The Vietnam-Netherlands relationship began to thrive in the early 1990s as Southeast Asia entered a period of robust development that attracted the attention of European business communities, including the Netherlands.

Overview of Vietnam - Netherlands bilateral relations

Since 1993, there have been numerous high-level visits and exchanges between the leaders of the two countries, which have laid the foundation for enhancing reliable friendship and cooperation in all fields, exemplified by the visits of Prime Minister Phan Van Khai (2001), Prime Minister Nguyen Tan Dung (2011 and 2014), Prime Minister Nguyen Xuan Phuc (2017), Chairwoman of the National Assembly Nguyen Thi Kim Ngan (2018), and visits to Vietnam by Dutch leaders such as Prime Minister Wim Kok (1995), Prince Willem Alexander (2005 and 2011), and Prime Minister Mark Rutte (2014). Through these visits, many bilateral cooperation mechanisms have been approved, important cooperation agreements have been signed, and legal frameworks have been established to promote bilateral relations in many areas.

Vietnam and the Netherlands are two coastal countries with strategic locations, large deltas, and face challenges of climate change and rising sea levels. These similarities have transformed the relationship between Vietnam and the Netherlands from a regular partnership to a Strategic Partnership on Climate Change Adaptation and Water Management in 2010 and a Strategic Partnership on Sustainable Agriculture and Food Security in 2014.

Since January 2014, the Vietnam-Netherlands relationship has shifted from development cooperation to a "trade partner," with a focus on promoting trade and investment. The Vietnam-Netherlands trade relationship has continued to grow, with trade turnover increasing steadily by over 20% per year. In 2016, bilateral trade turnover reached $6.68 billion, and in 2017 it reached $7.7 billion. Since then, the Netherlands has become the largest export market for Vietnam in the European Union (EU).

Vietnam & Netherlands trade and investment cooperation 

Regarding investment, it is notable that the Netherlands has consistently played a significant role as the largest European investor in Vietnam and the second-largest EU trading partner of Vietnam. Among the many large corporations currently operating efficiently in Vietnam, noteworthy examples include De Heus, Friesland Campina, Peja Vietnam, Heineken, Unilever, Royal Dutch Shell, Akzo Nobel, and Philips. Increasingly, more and more Dutch companies that focus on offering innovative solutions, circular economy and sustainable trade are entering the market. The EU – Vietnam Free Trade Agreement (EVTA), which has been in effect since August 2020, and the EU – Vietnam Investment Protection Agreement (EVIPA), which is expected to take effect soon in the near future, are paving the way to boost sustainable and inclusive trade and investment between Vietnam and the Netherlands.

According to recent statistics, the Netherlands has been granted 11 new investment projects and adjusted the capital on eight projects within the first five months of 2023, with a total newly registered, adjusted, and contributed capital of nearly USD 602 million. As of the end of May 2023, the Netherlands ranked eighth out of 143 countries and territories investing in Vietnam, with a total registered investment capital of USD 14.112 billion and 426 valid projects.

The EVFTA has had a positive impact on attracting investment and resources from the Netherlands into Vietnam. For Dutch enterprises currently doing business in Vietnam, especially those that import goods such as raw materials and supplies for production from EU countries and export finished products to this market, in addition to the tax incentives brought about by EVFTA, goods of Vietnamese origin are being elevated thanks to EVFTA.

In addition, the structure of Vietnam’s exports to the EU has been diversified and expanded during the first eight months of 2022, ranging from equipment and machinery (up 34.8% year-on-year), garment (41.2%), footwear (36.2%), to agro-fishery-forestry products of coffee (54.4%), seafood (42%), vegetable (18%), and rice (22.2%). In return, Vietnam has also boosted importing products from the EU, including pharmaceutical products (up 7.6%), chemicals (102%), wood, wooden products, animal feed (15.5%), and milk and dairy products (21.9%). According to experts, preferential treatments under EVFTA, especially tariff reductions, have significantly improved the competitiveness of Vietnam's exports and their penetration of European markets.

