Vietnam’s pharmaceutical industry is entering a decisive turning point. Stricter quality standards, shorter recall deadlines, and tighter compliance requirements are no longer abstract ideas. 

They are becoming legal reality with Circular 30/2025/TT-BYT. For foreign investors and international pharmaceutical companies, this shift represents both a challenge and an opportunity: the challenge of higher compliance costs, and the opportunity to capture growth in testing services, R&D partnerships, and high-quality manufacturing.

In my experience supporting foreign investments at Viettonkin, I have seen that the greatest risks often come not from the written laws themselves, but from how they are applied in practice. 

That is why helping our clients anticipate and adapt to these unwritten rules has become the foundation of long-term success in Vietnam’s evolving pharmaceutical market.

Key Takeaways:

• Circular 30/2025/TT-BYT will introduce stricter quality standards and faster recall deadlines for all pharmaceutical products, impacting the entire pharmaceutical market.
• Foreign investors and international pharmaceutical companies must prioritize understanding the new compliance landscape to ensure continued growth.
• While compliance costs may rise, new regulations create significant growth opportunities in testing services, R&D partnerships, and high-quality manufacturing for many companies.
• Strategic local partnerships are essential for pharma companies to navigate government agencies and ensure smooth market entry and long-term growth.
• Success in Vietnam's evolving pharmaceutical market hinges on treating regulatory compliance not as a hurdle, but as a core strategy for sustainable growth.

I. The New Playing Field: How Circular 30/2025 Reshapes Vietnam’s Pharmaceutical Sector

The Vietnamese government’s goal is clear: align the local pharma industry with international standards. This will improve public health and boost competitiveness for all companies involved. Circular 30/2025/TT-BYT is the primary instrument for this change. 

From my experience helping hundreds of companies navigate regulatory shifts, this is a moment of both risk and opportunity.

This is not just about updating paperwork. An expert analysis from Tilleke & Gibbins (2025) confirms that the new guidelines will enforce stricter drug quality standards and significantly shorten timelines for recalls. 

This is a major challenge that puts immense pressure on the supply chain management of all pharmaceutical companies. This move from the Ministry of Health replaces a previous circular, demanding a higher level of vigilance from all companies in the pharma sector.

For foreign investors, clarity is paramount. The official English translation of the circular, which legal portals like LuatVietnam (2025) provide, becomes an essential tool for foreign direct investment. However, the text alone is not enough. 

Understanding its practical application requires on-the-ground experience, especially when dealing with the many companies that form the local supply chain.

II. Vietnam’s Pharmaceutical Industry: A Market Of Contrast And Opportunity

Vietnam’s pharmaceutical market is one of the most dynamic in Southeast Asia, reflecting trends seen across the global pharmaceutical market. It's a key market among developing countries, driven by rising incomes and a growing demand for quality healthcare. 

Yet, it remains a challenging landscape for many companies where local manufacturing capabilities are still catching up.

The demand for high-quality generic drugs, biologics, and other pharmaceutical products is soaring. However, over half of the active ingredients are still imported, creating vulnerabilities. 

For smaller pharma companies, these stricter regulations present a hurdle. The high costs of upgrading facilities to meet Good Manufacturing Practice (GMP) standards can be overwhelming for these companies.

This is where proactive compliance becomes a lifeline. I think of our client whose permit was at risk. The challenge wasn't just the timeline; it was a complex regulatory issue threatening one of the many international companies seeking growth in Vietnam. 

Our team’s emergency coordination with government agencies saved their investment and achieved a 30% faster processing time, a precedent that has since benefited other companies.

III. From Compliance Burden To Competitive Advantage: Opportunities In The New Era

While the new rules demand more, they also create fertile ground for growth and investment for prepared pharma companies.

1. Building Trust And Opening Export Doors

Meeting international standards is no longer just a compliance exercise; it’s a powerful market differentiator. For our clients, achieving these standards has built trust with healthcare professionals and opened export opportunities. 

This is the essence of healthcare innovation in Vietnam today, turning quality control into a competitive advantage for companies.

2. A Booming Market For Testing And R&D Partnerships

The intensified focus on quality creates a market gap, presenting a prime opportunity for companies specializing in GMP/GLP testing. Furthermore, to close the R&D gap, Vietnamese pharma companies are seeking partnerships. This is driving investment in clinical trials for new molecular entities and other breakthrough medicines. 

With its large population, Vietnam is an attractive location for clinical trials, a sector poised for growth as more companies look to diversify research.

3. Emerging Growth Segments And A Reshaped Global Landscape

The pharmaceutical/drug business has several high-growth segments, many of which were profoundly shaped by the recent global health crisis. The pandemic massively impacted the global pharmaceutical industry, accelerating R&D at an unprecedented rate and reshaping global spending on healthcare. 

The race for a vaccine highlighted the power of scientific breakthroughs, and the lessons learned from that period are now being applied to other infectious diseases.

For all companies, the post-crisis landscape has created a new operational basis. The supply chain disruptions during the public health emergency forced a strategic rethinking, underscoring the critical need for local production, a huge opportunity for companies to invest in manufacturing within Vietnam.

This experience has made the entire pharma industry more resilient, a quality that was tested again in the previous year. The world after COVID 19 is simply different for all companies, and their strategies continue to reflect this new reality.

The market for generic drugs is also set for expansion. The looming patent expiration for several blockbuster branded drugs from top pharma companies like Merck & Co and Eli Lilly presents a massive opportunity. 

The loss of market exclusivity due to patent expiration can lead to lower sales for a drug company, which must be partially offset by higher sales from other pharmaceutical products in their product portfolio. 

For Merck & Co, its patent protection on key drugs is vital, but the company also relies on its animal health and diagnostics division, where revenues rose in the same period that drug sales fell in the previous year. The constant cycle of patent expiration is a key focus for all leading companies. 

A looming patent expiration forces companies to innovate in their core therapeutic areas. A company like Merck & Co consistently invests in R&D for new molecular entities across multiple therapeutic areas.

IV. Your Strategic Blueprint For Success In Vietnam’s Pharma Market

Navigating this new landscape requires a robust, proactive strategy focused on compliance and partnership for all companies.

1. Navigating Compliance With An Audit-Ready Mindset

The starting line is being audit-ready from day one. I remember the relief in a client’s voice after we resolved their emergency audit. The audit began with 24-hour notice, threatening their license. 

Our team’s systematic approach, leveraging documentation and agency relationships, resulted in a clean audit for one of the many companies we protect. This experience helped us develop protocols that now proactively protect all our client companies.

2. Local Partnerships: Your Key To Smoother Market Entry

For foreign companies, trying to go it alone is a costly mistake. Collaborating with local manufacturers and experienced advisory firms is critical. As Thư Viện Pháp Luật (2025) outlines legal requirements, a local expert translates them into actionable steps for companies.

V. The Future Is Bright, But Preparation Is Key

Vietnam's pharmaceutical industry is on an upward trajectory. The alignment with global standards and strong government support create a powerful engine for long-term, sustainable growth. The global pharmaceutical market, especially the competitive US market, sets a high bar. 

In the fourth quarter of the previous year, many leading companies reported that increased sales in some therapeutic areas were partially offset by challenges in others. Global sales continue to show a positive growth profile.

Investors must prepare for risks. For a major player like Merck & Co, even one weak quarter can affect net sales compared to the previous year. The focus remains on innovation in key therapeutic areas to drive growth and deliver new drugs. 

The development of molecular entities is critical for long-term success. The growth in therapeutic areas such as oncology and cardiovascular renal metabolic diseases is a key focus for companies like Merck & Co. Success in this pharmaceutical market hinges on a diverse product portfolio and robust patent protection. 

When a patent expires, it tests the resilience of even the largest companies. Over the past two decades, the global pharmaceutical industry has seen this cycle repeat. Even with strong performance in the previous year, all companies plan for future patent cliffs.

VI. Conclusion

As Vietnam’s pharmaceutical sector enters a phase of regulatory transformation, Viettonkin Consulting stands ready as your strategic partner, helping international businesses turn compliance pressures into meaningful competitive advantages. 

With many years of experience advising foreign direct investment, our multidisciplinary  team spanning legal, tax, compliance, audit, and advisory services has supported numerous multinational corporations through Vietnam’s regulatory landscape while seizing growth opportunities in testing, R&D, and high-quality local manufacturing.

At Viettonkin, we understand that sustainable success in Vietnam’s pharmaceutical market is built upon:

• A proactive, audit-ready compliance strategy
• Trusted partnerships with local industry and authorities
• A forward-looking vision focused on long-term growth

Let us guide your business confidently through this evolving regulatory environment, transforming challenges into opportunities for lasting achievement.

You may also be interested in our recent article on Navigating Vietnam’s Customs Clearance: Essential Insights for Foreign Investors, which explores practical steps to streamline import and export procedures in Vietnam.

Frequently Asked Questions

1. What is the biggest mistake foreign pharma companies make when entering Vietnam?

In my experience, the biggest mistake is underestimating the importance of practical relationships with regulatory bodies. Many pharmaceutical companies have perfect legal paperwork but fail because they don't understand the specific expectations of local authorities, where a trusted local partner becomes invaluable.

