An Introduction to Doing Business in Vietnam 2018-19 - Preview

4 AN INTRODUCTION TO DOING BUSINESS IN VIETNAM 2018 Foreign investors continue to prioritize their investments into Vietnam despite the rise of protectionism across the globe. The country is steadily becoming an important manufacturing base for electronics makers who are searching for the next location in the world that is able to provide a well-educated and low-cost workforce. On the heels of major investments from the likes of Samsung, Foxconn Technology Co., Intel Corp., LG Electronics and Canon Inc., investors are also beginning to drastically expand their investments into the country. The steady inflow of capital sends a strong signal that Vietnam not only looks attractive from the outside but can retain value for investors at a variety of locations on the value chain. Vietnamese businesses are optimistic about the economic future of the country and are also looking to grow their businesses tomeet upcoming demand. A prime example is VietJet, a discount airline that is aggressively expanding its operations throughout the country. In a groundbreaking move, and one that is highly indicative of Vietnam’s rapidly emerging business environment, Vietjet has chosen to raise capital via IPO rather than through conventional debt markets. The country has a growing workforce; however, there is still a noticeable lack of high-tech skills among job seekers. The Vietnamese government is pushing ahead with skills training programs. Foreign companies are also investing in the future of the country’s workforce. Intel is leading a group of technology companies, including Siemens, to train Vietnamese workers by funding training programs intended to develop a high-tech workforce within the country. An additional reason to be positive about Vietnam is the soon to be implemented European Union Vietnam Free Trade Agreement (EVFTA) which will place Vietnam in a prime position vis-à-vis tariff free trade links with some of the biggest markets in the world. Furthermore, recent progress on the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) could accelerate growth in Vietnam and ASEAN even further in the years to come. On top of this, research shows encouraging results on the efforts to improve the ease of conducting business in Vietnam. Vietnam ranks 68th out of 190 countries in the World Bank’s “Doing Business 2018” overall ranking, up 14 positions from 2017. Similarly to the overall improvements of doing business in 2017, several aspects of Vietnam’s investment environment show significant movement; however, areas for improvement prevail: • “Paying taxes” rose 81 positions year-on-year to 86, • “Protecting investors” rose 6 positions to 81, • “Starting a business” is ranked at only 123 (falling 2 positions year-on-year), while • “Getting credit” ranks at 29 (rising 3 position year-on-year). This publication, designed to introduce the fundamentals of investing in Vietnam, was compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Preface ALBERTO VETTORETTI Managing Partner Dezan Shira & Associates CONTACT Dezan Shira & Associates vietnam@dezshira.com www.dezshira.com