Prospects and trends in future bilateral relations

Ms. Vo Thi Ngoc Diep, the Vietnamese Commercial Counselor in the Netherlands, has stated that investment from the Netherlands into Vietnam is currently growing at a relatively good rate, although there are not many large projects. Dutch businesses still view the investment environment in Vietnam favorably, particularly with the recent significant improvements in administrative procedures, abundant and diligent labor resources, and a willingness to learn. Additionally, the renewal of appropriate policies and regulations that align with the country's economic development, regional and international trends have been positive developments.

Following the Covid-19 pandemic, in addition to high-level government delegations from the Netherlands visiting Vietnam, many business delegations from various Dutch localities have conducted market research and evaluations. Among them, many businesses operate in the fields of information technology, semiconductor technology, materials, high-tech agriculture, and climate change prevention projects.

Vietnam's current approach aligns with the strengths of the Netherlands, which is to attract investment into green and clean energy sectors, high-tech agriculture to create value-added products, industrial materials, semiconductors, and climate change prevention projects. The domestic ministries, agencies, and localities need to build standard documents and publish them on the websites of management agencies, as is currently done in Malaysia and Singapore. These documents should clearly outline information on the priority sectors/fields for investment attraction by the central and local authorities, as well as information on related procedures such as land leasing, leasing prices, taxes, locations, and regulations for each type of investment.

Conclusion 

N. Investing in Vietnam from the Netherlands means promoting bilateral trade growth, specifically increasing exports of goods from Vietnam to the Netherlands/EU to benefit from the EVFTA incentives. Moreover, with the goal of transitioning to clean and green energy by 2037, the Netherlands will only retain high-value goods production sectors and shift investment in production and export to countries with cheaper fuel and labor costs.

In conclusion, the economic and trade cooperation potentials between Vietnam and the Netherlands are promising, with Vietnam being a priority trading partner for the Dutch government. The recent investment policy from the Netherlands highlights the importance of investing in Vietnam, which will promote bilateral trade growth and increase Vietnam's exports to the Netherlands and the EU, benefiting from the EVFTA incentives.

If you are a Dutch investor looking to expand your business into Vietnam, Viettonkin Consulting can help. We have extensive experience in the Vietnamese market and can provide you with the support you need to succeed. Contact us today to learn more. With our help, you can take advantage of the many opportunities available in Vietnam and build a successful business. Don’t hesitate to reach out to us! 

Within the pharmaceutical landscape, many international organizations predict a persistent surge in investments, underscored by an upward trajectory in mergers and acquisitions. With a populace of 100 million and its strategic geographic location facilitating entry into neighboring markets, Vietnam emerges as a beacon for investments aimed at propelling its domestic pharma and medicine market, enhancing its competitive edge, and reducing reliance on external sources.

The Current Outlook of Vietnam's pharma and medicine market

As emphasized by the Deputy Minister of Planning and Investment, Vietnam's healthcare domain, particularly the pharmaceutical sector, is undergoing rapid expansion. Valued at over 20 billion USD, the pharmaceutical market constitutes roughly 6% of the GDP in 2022. Expert predictions anticipate this value to ascend to around 23.3 billion USD by 2025 and further elevate to approximately 33.8 billion USD by 2030.

Moreover, Vietnam's pharmaceutical market showcases robust momentum, marked by a 10.6% compound growth rate. This ascent is evidenced by the market's valuation, which surged from 3.4 billion USD in 2015 to an impressive 7 billion USD in 2022. Of particular note, domestic production contributes about 45% to the total value of therapeutic drugs. 

Experts project that by 2030, Vietnam's drug market could reach an overall value of about 13 billion USD, accompanied by an anticipated per capita drug expenditure of around 75 USD. Notably, IBM Technology Group (USA) foresees Vietnam's medical and pharmaceutical market soaring to nearly 16.1 billion USD by 2026, positioning the nation as a pivotal contender for pharmaceutical advancement within Southeast Asia.

The Ministry of Health also underscores a concerted commitment to ensuring the availability of quality drugs at reasonable prices, catering to medical treatment, examinations, and preventive care. This endeavor has resulted in the expansion of drug production, evidenced by 228 GMP-WHO compliant factories, including 18 production lines adhering to EU-GMP standards. Among these facilities, 7 specialize in vaccine production, 6 in secondary vaccine packaging, and 77 in the manufacturing of medicinal herbs, mirroring the dynamic growth of Vietnam's pharmaceutical sector.