2. Realistically, how long does it take for companies to become fully compliant with Circular 30/2025?

While legal transition periods are defined, achieving full operational compliance can take 6 to 12 months for most companies. This includes upgrading facilities, training staff on new recall procedures, and validating supply chains, all of which must be done meticulously to ensure growth.

3. Should my drug company partner with a local firm or navigate compliance alone?

Based on hundreds of cases, partnering with a local expert is the most effective way to protect your investment. The cost of a compliance crisis, a failed audit, or a rejected permit for any of the companies involved far outweighs the investment in securing experienced guidance from the start.

Vietnam's digital economy is experiencing an unparalleled boom, with its e-commerce sector leading the charge. Fueled by a young, tech-savvy population, rapidly increasing internet penetration, and a burgeoning middle class, the country presents an irresistible market for cross-border sellers and foreign direct investors (FDI) looking to tap into Southeast Asia's next big success story. However, this explosive growth comes hand-in-hand with an evolving regulatory landscape designed to formalize, regulate, and safeguard the digital marketplace.

For foreign investors and e-commerce enterprises, understanding these shifts is not just about compliance; it's about identifying strategic advantages and ensuring sustainable growth. At Viettonkin Consulting, we specialize in turning internal expertise into external simplicity, guiding you through the intricacies of Vietnam's legal and business environment. This article delves into the vast opportunities within Vietnam's e-commerce sphere, highlights the pivotal regulatory changes for 2024-2025, and critically examines the ongoing shift from informal household businesses to formal company structures, along with its significant tax implications.

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I. Vietnam's Digital Marketplace: A Growth Powerhouse for Cross-Border E-commerce

Vietnam's e-commerce market is on a blistering trajectory. With double-digit annual growth, it consistently outpaces many regional peers, solidifying its position as a top-tier digital economy in ASEAN.

• Massive Digital Adoption: High smartphone penetration and affordable internet access have cultivated a digitally fluent consumer base, comfortable with online shopping.
• Vibrant E-commerce Ecosystem: A proliferation of domestic and international e-commerce platforms (e.g., Shopee, Lazada, Tiki, TikTok Shop) offers diverse channels for reaching millions of consumers.
• Growing Disposable Income: The expanding middle class is driving demand for a wider variety of goods, including international products, creating significant opportunities for cross-border transactions.
• Government Support: The Vietnamese government actively promotes the digital economy, recognizing its potential to drive national economic growth and efficiency.

For cross-border sellers, this translates into a colossal market opportunity to directly access Vietnamese consumers, expand brand presence, and diversify revenue streams. However, to effectively capitalize on this, a clear understanding of the regulatory shifts is indispensable.

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II. Navigating the New Regulatory Wave: Key Legal Updates for 2024-2025

The rapid evolution of Vietnam's e-commerce market has prompted the government to introduce a series of new decrees and a forthcoming law, aiming to foster a more transparent, secure, and compliant digital environment. These updates directly impact foreign suppliers and cross-border sellers.

A. Cross-Border E-Invoicing Via Decree 70/2025/ND-CP (Effective June 1, 2025):

A significant step towards standardizing digital transactions, Decree 70/2025/ND-CP extends the scope of e-invoicing obligations to foreign suppliers selling goods or services via e-commerce platforms in Vietnam, even without a local branch. This means:

• Mandatory E-invoice Option: Foreign suppliers must enable the e-invoice option on the platforms they use.
• Compliance with Decree 123/2020/ND-CP: They must adhere to the general provisions for e-invoicing, ensuring accuracy and proper record-keeping.
• E-invoice Timing and Content Rules: Decree 70 specifically outlines the timeframe for issuing invoices based on transaction type (e.g., immediately upon transfer of ownership, completion of services, or within 1 business day after customs clearance for exports). Invoices must contain detailed information, including specifics for cross-border shipping transactions.

💡Implication for FDI: This regulation mandates greater transparency and formalization for foreign entities operating in Vietnam's e-commerce space, bringing them further into the domestic tax and regulatory fold.

B. Platforms Withholding VAT & PIT (Decree 117/2025/ND-CP) (Effective July 1, 2025):

This decree introduces a fundamental shift in tax collection responsibility within the e-commerce ecosystem:

• Platform Responsibility: From July 1, 2025, both domestic and foreign e-commerce platforms will be responsible for deducting, declaring, and paying Value Added Tax (VAT) and Personal Income Tax (PIT) on behalf of individual sellers or business households operating on their platforms.
• Variable Rates: Different VAT and PIT rates will apply based on the type of goods or services sold (e.g., goods, services, transport) and the seller's classification.
• Direct Tax Compliance: This regulation aims to streamline tax collection from the vast number of informal online sellers, ensuring that tax obligations are met directly at the point of sale.

💡Implication for FDI: While this primarily targets Vietnamese individual sellers and household businesses, it signifies a broader governmental drive for tax compliance within e-commerce, creating a more level playing field and indirectly encouraging sellers to formalize their operations (as platforms will implement strict withholding).

C. New E-Customs Integration Decree (By April 1, 2025):

To facilitate faster and more transparent cross-border trade, a draft decree will require customs systems to connect real-time data with e-commerce platforms and logistics wallets.

• Real-time Data Declaration: Cross-border e-commerce orders will mandate real-time data declaration to customs authorities.
• Dual Impact: This poses significant technical challenges for platforms and logistics providers to integrate systems seamlessly. However, it also promises substantial benefits in terms of promoting transparency in cross-border transactions and enabling faster customs clearance, ultimately benefiting the end consumer and efficient logistics.

D. Draft E-Commerce Law (Expected 2025–2026 Promulgation):

A comprehensive new E-Commerce Law is currently in its draft phase, intended to replace the existing Decrees 52/2013 and 85/2021. If promulgated in 2026 as planned, this law will bring sweeping changes:

• MOIT License & Local Presence: Cross-border e-commerce activities will likely require a Ministry of Industry and Trade (MOIT) license, and foreign entities may need to establish a headquarters in Vietnam or authorize a local representative to assume legal responsibility for their operations.
• Strengthened Regulations: The draft law emphasizes:
  • Seller Identification: More stringent requirements for verifying seller identities.
  • Product Transparency: Enhanced rules for clear and accurate product information.
  • Consumer Protection: Stronger mechanisms to protect consumer rights.
  • Handling Violations: Stricter enforcement against intellectual property (IP) infringement and the sale of counterfeit goods, a major concern for international brands.

💡Implication for FDI: This upcoming law underscores Vietnam's commitment to creating a mature and trustworthy e-commerce environment. For serious cross-border sellers and foreign investors planning long-term engagement, establishing a formal local presence and ensuring full compliance with these future regulations will be critical.

E. Domain & User Verification Via Decree 147/2024/ND-CP (From End of 2024):

Aiming to enhance accountability and combat misinformation or illicit activities online:

• Real ID Verification: Regulations will require verification of livestream and business users using real Vietnamese ID.
• Administrative Sanctions: It opens up the right to administrative sanctions, including the revocation of '.vn' domains if copyright infringement or the dissemination of false information is committed.

💡Implication for FDI: This reinforces the need for legitimate, transparent, and legally compliant operations, particularly for foreign businesses utilizing Vietnamese domains or engaging with Vietnamese content creators.

F. Data Protection & Cybersecurity Requirements (Since 2023):

Vietnam has significantly strengthened its data protection and cybersecurity framework, including the Personal Data Protection (PDP) Decree.

• Data Transfer Restrictions & Local Storage: Laws restrict cross-border data transfers and often require domestic storage of personal data.
• Impact on E-commerce Platforms: These regulations directly apply to e-commerce platforms and foreign companies that collect, process, or store personal data of Vietnamese users.

💡Implication for FDI: Foreign e-commerce businesses must meticulously review their data handling practices, ensure compliance with Vietnamese data localization and cross-border transfer rules, and implement robust cybersecurity measures.

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III. The Pivotal Shift: From Household Business to Formal Company Structures and Their Tax Implications

One of the most profound, yet often overlooked, shifts within Vietnam's e-commerce landscape is the government's strong encouragement, and increasingly, regulatory push, for informal household businesses to formalize into legally recognized company structures such as Limited Liability Companies (LLCs) or Joint Stock Companies (JSCs). This shift has significant tax implications for foreign investors seeking to navigate this market.

A. Understanding the "Household Business" Model:

Historically, many small-scale Vietnamese online sellers operated as "household businesses." This is an informal legal status characterized by:

• Simpler Registration: Easier to set up with minimal legal requirements.
• Limited Legal Personality: Often no clear distinction between the owner and the business, leading to unlimited personal liability.
• Simplified Tax Obligations: Often subject to a presumptive fixed tax or very basic declaration, typically without formal corporate tax structures.

B. The Drive Towards Formalization:

The Vietnamese government's push for formalization stems from several objectives:

• Enhanced Tax Collection: Bringing more economic activity into the formal tax net.
• Improved Transparency: Better tracking of business operations for statistical and regulatory purposes.
• Fair Competition: Leveling the playing field between formal businesses and informal operators.
• Consumer Protection: Easier enforcement of consumer rights and product quality standards when dealing with formally registered entities.

