and modern infrastructure. Ho Chi Minh’s international airport is the biggest airport in Vietnam, accommodating up to 17 million passengers per annum. Saigon Port consisting of a network of ports throughout the city is also the busiest port in Vietnam. Ho Chi Minh City has 11 industrial zones with a total area of more 1,700 hectares, and more than half of them have land available for rent. Ho Chi Minh Hi-tech Park was established in 2002 and has been able to attract leading international corporations including Intel, Samsung, contributing significantly towards the city’s tax revenue.
Another advantage of Ho Chi Minh City is its abundant human resources catering to all kinds of needs of investors, from skilled workers to qualified researchers and experts. In addition, the city houses more than 75 universities and colleges, and various research centers, think tanks, creating an inclusive network between research—development—and production, supplying local companies with the best human resources, technologies, and high-quality services. The city’s vibrant vibe, its people’s can-do attitudes, and rising income all make Ho Chi Minh an appealing investment destination for investors around the world.
2.Invest in Hanoi
As the capital of Vietnam, the charms of Hanoi date back to a thousand years ago. In the past, its name was “Thăng Long”, meaning rising dragon; now its name Hanoi means the river within the city. Both names reflect the potentials and prosperity of the city. In 2017, Hanoi’s GRDP stood at $23.6 billion, up 8.5% compared to 2016. Regarding FDI inflows, Hanoi ranked fourth among cities and provinces in Vietnam with more than 4,489 projects in force and $27 billion in registered capital.
Hanoi is attractive to foreign investors for several reasons. First, it is the transportation hub of the northern cities and provinces of Vietnam, with the international airport Noi Bai—the second biggest airport in Vietnam—and a comprehensive road network. In the past few years, the city government has invested heavily to improve the city’s transport infrastructure with several big projects expanding some inner-city roads, improving the railway station, building various crossovers, and tunnels. Second, Hanoi is bestowed with generous investment incentives by the Vietnamese government. For example, Hoa Lac Hi-tech Park in Hanoi is the first Hi-tech Park in Vietnam to receive special mechanisms and incentive policies, allowing investors and companies investing in Hoa Lac Hi-tech Park to enjoy preferential tax rates and other support.
Third, life in Hanoi is very thrilling for expatriates who love to explore Vietnamese history, culture, and lifestyle. Hanoi still retains its Old Quarter which features very distinctive Vietnamese architecture, trading practice, and tradition. The city also houses many unique historic and cultural sites such as the Turtle Tower, One-Pillar Pagoda, Opera House, Thang Long Citadel, Temple of Literature, etc. where investors and tourists can travel back to the past and reflect upon lives and what the city has gone through.
3. Invest in Bac Ninh
Over the past decade, from an agricultural province, Bac Ninh province has evolved into one of the major industrial hubs in the Northern Key Economic zone, a magnet for FDI attraction in Vietnam. In 2017, the province’s total GRDP was $7 billion, up 19% compared to 2016. While industry and construction sectors accounted for 74% of GRDP, the service sector accounted for 22% of total GRDP. In terms of FDI inflow, if in 2011, the city only had 317 projects with a total of committed capital of $3 billion, in 2017, it boasted 1,135 projects with a total committed capital of more than $16 billion, ranking 6th in the country. As major international corporations such as Canon (Japan), Samsung (South Korea), Nokia (Finland), and ABB (Sweden) established their presence in the province, Bac Ninh earned its reputation as a lucrative investment destination proving investors with appealing incentives, skilled labors, and comprehensive infrastructure. In the coming years, Bac Ninh is poised to attract more big names such as Foxconn, Hanwha Techwin Company, etc., which promised to offer more jobs and expand the industrial clusters in the province. Without any doubt, Bac Ninh is an exemplary success story of investment promotion and policies in Vietnam.
4. Invest in Binh Duong
Located in the Southeast region of Vietnam, only one and a half-hour of drive from Ho Chi Minh City—the economic center of Vietnam—Binh Duong is also a prominent investment destination in Vietnam. Thanks to its close proximity from Ho Chi Minh City, in the past, Binh Duong managed to attract big projects as companies seek to expand their production as part of their supply chain near Ho Chi Minh City.
However, over the past few years, Binh Duong government has proved that the province is more than just part of Ho Chi Minh City’s economic circle. The provincial government offers transparent and efficient investment and business registration procedures to help investors to save money and time in establishing their production, and hosts regular dialogues with foreign investors to facilitate their challenges. In addition, the province also invests in improving the quality of its human resources, shifting away from labor-intensive industries to high-value-added industries. As a result, Binh Duong attracted more than $30 billion worth of FDI capital, ranking 2nd in Vietnam. The biggest investors in the province are Japan, Taiwan, and South Korea. In 2017, the province enjoyed an economic growth rate of 9.15%, and GDP per capita was estimated at $5,286, much higher than the national average of $2,385.
5. Invest in Da Nang
In 2017, Da Nang was honored to be chosen to host the APEC Economic Leaders’ Week, drawing spotlights from news media all over the world to show on the small coastal city in the center of Vietnam. Establishing its brand as the city of bridges and the city of festivals, in the past few years, Da Nang has earned recognition not only from the Vietnamese government but also from international organizations. For instance, Da Nang topped Vietnam’s Provincial Competitive Index from 2013–2016 and ranked 2nd in Vietnam Provincial Governance and Public Administration Performance Index in 2012 and 2014. The city is also listed as Top 10 destinations on the rise for 2015 by TripAdvisor, and Asia leading festival and event destination by World Travel Awards Asia 2016.
Lying at the very heart of Vietnam, Danang holds a very strategic location. The city is only hours away from big domestic and foreign markets such as Hanoi, Ho Chi Minh, China, India, etc. The East-West Economic Corridor passing through Danang links the city with other neighboring countries such as Laos, Cambodia, Thailand, and Myanmar with Danang Port acting as the access point to the Pacific Ocean, facilitating the transportation of goods and people through the area. As compared with other cities and provinces, Danang is quite small with an area of around 1,258 km2 and a population of more than 1 million people. Nonetheless, its infrastructure is comprehensive and of international standards. The city has 06 industrial zones in operation and 03 more under planning. Danang Hi-tech Park also has more than 300 hectares of land available for rent with attractive rental rates and other supports.
What’s more, Danang is also voted as the most livable city in the country. The city is endowed with 70km of breathtaking coastal line and stunning white sand where people can relax and enjoy nature. Life in Danang is very peaceful and calm, which is very different from other hustling and bustling developing cities. The expatriate community in the city is also growing, up from more than 1,000 people in 2012 to more than 5,000 in 2017.
With its unlimited potentials and environmentally-friendly government policies, Danang is certain to offer great opportunities for foreign investors to build not only a business but also a home in the city.
So Go Explore!
In sum, although the road ahead for Vietnam and its provinces and cities is not without struggle and challenge, there still exist potentials and opportunities for investors and businesses to explore.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
unknown facts report- robert on September 19, 2018:
A retired couple dreaming peaceful life with peaceful community in CH-XHCN-VN.
They left Cali(US).Then bought
Land ,build a dream house,added
A small sized store next to house
The locals did not pay for goods ,preferring thievery
One night. The looter masked as customers to burgeon the women,
She has been in Coma since.
Her husband brought her back to
Cali for treatment.Surprising US
Consulate Office Kept quiet about
Despite of receiving number of report from reporter.May be too busy with HR issues in VN.
Their dream home were flatten by locals .Nothing left even the loo.
The Reporter SEA
Mary Norton from Ontario, Canada on January 15, 2018:
Vietnam is growing and given how hard the Vietnamese work it is a good place to invest.