Nonetheless, in comparison to the sector's potential and demand, these figures appear modest, necessitating collaborative efforts from both domestic and foreign players.

Opportunities are open for investors in Vietnam’s pharma and medicine market

At a recent seminar titled "Implementing Resolution 29: A New Approach in Medical and Pharmaceutical Industry Development", the discourse discussed the analysis of Resolution No. 29-NQ/CTN by the Central Government. The seminar explored the action program designed to sustainably develop the biotechnology and pharmaceutical sectors.

Attendees unanimously acknowledged the advantageous circumstances that position Vietnam's medical and pharmaceutical domain to attract foreign capital. These factors encompass strategic geographical advantages, political stability, consistent economic growth, and robust international integration through free trade agreements and bilateral partnerships with global economic players.

In addition, three pivotal strategies for pharmaceutical enterprises in the forthcoming era are innovation in novel drug products, development of natural-origin products, investment in high-quality human resources, and expansion of production facilities to meet international standards.

Amidst a global landscape marked by an 8% decline in global M&A volume and a 15% reduction in value during the initial half of 2023 (PwC's Global M&A Trends Report, 2023), the pharmaceutical sector persists as a magnet for investor interest. PwC's experts underscore the need for readiness in the face of a dynamic second half of 2023, driven by the alignment of buyer-seller pricing and a collective push towards advanced technology and AI-powered solutions to tackle evolving challenges and strategies.

In concurrence with these viewpoints, KPMG's assessment highlights Vietnam's potential to emerge as a regional pharmaceutical and medical nucleus, capable of robust pharmaceutical exports to ASEAN nations. The sector's resilience and adaptability, exemplified by rapid innovation during the COVID-19 pandemic, positions it for future growth. 

Projections from the Vietnam Pharmaceutical Corporation (Vinapharm) anticipate the nation's pharmaceutical industry to achieve an 8% revenue increase in 2023, reaching 169 trillion VND (approximately 7.2 billion USD).

Challenges ahead the road

In addressing the anticipated challenges, Mr. Emin Turan, Chairman of Pharma Group, offers insights that shed light on the unique hurdles within the pharmaceutical sector. It's noteworthy that out of an exhaustive 10,000 drug trials, only a minute fraction—just 1—culminates in a successful product. Even more striking is the fact that merely a third of these successful products manage to transition into commercialization. 

This stark reality underscores the immense risks associated with pharmaceutical research and development. Global biopharmaceutical companies are collectively committing over a staggering $1 trillion to research and development activities by 2030. This massive investment reaffirms the high-risk nature of the industry.

Meanwhile, in Vietnam, though foreign enterprises express interest in becoming strategic partners with domestic counterparts, the journey isn't without complexities. For state-owned enterprises, the process proves intricate, while private enterprises often grapple with corporate governance standards that fall short. 

A noteworthy voice, Mr. Do Van Su, Deputy Director of the Foreign Investment Department, aptly characterizes this landscape, drawing attention to the persisting family management approach prevalent in many Vietnamese businesses. This tendency imparts opacity and susceptibility to family influences, thereby necessitating governance enhancements.

In parallel, the insights of Prof. Dr. Nguyen Hai Nam, Rector of Hanoi University of Pharmacy, shed light on a significant bottleneck. Attracting investment to the pharmaceutical sector is constrained by its demanding nature, necessitating a high degree of expertise and carrying inherent risk. 

For instance, the span from project formulation to investment approval, averaging a five-year period, is considered lengthy by industry standards. At the same time, crafting a new drug, commencing from the initial research phase to obtaining regulatory approval, spans a time-prolonging and resource-intensive period of 10 to 15 years. The cost of shepherding a novel drug through this intricate journey comes with an astonishing price tag of approximately $2.6 billion. 

These statistics provide a glimpse into the immense complexities and financial commitments involved in pharmaceutical innovation. Thus, foreign-invested enterprises, in particular, seek a more open investment mechanism. Furthermore, the absence of preferential loan programs geared towards high-tech ventures within the pharmaceutical sector underscores an area ripe for advancement.