Decree 117/2025/ND-CP is a direct driver of this formalization. By making e-commerce platforms responsible for withholding VAT and PIT from individual sellers and household businesses, the government is essentially raising the compliance burden and reducing the "informal advantage". For household businesses seeking to scale, grow, and operate professionally on major platforms, the benefits of formalization now significantly outweigh the perceived simplicity of the informal model.

C. Tax Implications of the Shift: Household Business vs. Formal Company (LLC/JSC)

The tax landscape changes dramatically when a household business transitions to a formal company.

• For Household Businesses (Pre-Formalization, Post-July 2025):
  
  • They will experience direct withholding of VAT and PIT by e-commerce platforms as mandated by Decree 117/2025/ND-CP. This means a portion of their earnings will be automatically deducted for tax purposes at source. The specific rates depend on their industry/product.
  • This system, while streamlining collection for the state, reduces the immediate cash flow for the household business and makes their tax obligations more explicit. For many, it will be the impetus to consider formalizing.

• For Formal Companies (LLC or JSC):
  
  • Corporate Income Tax (CIT): Instead of PIT on individual income or presumptive taxes, companies are subject to Corporate Income Tax (standard rate typically 20%). However, they are also eligible for various CIT incentives, such as the 3-year CIT exemption for new SMEs (under Resolution 198/2025/QH15) or preferential rates for encouraged sectors/locations, which informal household businesses cannot access.
  • Value Added Tax (VAT): Companies apply VAT based on a more structured input/output tax system, allowing for VAT credits on purchases. This is more complex than the direct withholding for household businesses but offers greater financial management flexibility.
  • Business License Tax (BLT): Companies are subject to annual Business License Tax, the rate of which depends on their charter capital. However, the planned abolition of business license tax collection starting January 1, 2026, will further simplify compliance for newly formalized entities.
  • Formal Accounting & Auditing: Companies are required to maintain formal accounting records and, depending on size, undergo audits. This increases administrative costs but ensures transparency and financial integrity.

The Strategic Imperative for Foreign Investors:

For foreign investors planning a serious and sustainable presence in Vietnam's e-commerce market, establishing a Limited Liability Company (LLC) or Joint Stock Company (JSC) is not merely a formality but a strategic necessity. It provides:

• Limited Liability Protection: Essential separation of personal and business assets.
• Credibility & Professionalism: Key for attracting local partners, securing better platform terms, and building consumer trust.
• Scalability & Funding: Easier to raise capital, expand operations, and enter new markets.
• Access to Incentives: Eligibility for various tax incentives and other government support policies available only to formalized businesses.
• Clear Legal Framework: Operating within a recognized legal structure simplifies compliance with the evolving e-commerce regulations, making it easier to integrate with e-invoicing, e-customs, and data protection requirements.

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IV. Opportunities and Challenges for Cross-Border Sellers in Vietnam's E-commerce Market

A. Unprecedented Opportunities:

• Massive Untapped Potential: Despite rapid growth, per capita e-commerce spending in Vietnam still has significant room for expansion compared to developed markets.
• Digital-First Consumer Base: Vietnamese consumers are highly engaged online, responsive to digital marketing, and increasingly accustomed to cross-border purchases.
• Governmental Support for Digital Economy: Policies and infrastructure investments continuously improve the operating environment for digital businesses.
• Diverse Product Demand: From fashion and cosmetics to electronics and specialized goods, a wide range of imported products are in high demand.

B. Key Challenges to Navigate:

• Evolving Regulatory Landscape: Staying updated with new decrees (70/2025, 117/2025, e-customs) and the upcoming E-Commerce Law requires constant vigilance and expert guidance.
• Compliance Burden: Managing e-invoicing, tax withholding rules (for platforms), data protection, and real ID verification adds layers of complexity.
• Intellectual Property (IP) Protection: While strengthening, IP infringement and counterfeit goods remain concerns that cross-border sellers must proactively address.
• Logistics & Fulfillment: Efficient cross-border logistics, last-mile delivery, and reverse logistics require robust solutions.
• Localization: Effective market penetration demands deep understanding of local consumer preferences, payment methods, and cultural nuances.
• Competition: The market is increasingly competitive, with both domestic and international players vying for market share.

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V. Partnering for E-commerce Success: How Viettonkin Consulting Simplifies Your Journey

The "e-commerce explosion" in Vietnam presents a goldmine of opportunities, but successfully navigating its dynamic regulatory environment, particularly for cross-border sellers and foreign direct investors, requires specialized expertise. This is where Viettonkin Consulting becomes your invaluable partner.

We provide comprehensive, end-to-end solutions designed to turn internal legal and business complexities into external simplicity for your e-commerce venture in Vietnam:

• Market Entry Strategy & Company Formation: Guiding you through the optimal setup, including the formalization from potential informal operations into a robust LLC or JSC structure.
• E-commerce Licensing & Compliance: Ensuring adherence to Decree 70/2025 (e-invoicing), Decree 147/2024 (user verification), and preparing for the new E-Commerce Law.
• Tax Advisory & Structuring: Expert advice on VAT, PIT, CIT, and leveraging available tax incentives, including the implications of Decree 117/2025 on platform withholding and the benefits of formalization.
• IP Protection & Enforcement: Strategies to safeguard your intellectual property in the Vietnamese digital space.
• Data Protection & Cybersecurity Compliance: Ensuring your data handling practices align with Vietnamese laws on personal data protection and cybersecurity.
• Local Representative & Compliance Support: Acting as your trusted local representative or providing ongoing compliance services.

Our team of seasoned legal and business consultants possesses deep local knowledge combined with international best practices, ensuring your cross-border e-commerce operations in Vietnam are not only compliant but also strategically positioned for exponential growth.

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VI. Conclusion: Seizing Vietnam's Digital Future Responsibly

Vietnam’s e-commerce market offers undeniable potential for cross-border sellers and foreign direct investors in 2024–25 and beyond. Its rapid growth, digital-savvy population, and a government committed to fostering the digital economy create an attractive landscape. However, the concurrent introduction of new regulations – from e-invoicing and platform tax withholding to stricter customs integration and a comprehensive new E-Commerce Law – underscores a maturing market that demands serious, compliant, and formally structured engagement.

Crucially, the clear shift away from informal household businesses towards formal company structures (LLC/JSC), driven partly by new tax withholding mechanisms, presents a pivotal moment. For foreign investors, embracing this formalization is not a hurdle, but a strategic advantage – unlocking greater stability, credibility, scalability, and access to significant tax incentives.

By proactively understanding and adapting to these legislative changes, and by partnering with experienced local advisors like Viettonkin Consulting, cross-border sellers can confidently navigate Vietnam's exciting e-commerce explosion, turning regulatory complexity into a clear pathway for sustainable success.

Ready to launch or expand your cross-border e-commerce venture in Vietnam with confidence and full compliance?

Let Viettonkin Consulting simplify your journey. We translate Vietnam's legal expertise into actionable strategies, ensuring your digital business thrives in this dynamic market.

As Vietnam and Brazil mark 35 years of diplomatic relations, a new chapter is unfolding—one that may reshape trade and investment between Southeast Asia and South America. In November 2024, the two countries elevated their relationship to a Strategic Partnership, signaling a commitment to deeper cooperation in trade, innovation, and sustainable development.

Central to this momentum is the proposed Free Trade Agreement (FTA) between Vietnam and the Southern Common Market (MERCOSUR), a South American trade bloc in which Brazil plays a leading role. For Brazilian investors, this FTA represents a golden opportunity to tap into one of Asia’s most dynamic economies—and for Vietnam, it’s a strategic move to diversify trade and attract high-quality foreign direct investment (FDI).

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Vietnam–Brazil Trade at a Glance

• Diplomatic ties established: 1989
• Strategic Partnership launched: November 2024
• Two-way trade in 2024: Nearly USD 8 billion
• Brazil’s share of Vietnam–Latin America trade: 34.8%

Brazil is already Vietnam’s largest trading partner in Latin America, and the proposed FTA is expected to significantly boost this relationship by reducing tariffs, simplifying customs procedures, and opening new sectors for investment.

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Why Vietnam Is an Attractive FDI Destination for Brazil

1. Strategic Location in ASEAN

Vietnam offers Brazilian companies a gateway to the 680-million-strong ASEAN market, with preferential access through existing FTAs such as:

• ASEAN Free Trade Area (AFTA)
• Regional Comprehensive Economic Partnership (RCEP)
• CPTPP and EVFTA

A Vietnam–MERCOSUR FTA would complement these agreements, allowing Brazilian firms to leverage Vietnam as a regional export hub.

2. Stable Growth and Pro-Investment Policies

Vietnam’s GDP growth remains among the highest in Asia, supported by:

• A young, tech-savvy workforce
• Political stability
• Ongoing legal reforms (e.g., Resolutions 57 and 59) to improve transparency and digital governance

The government has prioritized green growth, digital transformation, and innovation, aligning well with Brazil’s strengths in agritech, bioenergy, and fintech.

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Sectors Where Brazil Can Benefit Most from Investing in Vietnam

🌾 Agribusiness and Food Processing

• Brazil’s leadership in global agriculture, combined with Vietnam’s cost-effective processing, packaging, and export logistics, creates synergies for joint ventures and fast access to Asian markets.
• Investment in joint ventures or processing plants in Vietnam can help Brazilian firms reach Asian markets faster and more efficiently.