These challenges collectively underscore the nuanced landscape that investors and decision-makers must navigate. A multifaceted approach, informed by evolving governance structures and policy enhancements, holds the key to unlocking the sector's potential. As we forge ahead into this landscape, Viettonkin remains committed to steering you through these complexities, armed with strategic insights and tailored solutions. The roadmap may be intricate, but with astute guidance, the transformative potential of Vietnam's pharmaceutical industry beckons.

Final Thoughts 

It's clear that Vietnam possesses an unprecedented opportunity to leverage its experiences and harness advancements in science and technology. These factors can accelerate the establishment of a robust healthcare infrastructure and a sustainable pharmaceutical industry. To materialize transformative progress, it's crucial to embrace a new approach that actualizes the objectives outlined in Resolution 29/NQ-CP.

In pursuit of this goal, stakeholders must prioritize institutional reform, define explicit objectives to expedite public access to innovative medicines, and devise adaptable medical financing mechanisms that harmonize the interests of all stakeholders. The sector's vibrancy should be rooted in scientific prowess, fostering an ecosystem fueled by competition, innovation, and comprehensive integration to enhance Vietnam's pharmaceutical competitiveness regionally and globally.

If you want to start a business in Vietnam’s pharma and medicine industry, Viettonkin can be your trustworthy partner! With a seasoned team dedicated to unraveling the potential that lies within Vietnam's pharmaceutical sector, we can help you navigate through the complex legal process and land at your targeted market successfully. Together, we can chart a course that leads to remarkable opportunities and impactful contributions within this burgeoning industry!

Vietnam is one of the fastest-growing economies in Southeast Asia, with a vibrant and dynamic startup ecosystem. Among its cities, Da Nang stands out as a rising spot for innovation and entrepreneurship, attracting domestic and foreign investors looking for opportunities in this emerging market. In this article, we will explore the story of Da Nang as a startup hub, the factors that contribute to its success, and the potential opportunities for investors in this city.

Da Nang's journey to be a startup hub in Vietnam

Da Nang is the fourth-largest city in Vietnam, located in the country's central region. It is known for its beautiful beaches, rich cultural heritage, and modern infrastructure. It is also a significant tourist destination, attracting millions yearly visitors.

But Da Nang is more than just a place for leisure and relaxation. It is also a place for innovation and creativity. In recent years, Da Nang has emerged as a leading city in developing and supporting startups, especially in technology, education, tourism, and social impact.

According to the Da Nang  Department of Science and Technology, by 2025, Da Nang will become a national-level innovative startup hub. Despite facing many difficulties sparked by COVID-19, the department, startup supporting units, universities, and colleges citywide, have together effectively implemented a wide range of highly practical activities, thereby significantly contributing to the development of the Da Nang startup ecosystem.

Some of the milestones and achievements of Da Nang's startup journey include:

• In June 2021, the Da Nang Innovation Startup Support Centre was officially established based on re-organizing the Science and Technology Information Centre under the Department of Science and Technology. This is considered a focal point connecting the domestic and foreign startup ecosystem network with the city in tandem with deploying supportive activities for innovative startups.
• In June 2021, the Da Nang Startup Network Coordinating Council was consolidated with the operating regulations. Da Nang has six incubators, two creative spaces, nine co-working spaces, ten startup clubs, many startup centers built within universities and junior colleges citywide, and two startup investment funds.
• In June 2021, Da Nang Startups had high expectations for establishing the National Innovation Startup Support Centre. In his remarks at the 15th National Assembly's 5th session in June 2021, Minister of Science and Technology Huynh Thanh Dat said that the ministry has developed and completed the project of setting up the National Innovation Startup Support Centre at Da Nang City.
• In April 2021, Da Nang may be Vietnam's fourth largest city, but its progress and prospects—and let's not forget its beautiful beaches—are attracting startup and investor attention. The city hosted SURF - Da Nang Startup Wave 2021, an annual event showcasing the city's best startups and connecting them with mentors, investors, media, and other stakeholders.
• In March 2021, Duy Tan University's 'Renewable Energy Backpack' project won the second prize in the national Go Green in the City competition organized by Schneider Electric Vietnam. Other elite projects such as 'Garbage recycling machine' by Duy Tan University, 'Centuine Milk' by the University of Science and Technology, and 'Mobile Application for Vegetarians' by the University of Economics also entered the final round of the Hult Prize 2021 startup competition in Southeast Asia.

These are examples of how Da Nang fosters a culture of innovation and entrepreneurship among its locals, especially the youth. The city has also incubated nearly 140 innovative startup projects and established about 50 innovative startups, including some that have attracted hundreds and thousands of dollars worth of investment capital, including Datbike Vietnam (an electric motorcycle company), Hekate (a smart home solution provider), and EM&AI (an artificial intelligence platform for customer service).

Factors behind Da Nang's success

Da Nang's success as a startup hub is not accidental. It has resulted from a combination of factors that created a conducive environment for innovation and entrepreneurship. Some of these factors are:

Visionary leadership

The municipal government has shown strong commitment and support for developing an innovative startup ecosystem in Da Nang. It has issued various policies and guidelines to facilitate startup activities, such as Decision No. 308/QD-TTg dated March 28, 2021, on approving the foreign investment cooperation strategy for the period 2021-2030, which aims to attract more foreign investors to the city, especially in the fields of innovation, technology, and digital transformation. The government has also allocated resources and funds to support startups, such as providing financial assistance worth a total of more than VND 600 million to 3 startup businesses and one incubator in 2021.

Collaborative network

Da Nang has a strong and diverse network of stakeholders involved in the startup ecosystem, such as universities, colleges, research institutes, incubators, accelerators, co-working spaces, startup clubs, investment funds, media, and other supporting organizations. These stakeholders work together to provide training, mentoring, networking, funding, and exposure opportunities for startups. They also organize events and programs to promote and celebrate the startup culture in the city, such as SURF - Da Nang Startup Wave, SHi Accelerator Journey (SHi-VTS), SV STARTUP (a national startup contest for students), and Da Nang Startup Day.

Talented & international workforce

Da Nang has a large pool of young and educated individuals who are potential entrepreneurs and innovators. The city has more than 20 universities and colleges that offer various programs and courses related to science, technology, engineering, mathematics, business, and entrepreneurship. These institutions also encourage and support their students to participate in startup competitions and activities, both locally and internationally. Moreover, Da Nang attracts talent from other parts of Vietnam and abroad, thanks to its high quality of life, low cost of living, and favorable business climate.

Strategic location

Da Nang is strategically located in the central region of Vietnam, which gives it access to a large market of over 30 million people. It is also well-connected to other major cities in Vietnam and the region by air, land, and sea. In particular, the direct flight from Da Nang to Hanoi and from Da Nang to Ho Chi Minh both take about over an hour. Meanwhile, it takes a bit longer (over 2 hours) to fly directly from Da Nang to Singapore. 

The city has an international airport that serves more than 10 million passengers per year, a deep-sea port that handles more than 10 million tons of cargo per year, and a railway station that links it to the North-South railway line. Furthermore, Da Nang is part of the East-West Economic Corridor (EWEC), which connects Vietnam with Laos, Thailand, and Myanmar. This gives Da Nang an advantage in trade and investment with these countries.

Opportunities for investors in Da Nang

Da Nang offers many opportunities for investors who are interested in tapping into the potential of this emerging startup hub. Some of these opportunities are:

Investing in startups

Da Nang has a vibrant and diverse startup scene that covers various sectors and domains, such as technology, education, tourism, social impact, agriculture, healthcare, and more. These startups have innovative solutions that address real problems and needs in the market. For example, MultiGlass is a technology-based startup project to help handicapped people use computers through eye and head movements. These glasses can also assist long-distance truck drivers to reduce fatigue, thereby contributing to reducing traffic accidents. 

Startups in Da Nang also have high growth potential and scalability. One typical example is Delta X project, a robotic arm applied in industrial production lines. The startup project successfully called for nearly USD 500,000 in Shark Tank Vietnam. Investors can find promising startups to invest in through platforms such as Innovative Startup Portal, which helps to connect with Da Nang's startup ecosystem, or events such as SURF - Da Nang Startup Wave or Da Nang Startup Day, which showcase the best startups in the city.