⚡ Renewable Energy and Biofuels

• Vietnam is targeting net-zero emissions by 2050 and is rapidly expanding its solar, wind, and biomass capacity.
• Brazilian expertise in bioethanol and sustainable energy can support Vietnam’s green transition and open doors for energy partnerships.

🧬 Pharmaceuticals and Biotechnology

• Vietnam’s growing middle class is driving demand for healthcare and life sciences.
• Brazilian pharmaceutical firms can benefit from local production incentives and regional export potential.

📦 Logistics and Supply Chain Infrastructure

• Vietnam is investing heavily in ports, highways, and industrial zones.
• Brazilian logistics companies can partner in smart warehousing, cold chain logistics, and e-commerce fulfillment.

💻 Digital Transformation and Fintech

• Vietnam’s digital economy is projected to reach USD 50 billion by 2025.
• Brazilian fintech and IT firms can explore B2B platforms, mobile payments, and blockchain solutions in a fast-growing digital market.

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FTA with MERCOSUR: What’s at Stake?

The proposed FTA between Vietnam and MERCOSUR (Brazil, Argentina, Paraguay, Uruguay) is expected to:

• Eliminate or reduce tariffs on key exports
• Facilitate investment flows and joint ventures
• Enhance cooperation in innovation, sustainability, and digital trade

This agreement would mirror the success of Vietnam’s FTAs with the EU and UK, which have significantly boosted exports and FDI inflows.

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Strategic Collaboration Beyond Trade

Vietnam and Brazil are also exploring cooperation in:

• Climate change and green development
• Digital transformation and smart governance
• Education, science, and cultural exchange

These areas offer long-term investment opportunities and align with global ESG (Environmental, Social, and Governance) trends.

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Conclusion: A Bilateral Relationship with Global Potential

The Vietnam–Brazil Strategic Partnership and the proposed MERCOSUR–Vietnam FTA mark a pivotal milestone in South–South cooperation.

For Brazilian investors, Vietnam presents:

• A politically stable, high-growth economy
• Preferential access to ASEAN and global markets
• Strong synergies in agriculture, clean energy, life sciences, and digital innovation

At Viettonkin Consulting, we are ready to help Brazilian businesses navigate Vietnam’s regulatory landscape, identify investment opportunities, and build lasting partnerships.

As global trade dynamics shift toward South–South cooperation, Vietnam and Egypt are emerging as pivotal players in connecting Southeast Asia and North Africa. With diplomatic relations dating back to 1963, Egypt was one of the first countries in the Middle East and North Africa (MENA) to establish ties with Vietnam. Today, both nations are exploring the next logical step in their partnership: a bilateral Free Trade Agreement (FTA).

This potential FTA could unlock significant opportunities for foreign direct investment (FDI), particularly for Egyptian businesses seeking to expand into Asia and for Vietnamese firms looking to access African markets.

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Vietnam–Egypt Trade Snapshot

• Diplomatic relations established: 1963
• Vietnam’s exports to Egypt (H1 2024): USD 246 million, up 4.1% YoY
• Key Vietnamese exports: Coffee, pepper, cashew nuts, machinery, electronics, textiles
• Vietnam’s largest investment in Egypt: USD 30 million project in Sadat City

Trade between the two countries continues to grow steadily, with Vietnamese enterprises increasingly eyeing Egypt as a strategic entry point into Africa. Conversely, Egypt is beginning to recognize Vietnam’s role as a manufacturing and logistics hub in Asia.

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Why a Vietnam–Egypt FTA Matters

1. Strategic Market Access

• Vietnam is a member of 15+ FTAs, including RCEP, CPTPP, and EVFTA, offering access to over 50 global markets.
• Egypt is a member of the African Continental Free Trade Area (AfCFTA), connecting it to 1.3 billion consumers across Africa.

An FTA would allow both countries to serve as trade gateways—Vietnam into ASEAN and East Asia, and Egypt into Africa, the Middle East, and Europe.

2. Complementary Economies

Vietnam and Egypt have non-competing, complementary strengths:

• Vietnam: Advanced in manufacturing, electronics, textiles, and digital services
• Egypt: Strong in agriculture, logistics, energy, and regional trade facilitation

This complementarity creates fertile ground for joint ventures, technology transfer, and supply chain integration.

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Sectors Where Egypt Can Benefit Most by Investing in Vietnam

🏭 Manufacturing and Industrial Processing

Vietnam is a global manufacturing hub, especially in:

• Electronics and semiconductors
• Textiles and garments
• Automotive components

Egyptian firms can invest in assembly plants, component manufacturing, or industrial park development, leveraging Vietnam’s skilled labor and export infrastructure.

🌾 Agri-Food Processing and Packaging

Vietnam’s agricultural exports (coffee, cashews, pepper) are globally competitive. Egyptian investors can:

• Set up processing and packaging facilities
• Partner in cold chain logistics
• Export value-added products to the Middle East and Africa

⚡ Renewable Energy and Green Technology

Vietnam is targeting net-zero emissions by 2050 and expanding its solar, wind, and biomass sectors. Egypt, with its experience in solar and hydroelectric power, can:

• Invest in green energy projects
• Transfer clean tech solutions
• Collaborate on climate finance and carbon markets

📦 Logistics and Maritime Infrastructure

Vietnam’s ports and logistics networks are expanding rapidly. Egyptian logistics firms can:

• Invest in smart warehousing and inland ports
• Develop multimodal transport solutions
• Facilitate ASEAN–Africa trade corridors

💻 Digital Economy and Fintech

Vietnam’s digital economy is projected to reach USD 50 billion by 2025. Egyptian tech firms can explore:

• Fintech platforms for mobile payments and remittances
• E-commerce logistics
• AI and cybersecurity services

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Mutual Strategic Advantages

Vietnam	Egypt
Access to ASEAN, China, Japan, Korea	Access to Africa, Middle East, EU
Strong in manufacturing and digital	Strong in logistics and agriculture
Member of CPTPP, RCEP, EVFTA	Member of AfCFTA, COMESA, GAFTA
Political stability and pro-FDI policies	Strategic location at trade crossroads

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What’s Next? Toward a Bilateral FTA

While no formal FTA has been signed yet, both governments have expressed interest in deepening economic ties. A bilateral FTA would likely include:

• Tariff reductions on key goods
• Investment protection clauses
• Customs cooperation and trade facilitation
• Technology and innovation partnerships

Such an agreement would formalize trade flows, reduce costs, and enhance investor confidence on both sides.

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Conclusion: A Bilateral Opportunity with Global Reach

The Vietnam–Egypt partnership is more than symbolic—it’s a strategic alliance with the potential to reshape trade between Asia and Africa. For Egyptian investors, Vietnam offers:

• A stable, high-growth economy
• Access to global markets
• Sectoral synergies in manufacturing, energy, and digital innovation

At Viettonkin Consulting, we are ready to help Egyptian businesses navigate Vietnam’s regulatory landscape, identify investment opportunities, and build long-term partnerships in one of Asia’s most promising economies.

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Vietnam and India share a long-standing relationship, grounded in robust historical, cultural, and economic ties. In recent years, this partnership has expanded significantly, with foreign direct investment (FDI) playing a pivotal role in cementing economic collaboration between the two nations. This Blog Article explores the latest FDI statistics and bilateral trade developments, offering insights into the growing partnership and the vast potential for further collaboration.

Current State of Indian Investments in Vietnam

India currently ranks as the 25th largest investor among 146 countries and territories in Vietnam, with 407 projects amounting to a total registered capital exceeding 1.02 billion USD. When factoring in indirect investments, this figure climbs to an impressive 3 billion USD. Indian investors view Vietnam as a prime destination across various industries, including IT, pharmaceuticals, smart agriculture, and infrastructure development. Historically, Godrej Vietnam became the first Indian company to establish a production facility in Vietnam in 1994 at the Binh Duong Industrial Park. Since then, major corporations such as TATA, Marico, Wipro, and KCP have recognized Vietnam’s dynamic market as an essential part of their global strategies. Supporting this growing collaboration is the improved air connectivity between the two nations. Direct flights now link Indian cities like Delhi, Mumbai, and Bangalore to Hanoi and Ho Chi Minh City, significantly facilitating trade and investment.

Vietnam’s 2024 FDI Landscape

The year 2024 has been remarkable for Vietnam in terms of foreign investment attraction. Between January and December, the country successfully initiated 48 new projects, which brought in a registered capital of 2.79 million USD. Additionally, five projects underwent capital adjustments, adding 74.55 million USD to their initial investments. In terms of equity contributions and share purchases, there were 75 transactions, contributing 9.36 million USD. Collectively, these investments pushed Vietnam’s total registered capital for the year to 86.69 million USD, reflecting a year-on-year growth of 64.2 percent. Since the start of its foreign investment journey in 1988, Vietnam has accumulated 40,285 foreign investment projects, with a total registered capital exceeding 481 billion USD. Such figures underscore the nation’s consistent growth as a preferred destination for global investors.

Bilateral Trade - Achievements and Opportunities

Bilateral trade between India and Vietnam has witnessed exponential growth over the years. From a modest 200 million USD in 2000, the trade volume surged to 15.1 billion USD in 2022 and 14.3 billion USD in 2023. Despite these achievements, the potential for greater collaboration remains immense, given the complementary strengths and extensive market sizes of both countries. Efforts to tap into these opportunities were evident at the Conference on Promoting Investment, Trade, and Tourism Development in Binh Dinh Province. This event saw active participation from Indian corporations, resulting in the signing of several memoranda of understanding. Key agreements included collaboration in robotics, timber, tourism, and education, with the Indian Robotics Association taking a keen interest in developing the robotics industry in Binh Dinh.

Binh Dinh Province serves as a Hub for Indian Investment

Binh Dinh Province has emerged as a promising hub for Indian investments due to its strategic focus on infrastructure development. The province has made significant upgrades, including enhancing its deep-water seaports, expanding airport facilities, and adding industrial parks. Infrastructure leasing costs are notably competitive, ranging from 25 to 60 USD per square meter over 50 years, making it an attractive proposition for foreign investors. However, Indian investments in the province remain modest, with only four projects totaling 3.24 million USD. This disparity highlights the untapped potential in high-growth sectors such as clean energy, innovation, digital transformation, high-tech agriculture, and healthcare.

Vietnam’s Economic Outlook

Vietnam’s economy continues to outpace its ASEAN counterparts, with the IMF projecting it to remain the fastest-growing economy in the region and rank among the top ten in Asia from 2024 to 2029. Despite facing challenges at both international and domestic levels, Vietnam has demonstrated resilience, achieving significant milestones in socio-economic development during the first quarter of 2024. International organizations have consistently praised the country’s economic performance and growth prospects, further solidifying its reputation as a leading investment destination.

Ending Note for Indian Investors

With shared aspirations and strategic alignment, India and Vietnam are poised to unlock unprecedented opportunities in their economic partnership. Existing infrastructure in regions like Binh Dinh, coupled with emerging sectors ripe for innovation, provides a strong foundation for growth. Indian businesses have a unique opportunity to shape the future of this bilateral relationship, leveraging Vietnam as a gateway to success in Southeast Asia. As the momentum for collaboration continues to build, the potential for profound and enduring partnerships between these two nations remains limitless.

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On September 21, 2024, Vietnam’s Prime Minister signed Decision No. 1018, setting forth an ambitious strategy to develop the country’s semiconductor industry. This plan aims to position Vietnam as a significant player in the global semiconductor supply chain by 2030, with aspirations of becoming a world leader by 2050.

At the heart of this initiative lies a unique formula:

C = SET + 1

• C: Semiconductor Chips
• S: Specialized Chip Development
• E: Electronics Industry
• T: Technology Human Resources
• +1: Vietnam as a safe and reliable destination for the global semiconductor supply chain

This formula encapsulates Vietnam’s comprehensive approach to achieving sustainable growth in the semiconductor sector.

Developing the Semiconductor Industry according to a 3-Phase Roadmap

The strategy outlines a phased roadmap, each stage building upon the previous to ensure steady progress.

Phase 1 (2024–2030): Establishing the Foundation

In the first phase, Vietnam aims to capitalize on its geopolitical advantages and human resources. The country will selectively attract foreign direct investment (FDI) to form basic capabilities across the semiconductor supply chain, including research, design, production, packaging, and testing.

Key objectives include:

• Establishing 100 design enterprises
• Building one small-scale semiconductor chip manufacturing facility
• Developing 10 semiconductor packaging and testing factories

By 2030, the revenue from Vietnam’s semiconductor industry is projected to exceed $25 billion annually, with added value reaching 10–15%. The electronics industry is expected to achieve revenue of over $225 billion annually. Human resources will also expand to over 50,000 skilled engineers and specialists.

Phase 2 (2030–2040): A Global Semiconductor Hub

The second phase focuses on elevating Vietnam to become one of the global centers of semiconductor and electronics manufacturing. This includes fostering self-reliance while maintaining partnerships with foreign investors.

The objectives for this phase are:

• Increasing the number of design enterprises to 200
• Constructing two semiconductor chip factories
• Expanding to 15 packaging and testing factories

By 2040, annual semiconductor revenue is forecast to exceed $50 billion, and the workforce is expected to surpass 100,000 qualified engineers.

Phase 3 (2040–2050): A Global Leader

By 2050, Vietnam aspires to become a world-leading country in the semiconductor and electronics industries, with mastery in research and development.

The goals for this phase include:

• Establishing 300 design enterprises
• Building three semiconductor manufacturing factories
• Operating 20 packaging and testing factories

Revenue from the semiconductor industry is anticipated to exceed $100 billion annually, with added value reaching 20–25%. The workforce will continue to grow, ensuring Vietnam’s ability to lead in specific production chain segments.

Five Tasks for Developing the Semiconductor Industry

Decision No. 1018 outlines five key tasks aimed at advancing Vietnam’s semiconductor industry. These tasks provide a comprehensive framework to build a robust, competitive, and sustainable sector.

1. Developing Specialized Chips

The strategy emphasizes research and development of core technologies to create next-generation specialized chip products, such as AI chips and IoT chips. This will be achieved through investments in core semiconductor technology research centers. These centers will focus on areas of significant technological breakthroughs, ensuring Vietnam remains at the forefront of global semiconductor advancements.

Efforts will also include the development of a domestic semiconductor industry ecosystem. This involves creating strong connections between Vietnam’s ecosystem and those of its strategic partners in the global semiconductor supply chain. Additionally, preferential mechanisms, investment support, and special state financing will be allocated to build a high-tech, small-scale semiconductor chip manufacturing factory. This facility will cater to research, design, and production needs, further boosting Vietnam’s chip development capabilities.

2. Developing the Electronics Industry

Vietnam will allocate resources for research and development of electronic equipment, focusing on new-generation devices that integrate specialized chips and AI technologies. A prioritizing policy will direct the use of state budgets to purchase domestic electronic equipment, thereby promoting the growth of Vietnam's electronics market.

The government will support and encourage large domestic corporations and enterprises to produce next-generation electronic equipment. The goal is to transform these entities into multinational enterprises capable of enhancing global competitiveness. Moreover, Vietnam will develop a supportive ecosystem for industries by promoting technology transfer and fostering joint ventures and partnerships with foreign enterprises. These collaborations will serve the production of new-generation civil and specialized electronic equipment.

3. Human Resource Development

Human resource development is a cornerstone of Vietnam’s semiconductor strategy. The government will focus on retraining, advanced training, and transitional training programs for existing human resources, particularly engineers in electronics, telecommunications, IT, and digital technology. The abundant pool of STEM-capable professionals in Vietnam will be leveraged through long-term, market-driven planning.

Financial support will be provided for training activities, curriculum development, and university-level research programs. Investments will also be made in modern equipment for training facilities and research institutes, as well as the establishment of data centers and supercomputer systems to support these initiatives.

Additionally, the government will implement breakthrough policies to attract and nurture world-class talent and experts in semiconductors and electronics, both domestically and internationally. Collaborative agreements will be pursued with countries facing human resource shortages in the semiconductor field, and commitments will be signed between training institutions and domestic and foreign enterprises to address workforce needs effectively.

4. Attracting Investment in the Semiconductor Sector

Vietnam will build the most attractive incentive mechanisms to selectively attract foreign investment projects with high technology content in the semiconductor and electronics industries. This includes support from central and local budgets and the establishment of an Investment Support Fund to minimize the impact of global minimum income tax regulations.

Priority will be given to foreign enterprises engaged in research and development activities in Vietnam, those utilizing Vietnamese supporting industries, and those entering joint ventures or partnerships with domestic companies. To facilitate operations, Vietnam will implement a green lane mechanism and other streamlined processes for enterprises importing and exporting semiconductor-related goods, raw materials, supplies, and components.

Infrastructure development will also play a critical role. Investments will be made in digital infrastructure, electricity, and water supply systems to meet the demands of semiconductor and electronics manufacturing plants in designated areas. Electricity and water price support mechanisms will be introduced to ensure operational efficiency for these facilities.

5. Enhancing the Ecosystem

The development of a comprehensive domestic ecosystem is essential for the semiconductor industry's growth. This includes improving connectivity between Vietnam’s ecosystem and those of global strategic partners. Policies and initiatives will be implemented to ensure the ecosystem supports the entire production chain, from resource exploitation to product delivery.

Vietnam will also establish mechanisms to ensure sustainability in the semiconductor industry. This includes the development of regulations for the treatment, reuse, and disposal of toxic waste generated during semiconductor and electronics production. Measures will be taken to enhance environmental treatment capacity, ensuring resource exploitation is balanced with environmental safety and sustainability.

Organizational Support and Environmental Sustainability

To oversee this ambitious strategy, a National Steering Committee for Semiconductor Development, chaired by the Prime Minister, will be established. This committee will provide top-level guidance and coordination for all initiatives.

An Expert Advisory Group will also be formed, comprising independent professionals with deep expertise in semiconductors and electronics. This group will serve as a strategic advisory body, providing in-depth analyses and recommendations to support the Steering Committee and the Prime Minister in guiding the industry’s development.