Partnering with incubators and accelerators

Da Nang has several incubators and accelerators that provide comprehensive support for startups at different stages of development. These include Da Nang Innovation Startup Support Centre (under the Department of Science and Technology), Songhan Incubator (SHi), DNES (Da Nang Entrepreneurship Support), DNES Lab (a joint venture between DNES and FPT University), Fablab Da Nang (a maker space under Duy Tan University), Hatch! Ventures (a venture builder), VietAI Hub (an AI-focused incubator), and more. Investors can partner with these organizations to access their network of startups, mentors, experts, and resources; or to co-create programs and initiatives that foster innovation and entrepreneurship in the city.

Establishing R&D centers or offices

Da Nang has a conducive environment for research and development (R&D) activities, thanks to its talented workforce, modern infrastructure, supportive policies, and strategic location. Many multinational companies have already established their R&D centers or offices in Da Nang, namely IBM Vietnam Innovation Centre (under Duy Tan University), Samsung R&D Institute Vietnam (SRV) Da Nang Branch Office (under Da Nang University of Science and Technology), LG Electronics Vietnam Hai Phong Co., Ltd. Da Nang Branch Office (under Da Nang Software Park), Gameloft Studio Da Nang (under Indochina Riverside Tower), Axon Active Vietnam Da Nang Branch Office (under Da Nang Software Park), FPT Software Da Nang Branch Office (under FPT Complex Building), CMC Technology & Solution Co., Ltd. Da Nang Branch Office (under CMC Building), Viettel Group Da Nang Branch Office (under Viettel Complex Building), VNPT Technology Co., Ltd. Da Nang Branch Office (under VNPT Building), MISA Joint Stock Company Da Nang Branch.

Final Thoughts

Da Nang is a rising spot as a startup hub of Vietnam, with a vision, a network, a talent, and a location that makes it an ideal destination for innovation and entrepreneurship. The city has a vibrant and diverse startup scene that offers many opportunities for investors looking for high-potential and scalable solutions in various sectors and domains. Da Nang also has a supportive and collaborative ecosystem that provides comprehensive support for startups and investors alike.

If you are interested in exploring the opportunities in Da Nang and Vietnam, we can help you. As a leading local consultant, we are equipped with extensive experience and expertise in diverse majors and sectors of the Vietnamese and global markets. We can walk you through the complexity of legal procedures. Take your chance to be part of this transformative journey. Take action now and explore the possibilities of doing business and investing in Vietnam. Contact our team for valuable insights and guidance on navigating Vietnam's dynamic investment landscape. 

The North-South expressway system, a monumental infrastructure project, is set to redefine transportation networks and fuel growth in this vibrant Southeast Asian nation. In this blog post, we will walk you through an overview of North-South Expressway projects and analyze other investment opportunities in developing Vietnam’s expressways for those seeking to capitalize on Vietnam's booming economy.

Orientation for the implementation of North-South expressway projects in Vietnam

From 2021 to 2023, the whole country inaugurated and put into operation an additional 566 km of highways, bringing the total length of highways of the country to 1,729 km. Currently, many expressway projects are under construction, with 1,756 km started by the end of June 2023.

According to Prime Minister Pham Minh Chinh, in the nine-year period from 2021 to 2030, Vietnam needs to invest and build nearly four times the number of highways built over the past 20 years.

Similarly, the National Assembly's resolution stated that by 2025, the whole country should strive to have about 3,000 km of highways and take the first steps towards expanding the North-South expressway to the East. 

An overview of North-South Expressway system 

According to the road network plan for the period 2021 - 2030, with a vision to 2050, the North-South expressway to the East from Huu Nghi border gate (Lang Son - northest landmark of Vietnam) to Ca Mau (southest landmark of Vietnam) has a length of 2,063 km. The construction of this expressway is divided into many projects corresponding to different phases. So far, 800 km has been completed and put into operation.

Specifically, the North-South Expressway Project Phase 1 (2017 - 2020) has a length of more than 650 km, including 11 component projects, with 8 public investment projects and 3 public-private partnership (PPP) projects. The total project implementation capital is more than 5,500 billion VND, of which investors’ capital is over 2,500 billion VND and state capital is about 3,000 billion VND.

Currently, the project has opened 6 sections of the route including: Cao Bo - Mai Son, Mai Son - National Highway 45, Cam Lo - La Son, Phan Thiet - Dau Giay, Vinh Hao - Phan Thiet, Nha Trang - Cam Lam. It is expected that on September 2, the National Highway 45 - Nghi Son section with a length of 43 km and the Nghi Son - Dien Chau section with a length of 50 km will be opened. On December 31, the My Thuan 2 bridge project will be completed. In 2024, the remaining 2 component projects, Dien Chau - Bai Vot, Cam Lam - Vinh Hao will be opened for operation.