Environmental sustainability is a priority within the strategy. Vietnam will implement strict regulations for managing toxic waste generated during semiconductor production, focusing on treatment, reuse, and disposal processes. Investments will also be made to improve environmental treatment capacity, ensuring the semiconductor industry grows sustainably while minimizing its ecological impact.

Conclusion

Vietnam’s strategy for semiconductor development marks a transformative chapter in the country’s industrial growth. With its phased approach, focus on talent development, and commitment to sustainability, Vietnam is positioning itself as a crucial player in the global semiconductor landscape.

This ambitious plan not only promises economic growth but also reinforces Vietnam’s reputation as a reliable and innovative partner in the international technology arena.

Indonesia, the largest economy of Southeast Asia, has gone through drastic changes in the last decades. Being a dynamic and diverse country, its economic system is shaped by the unique interplay of the market-oriented policy and selective governmental intervention. It has been imbued with an historical context combined with rich natural resources and the shifting paradigm of world trade.

This article examines the basic features of the Indonesian economic system: its core role of government, its international market impact, and its future challenges and opportunities. An overview of Indonesia's economic bases and present trends will explain to us the position of Indonesia in the current global economic setting.

Key Takeaways:

• Being a dynamic and heterogeneous country, its economic structure mingles a unique blend of market-oriented policies together with strategic governmental intervention.
• An economic system is an institution or framework through which a society organizes and directs its economic activities, including both government-led and private sector initiatives.
• Indonesia follows the economic system of Pancasila whereby the values of mutual cooperation and collective strength of the country are deeply embedded.

Definition of Economic System

Quoting from the book 'Sistem Ekonomi Indonesia, written by Muchtar et al., a host of writers drawn from different disciplines, including law and economics, an economic system is that framework through which a society organizes and coordinates its economic activities both from the government and private sector level (Muchtar et al., 2021).

It is founded on some principles, which all have a general purpose of ensuring prosperity and wellbeing. Any economy's backbone is the ideologies, crucial in giving it a backbone and something to build from. Without ideologies forming the core of an economic system, it would be just some technical and theoretical creation devoid of any attributes which may define it.

It is this ideological nature of these values that distinguishes one economic system from another. For example, the capitalist economic system is radically different from the socialist system, not just in the principles on how to operate but in the very tenets on which it rests.

Moreover, since these values are ideological, the effects spill over not only into economic decision-making but also into wider areas of life, such as politics and social issues. This interconnection underlines the fact that ideology is the most significant constituent element of an economic system, which defines it and determines the way it functions.

Indonesia Economic System

Indonesia follows the Pancasila Economic System, which is based on the foundation of mutual cooperation and collective strength inherent in the core of the nation. According to the Agency for Pancasila Ideology Development, this model of the economy denotes the commitment of Indonesia towards national unity and solidarity in economic practices.

The Pancasila economic system consecrated the guideline for the management of the economy and gave the authority to the state to direct the activity of production in Article 33 of the 1945 Constitution. In this system, an economic development shall be oriented toward the common welfare of a group rather than toward the accumulation of capital by an individual or particular groups, so that the wealth is distributed equitably among the people.

Article 33 is the constitutional basis for setting economic policy in Indonesia, particularly with respect to state ownership of certain strategic sectors. It regulates vital industries and natural resources, giving emphasis on the leading role of the state in the management of these resources towards the maximum prosperity of its people. Further, it also underlines how the government extends its cooperation with the private sector toward developing the best welfare for the people by considering common ownership and family-oriented economics. It controls land, water, and other natural resources with the view of promoting their use in a sustainable manner for the benefit of all citizens of Indonesia.

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Characteristics of Indonesia's Economic System

Article 33 of the 1945 Constitution is the basis for Indonesia's economic system implementation, which, according to a paper by Eunike Rose Mita Lukiani, a student born from the Economics Education Program in University of Nusantara PGRI Kediri, and Doctorate Student of Economics Education at Universitas Negeri Malang entitled 'Human Perspective in Indonesian Economic System'. Initially, it was a three-paragraph document but was expanded on August 10, 2002, to include five key provisions outlining the general principles governing the state's economic system (Eunike Rose Mita Lukiani, 2015).

These five paragraphs provide that: (1) The economy is organized as an enterprise collective in view of the kinship system; (2) The state manages strategic industries that are indispensable to the nation and vital to the needs of the greater number; (3) The state holds land, water, and natural resources in trust for the people; (4) The national economy is directed according to the principles of economic democracy, namely, cooperation, efficiency with social justice, sustainability and environmental concern, independence, and patriotisms and balanced progress; and (5) The manner of implementation of these principles is further governed by law.

1. Indonesian Economy is Collective Effort-Based on Kinship

The first principle, as detailed in Article 33, paragraph 1, provides that the Indonesian economic system runs on a collective effort with a basis in kinship. This model was set in contrast with the capitalist-liberal systems that were oriented toward competition at the individual level and the accumulation of profits. Instead, the Indonesia system based on kinship encourages solidarity in which concern is for mutual interest rather than personal profit. Economic enterprise is organized to realize mutual development in which success is shared reasonably by those concerned with their input into the venture while common development must not be sacrificed to individual progress.

2. State Control Over Key Sectors Vital to the Nation and People's Livelihoods

The second characteristic defining it, stipulated in paragraph 2, asserts that the state controls sectors critical to the nation and crucial to the welfare of the population. These are those which normally produce goods and services that are indispensable to living and are usually narrow in supply. The state's control over these industries is to ensure they serve the collective good in ways which protect interests at a national level and maximize public welfare. While these strategic sectors are regulated by the state, private enterprise is left to try its hand in areas where they would not dominate the livelihood of the people so that a proper balance between state control and the growth of the private sector is maintained.

3. Land, Water, and Natural Resources Controlled by State for Welfare of All

From paragraph 3, it was said that land, water, and natural resources controlled by the state ensure their use serves the benefit of all citizens. Such resources, regarded as gifts from the gods, are somehow part of the common patrimony rather than private property. The state is supposed to manage them wisely so that the people would enjoy plenty and not concentrate wealth in the hands of a few. It is in tune with the general underlying values of Indonesia, such as social justice, which ensure that the resources of the nation are conserved and utilized in a manner that will be sustained for generations to come, and that public welfare is at the heart of economic governance.

4. Economic Democracy: Principles of Cooperation, Equity, and Sustainability

The fourth central principle is that Indonesia's economy is based upon a model of economic democracy. This means that economic activities serve the interest of the people and are undertaken for the main reason of attaining common good. Economic democracy ensures that all voices of the citizens are heard in all of the economic processes of their country through fairness, sustainability, and concern for the environment. By upholding these values, it follows that the economic framework in Indonesia upholds the national unity of Indonesia, ensuring that economic progress is welfare-oriented in a manner that will benefit the present and future generations as well as be friendly to the environment.

Key Pillars of the Economic System in Indonesia

Indonesia's economic framework derives from the very fundamental tenets of Pancasila, which is the state ideology: to guide the economy in service to the common welfare of the people and to serve the purpose of safeguarding national unity by adhering to ethical and just practices.

Explanation of basic pillars that shape Indonesia's economic system, which is in regards to how economic activities are organized, ordered, and conducted. According to Eka, a student from the Faculty of Accounting Universitas Negeri Semarang, it goes as follows (Eka, 2015):

Principle of Divinity

The Principle of Divinity forms part of the foundation of Indonesia's economic system and strongly stresses that economic activities must run in conjunction with divine attributes such as honesty, justice, and morality. Indonesia encourages and promotes religiously founded economic practices, such as Islamic finance, to encourage diversity and inclusion within the economic climate.

On the other side, this concept has played a role in shaping ownership in Indonesia. Natural resources and their value are therefore God's creation, in which He is the true owner. Still, ownership by individuals is allowed, provided that natural resources, being public property, are to be administered for the welfare of all. With that, the philosophy of common trusteeship in regard to the resources rather than individual proprietorship for personal benefit is complete. Principle of Divinity: This principle upholds that all economic activities should be directed to the common good with respect to divine justice.

Principle of Humanity

The guiding principles of kemanusiaan place the welfare and dignity of the person at the center of Indonesia's economic system. Humans are to be treated as rational, free, and essentially social beings, created equal before God, and the system should reflect those humanistic values, showing that economic activities elevate human welfare and freedom.

This means that, in practice, people are free to engage in those economic activities that interest them or that they aspire to, insofar as such practice does not violate the rights of others. Private ownership is allowed, but it carries a social responsibility in the sense that very often, personal wealth comes with the active contribution of other members of society. It tries to balance the rights of the individual with the common good, ensuring that economic activities are useful to general well-being.

Principle of Unity/Nationalism

The Principle of Unity is crucial in maintaining Indonesia's national cohesion. It requires that economic activities be able to build a sense of togetherness with broad participation from all walks of society. This pillar also voices balanced distribution, which signifies that every resource is fairly distributed to create the feel of economic benefits among the populace. This will also nurture national self-reliance and economic independence through the development of industries that promote competitiveness in the international market, with nationally driven pride and unity remaining intact.

Principle of Democracy

Basically, democracy in Indonesia's economic system is reflected by the notion of economic democracy, which places the people at the helm, as being the most important entity in decision-making processes regarding the economy. By people-centered it means that economic activities are initiated, conducted and led for the welfare of the people as a whole.

"From the people" implies that the national economy is led by a mandate from its citizens. "By the people" is about active involvement in economic activities, where the people and the community participate directly in the process. Lastly, "For the people" indicates that the ultimate goal involves ensuring shared prosperity for all citizens, not just a certain individual or group, is at the core of the movement. It is to assure this democratic approach that the economy will be all-inclusive, equitable, and oriented toward an improved quality of life for all Indonesians.

Unlocking Potential for Indonesia's Economic Growth with Viettonkin Consulting

The economic system of Indonesia promises a certain degree of opportunities as well as challenges for any business that seeks to establish a foothold in the region. Indonesia's economic system is an eclectic blend of market-driven policies and government intervention, which has spurred economic growth in various sectors. However, to understand and control the minute details of the regulations and the economic mechanism might prove to be very cumbersome for any foreign investment seeking investment or expansion in Indonesia.

Viettonkin Consulting is ready to serve all of your needs through our integrated services, making Indonesia's complex economic environment understandable. With rich experience, the professional team would be able to support you in regulatory requirements and enable the optimization of your business strategy for sustained growth in Indonesia.

Would you like to know about all the services offered by Viettonkin Consulting? Please now visit our website to learn more.

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Embarking on an impactful journey, Vietnam is poised to realize its prowess in semiconductor production. In a landscape propelled by the global demand for innovative semiconductors and cutting-edge semiconductor devices, Vietnam emerges with strategic ambitions in the domain of semiconductor manufacturing. As the world increasingly relies on these technological pillars, Vietnam's foray into semiconductor production not only addresses the surging demand but also establishes itself as a significant player in the ever-evolving semiconductor industry. This article, building on the exploration of Vietnam's potential in the preceding piece, conducts an in-depth analysis of the nation's capabilities and growth prospects in semiconductor production.

Vietnam's Semiconductor Production Landscape

Chip Imports Surge: A Market Share Ascension

Vietnam's ascendancy in semiconductor production is underscored by a significant surge in chip exports to the US. According to Bloomberg, chip imports from Vietnam to the US soared from $321.7 million in February 2022 to $562.5 million in the same month a year later, capturing an 11.6% market share. This remarkable increase positions Vietnam as a notable player, trailing only Malaysia and Taiwan (China) in the US market.

Investment Influx: Recognizing Vietnam's Potential

Acknowledging Vietnam's prowess in semiconductor production, major industry players have initiated substantial investments in the country. Intel, a prominent player in the semiconductor market, has established a state-of-the-art chip assembly, packaging, and testing factory in Vietnam. Valued at over $1 billion, this facility stands as Intel's largest project globally. Additionally, Amkor Technology, a key provider of semiconductor packaging services, is poised to inaugurate a $1.6 billion factory in Bac Ninh, Vietnam, further solidifying the nation's status as an attractive hub for semiconductor investments. Samsung Group from South Korea has also expressed intentions to manufacture semiconductor parts in Vietnam, showcasing the country's appeal to global tech giants.

Roles in Chipmaking: Assembling Strengths

The dynamics of chipmaking involve three crucial phases: designing, foundry, and packaging. In this intricate process, Vietnam primarily engages in the final phase, contributing to assembly, testing, and packaging. Despite packaging representing only 6% of a chip's value in the supply chain, Vietnam's strategic role in the global semiconductor landscape cannot be overlooked. While the industry's complexity necessitates global collaboration, Vietnam's unique position allows it to contribute significantly to the supply chain. To capitalize on this, the country faces a pivotal choice between expanding its production sector or enhancing skills in design and packaging. Industry experts advocate for the latter, emphasizing the importance of developing design expertise. With a growing focus on training engineers and nurturing design capabilities, Vietnam aims to position itself as a key player in the semiconductor industry. FPT University's recent establishment of a dedicated department for semiconductors and circuits underscores the country's commitment to addressing skill shortages and fostering expertise in the semiconductor domain. The call for government investment in training tens of thousands of semiconductor experts reflects Vietnam's proactive approach to harnessing its potential in semiconductor production.

Government Support and Industry Collaboration in Semiconductor Production

Government Initiatives Fostering Semiconductor Production

Vietnam's government has strategically positioned itself to champion the growth of the semiconductor industry through targeted initiatives and investment-friendly policies. To incentivize businesses, the government offers attractive measures, such as exemptions from land and water surface rents for enterprises investing in the sector. In centralized high-tech parks, eligible businesses can enjoy a reduction of up to 50 percent in rent. Notably, companies investing in socio-economically deprived areas receive full exemptions from land and water surface rents for the duration of their lease, encouraging investments in less developed regions.

The government's commitment to digital transformation serves as a catalyst for the semiconductor chip industry's growth. Recognizing the industry's role in achieving the nation's long-term goal of becoming a digital economy, Vietnam's government has implemented policies and initiatives to propel its development. Various funds, including the National Technology Innovation Fund (NATIF) and the Vietnam-Korea IT Incubator (VKII), have been established to provide financial support for research, development, and start-ups in the semiconductor industry. These initiatives collectively create a conducive environment for businesses to thrive in Vietnam's growing semiconductor landscape.

Collaborative Efforts: Public-Private Partnerships Driving Innovation

In a significant collaboration, Synopsys Inc. and Vietnam's National Innovation Centre (NIC) have joined forces to elevate integrated circuit (IC) design expertise in Vietnam. This partnership involves Synopsys's support for the establishment of a chip design incubation center by NIC, fostering a conducive environment for innovation and skill development in semiconductor design. Moreover, the Vietnam-US Comprehensive Strategic Partnership has recognized Vietnam's substantial potential in the semiconductor industry, emphasizing initiatives to enhance human resources in this sector. The partnership includes the provision of a seed fund of 2 million USD by the US, reinforcing collaborative efforts between nations to advance Vietnam's standing in semiconductor production.

Building a Skilled Workforce: Projected Growth in Semiconductor Human Resources

Vietnam's ambitious project for semiconductor human resources development until 2030 aims to train about 30,000 to 50,000 engineers and experts. FPT, a prominent player in Vietnam's tech landscape, is poised to play a crucial role in this endeavor. Tran Dang Hoa, Chairman of FPT IS and FPT Semiconductor, outlines FPT's commitment to training 10,000 semiconductor engineers. This initiative includes collaboration with foreign educational institutions to ensure a comprehensive and globally relevant training program. The government's emphasis on training a significant number of skilled professionals underscores its vision for Vietnam to emerge as a hub for semiconductor talent, contributing significantly to the industry's growth.

Final Thoughts

As we conclude our insightful journey into Vietnam's role in semiconductor production, it's clear that the nation emerges as a key player in shaping the future of this dynamic industry. Emphasizing the significant potential within Vietnam's semiconductorlandscape, we extend an invitation to unlock unprecedented opportunities with Viettonkin's specialized guidance in semiconductor investment. Seamlessly navigate the intricacies of this rapidly evolving sector with our strategic insights and tailored support today.

Administrative Capital and Urban Planning

Putrajaya: A Planned Administrative Capital

Malaysia’s commitment to structured urban development is epitomised by Putrajaya, a meticulously planned administrative capital that reflects the country's vision for sustainable urban growth and modern infrastructure. Created to reduce congestion in Kuala Lumpur, Putrajaya serves as an efficient government hub with expansive green spaces, advanced transportation, and cutting-edge infrastructure. Landmarks like the Perdana Putra (Prime Minister’s office) and Putra Mosque blend traditional Islamic architecture with modern design. These features, along with smart city initiatives and a well-planned layout, make Putrajaya a model for urban development in the region.

Population and Urbanization

As of 2024, Putrajaya has grown to approximately 34 million residents, with an annual growth rate of 4.2%, highlighting its attractiveness and strategic importance. In contrast, Kuala Lumpur has around 1.8 million residents, growing at 1.8% per annum. This demographic shift underscores ongoing urbanisation and the decentralisation of population and economic activities, driven by economic opportunities and quality of life improvements in areas like Putrajaya and Cyberjaya, promoting balanced regional development.

Economic Diversification and Regional Development

Economic Diversification

Malaysia’s strategic move to diversify its economy away from heavy reliance on oil and gas exports has spurred growth in manufacturing, services, and tourism. This diversification is evident in the emphasis on high-tech industries and services, driven by government policies and incentives that attract investments. These efforts are fostering sustainable and inclusive economic growth, laying the foundation for a resilient economy capable of withstanding global economic fluctuations.

Manufacturing Sector

The manufacturing sector continues to be a cornerstone of Malaysia’s economy, growing by 5.7% in 2024 and contributing 24.3% to the GDP. Key industries like electronics, automotive, chemicals, and machinery benefit from strategic investments and a skilled workforce. Malaysia’s strength in electronics positions it as a key player in the global supply chain. Industrial zones, such as the Penang Industrial Park, provide world-class infrastructure and facilities, supporting continuous innovation and growth.

Regional Development

The Malaysian government has launched numerous initiatives to promote regional development, aiming to reduce regional disparities and enhance economic opportunities. These efforts include the creation of new cities and the implementation of extensive infrastructure projects, such as the East Coast Rail Link (ECRL) and the Pan Borneo Highway, which enhance connectivity and stimulate economic activity in less developed regions. These projects facilitate the movement of goods and people, attract investments, create jobs, and boost local economies, ensuring balanced national growth and that all regions benefit from economic progress.

Regional GDP Growth

Targeted regional development strategies have proven successful with regions like the East Coast Economic Region (ECER) and Iskandar Malaysia experiencing robust growth. In 2024, the ECER recorded a 6.1% growth rate, driven by investments in manufacturing, agriculture, and tourism. Iskandar Malaysia, now a hub for finance, education, and healthcare, grew by 5.5%, attracting significant foreign direct investment (FDI). These figures highlight the effectiveness of government initiatives in spurring regional economic activity and development, contributing to Malaysia’s overall economic resilience and prosperity.

Environmental and Social Issues

Mitigating Environmental Issues

Malaysia addresses environmental challenges with policies like the National Policy on Climate Change and the Malaysia Green Technology Master Plan, focusing on conservation, renewable energy, and sustainable practices. The country also commits to the Paris Agreement, targeting greenhouse gas reduction and climate resilience. These efforts are crucial for preserving natural resources and ensuring long-term environmental sustainability.

Renewable Energy

A key component of Malaysia's environmental strategy is expanding its renewable energy capacity. By 2025, Malaysia aims for renewable energy to make up 20% of its energy mix, up from 13% in 2020. As of 2024, the capacity is 1,444 MW, with a target of 3,000 MW by 2025. Investments in solar, wind, and hydropower are crucial to these goals. The government supports this with incentives for green technology and the establishment of the Sustainable Energy Development Authority (SEDA). This focus is vital for reducing carbon emissions and ensuring sustainable energy for future generations.

Enhanced Economic Stability and Growth

To ensure sustained economic stability and growth, the Malaysian government has implemented policies emphasising fiscal discipline, effective monetary policy, and structural reforms. These efforts led to a GDP growth of 4.5% in 2024, with a target of 5.5% by 2025. Key measures include reducing the budget deficit and promoting structural reforms. Initiatives like the Malaysia Productivity Blueprint enhance competitiveness and productivity, making Malaysia an attractive destination for investors and fostering a resilient economy.

Current Leadership and Priorities

Prime Minister Anwar Ibrahim

Under the leadership of Prime Minister Anwar Ibrahim, Malaysia is advancing a comprehensive agenda focused on economic development, infrastructure, education, healthcare, foreign policy, and digital transformation. These priorities are designed to drive Malaysia’s long-term growth and prosperity.

Economic Development and Infrastructure

For 2024, the Malaysian government has allocated RM 43.4 billion (about USD 10.5 billion for infrastructure development, focusing on transportation, energy, and water. Major projects include the East Coast Rail Link, the Pan Borneo Highway, and urban development initiatives. These investments aim to improve connectivity, support economic growth, and establish Malaysia as a key logistics hub in Southeast Asia.

Education and Human Capital Development

Education and human capital development are central to the Malaysian government’s agenda. Initiatives like the National Education Policy 2013 and the Human Capital Development Strategy 2030 aim to boost educational outcomes and workforce skills. The goal is to increase the human capital index to 0.7 by 2025, ensuring a skilled workforce for economic growth. Investments in vocational training and higher education align skills with modern economic needs, maintaining Malaysia’s global competitiveness.

Healthcare

Improving healthcare services is another critical priority for Malaysia. Key initiatives, including the National Health Policy 2015 and the Healthcare Financing Policy 2015, aim to enhance service delivery and access. The government plans to increase healthcare spending to 5% of GDP by 2025, addressing public health challenges and ensuring better health outcomes. Expanding healthcare infrastructure and implementing e-health initiatives will provide equitable access to quality services, improving overall health and well-being.

Foreign Policy and Diplomacy

Under Prime Minister Anwar Ibrahim, Malaysia’s foreign policy focuses on strengthening bilateral relations and regional cooperation. The country aims to attract USD 15 billion in foreign direct investment by 2025, reflecting its commitment to a favourable environment for international investors. Active participation in regional forums like ASEAN and the CPTPP highlights Malaysia’s dedication to regional integration and global trade, enhancing its international standing and economic prospects.

Increasing Mobility in Malaysia

To boost mobility and digital transformation, Malaysia has launched initiatives like the Malaysia My Second Home (MM2H) program and efforts by the Malaysia Digital Economy Corporation (MDEC). These programs aim to attract foreign talent and investment, with a target to grow the digital economy to USD 44 billion by 2025/ Key developments include expanding digital infrastructure, nationwide high-speed internet, and smart city initiatives, which support digital innovation and improve residents’ quality of life.

Prime Minister Anwar Ibrahim’s administration is dedicated to a progressive and sustainable Malaysia, emphasizing urban planning, economic diversification, regional development, and environmental sustainability. These strategic priorities make Malaysia a dynamic and attractive investment destination, offering stability and growth opportunities with strategic regional advantages. For investors looking to capitalize on these prospects, Malaysia presents a promising environment for continued prosperity. Viettonkin Consulting is here to help you navigate these opportunities and ensure successful investment ventures in this thriving market.

Malaysia, as the fifth-largest economy in ASEAN, boasts a robust agriculture sector that spans palm oil, rubber, cocoa, pepper, and tropical fruits. These industries collectively contribute significantly to Malaysia’s GDP, underscoring their pivotal role in driving economic stability and growth. Positioned strategically in Southeast Asia, Malaysia serves as a vital hub for agricultural exports, offering unparalleled access to over 600 million consumers in the ASEAN market and facilitating robust trade and investment flows. This strategic location makes Malaysia an attractive destination for multinational agribusinesses looking to establish regional operations or expand their market reach.

With a supportive investment climate characterised by favourable government policies, advanced infrastructure, and a skilled agricultural workforce, Malaysia continues to attract Foreign Direct Investment (FDI) into its agriculture sector. The country’s commitment to innovation and sustainable practices further enhances opportunities in emerging fields such as modern farming technologies, sustainable agriculture, and food processing. This article explores the sector's performance, highlighting key trends, growth drivers, and investment opportunities that reinforce Malaysia’s position as a vibrant and competitive destination for agricultural investments, appealing to both local entrepreneurs and international investors.

A Vital Economic Contributor

Malaysia's agriculture sector accounted for 8.9% of GDP in the first half of 2024. Major products include palm oil, rubber, cocoa, and pepper. The country's agricultural exports continue to thrive, reflecting strong global demand. The National Agrofood Policy 2021-2030 aims to enhance productivity, sustainability, and technology adoption in agriculture, offering attractive opportunities for investors in modern farming tech, sustainable practices, and processing facilities.

Strong Export Growth

Malaysia's agriculture sector demonstrates robust export growth, significantly contributing to the national economy. In 2023, agricultural exports reached $33 billion, showcasing Malaysia's strong presence in global trade. Key exports such as palm oil, rubber, and tropical fruits are in high demand worldwide. This solid export performance reflects the sector's efficiency, productivity, and the global market's reliance on Malaysia's agricultural products. The ability to consistently meet international demand highlights the sector's resilience and its pivotal role in sustaining economic stability and growth.

Government Support and Innovation

The Malaysian government is committed to advancing the agriculture sector through technology and sustainable practices. Initiatives like the National Agro-Food Policy (2011-2020) and the Agrofood Policy 2.0 (2021-2030) aim to enhance productivity and efficiency. These policies promote smart farming techniques, biotechnology advancements, and sustainable agricultural practices, ensuring long-term growth and environmental sustainability.

Incentives
In Malaysia's agriculture sector, attractive incentives play a pivotal role in fostering growth and investment. These include a range of tax incentives such as exemptions and reductions for companies engaged in primary agricultural activities, food production, and processing. The Investment Tax Allowance (ITA) enables deductions from statutory income for capital expenditures in modernising agricultural projects. Pioneer Status offers a tax holiday to new agricultural ventures, easing initial financial burdens. Moreover, subsidies and grants support farmers and agribusinesses by lowering input costs for essentials like fertilisers, seeds, and machinery. These incentives, coupled with supportive government policies, position Malaysia as a compelling destination for agricultural investment, driving sustainable development and innovation in the sector.

Viettonkin Consulting: Your Strategic Partner

At Viettonkin Consulting, we specialise in helping companies navigate the Malaysian agriculture landscape. Our comprehensive services are tailored to support your expansion and ensure sustainable growth. We offer market entry strategy, regulatory compliance assistance, partner identification, talent acquisition, payroll administration, accounting and tax compliance, and translation and localization services.

Investors eyeing Malaysia’s dynamic agriculture sector for growth opportunities can leverage Viettonkin’s specialised expertise and strategic insights. With a deep understanding of Southeast Asian markets, including Malaysia, Viettonkin offers essential support through comprehensive market research and advisory services. Our guidance empowers investors to navigate regulatory complexities, identify promising opportunities, and develop sustainable strategies that align with Malaysia’s agricultural goals. By partnering with Viettonkin, investors can capitalise on the sector's potential while contributing to Malaysia’s sustainable agricultural development and achieving their financial objectives.