In early 2023, the North - South Expressway component projects in the 2021 - 2025 period (phase 2) were started. The East North-South Expressway Project Phase 2 consists of 12 component projects with a total length of 723.7 km of the main route, including sections: Ha Tinh-Quang Tri (260.9 km), Quang Ngai- Nha Trang (352.06 km) and Can Tho-Ca Mau (110.9 km). The total investment of the project is up to 146,990 billion VND, in which 119,666 billion VND will be arranged in the period of 2021 - 2025, and VND 27,324 billion will be arranged in the following period 2026 - 2030. The project will fundamentally be completed in 2025 and opened for operation from 2026.

How to invest in North-South Expressway Project

General regulations on selection of contractors for investment in express railway projects.

Currently, there are no special restrictions for investors in the railway sector. Thus, investment projects to build high-speed railways can be in the form of public-private partnership (PPP) or private investment. However, in fact, attracting private investment in the field of railway construction faces several challenges due to large investment capital required, lengthy construction time, or complex administrative procedures, among others. 

Meanwhile, the Vietnamese government has considered offering incentives, attracting private investment in this field. Besides, the amended Railway Law 2017 added regulations to encourage organizations and individuals investing in and building high-speed railways. In particular, the law clearly defines the contents of investment incentives and support in constructing, managing, using and maintaining high-speed railways. 

In the North-South expressway super project, the Government has proposed the form of public investment to ensure "by 2025, basic completion of the North-South expressway to the East".

According to the Chairman of the Economic Committee of the National Assembly- Mr. Vu Hong Thanh, the National Assembly has passed Resolution 29 on the medium-term public investment plan for the period 2021-2025. The plan has allocated capital for various road transport investment projects under the PPP method, including North - South expressway project.

Recently, the project management units (PMUs) of the Ministry of Transport (MoT) have completed the selection of contractors and are granting contracts to sign for priority construction and installation packages of 12 component projects on the North - South Expressway in the period 2021 - 2025.

The selection process of contractors for open bidding and limited bidding

The selection of a contractor for a high-speed railway construction project is carried out in accordance with the Law on Bidding and/or the Law on Public Investment (for investment projects in the form of PPP) and related regulations. 

Depending on the implementation orientation of the project, the execution sequence can be changed. However, the general contractor selection process for open bidding and limited bidding is carried out as follows (Clause 1, Article 38 of the Law on Bidding 2013):

• Step 1: Prepare for contractor selection,
• Step 2: Organize contractor selection,
• Step 3: Evaluate bids and negotiate contracts,
• Step 4: Submit, appraise, approve and publicize contractor selection results,
• Step 5: Finalize and sign the contract.

On the other hand, the appointment of contractors according to the normal process as follows:

• Step 1: Prepare for contractor selection,
• Step 2: Organize contractor selection,
• Step 3: Evaluation of proposals and negotiation of the contractor's proposals,
• Step 4: Submit, appraise, approve and publicize contractor selection results,
• Step 5: Finalize and sign the contract.

(Clause 2, Article 38 of the Law on Bidding 2013)

The way that construction project is bid will be decided by the competent authority.

To Sum Up…

Vietnam's expressway infrastructure presents a gateway to a wealth of investment and development opportunities. As the country embraces rapid economic growth, the South-North expressway system stands as a testament to Vietnam's commitment to modernization and progress. To gain deeper insights into Vietnam's current investment environment and unlock the keys to successful business ventures, reach out to our team. Our team of experts are insightful of the latest Vietnamese Market Regulations, Policies, and FDI trends to help you make informed decisions and maximize your investment potential.

Discover firsthand the untapped potential that awaits you in Vietnam and embark on a journey of profitable partnerships. Let’s embark on a remarkable journey in the dynamic Vietnamese market! 

The concept of technology transfer holds immense significance for policymakers, carrying substantial implications for global economic progress. This is particularly relevant for countries like Vietnam, currently undergoing industrialization and modernization. The process involves rigorous research, policy formulation, and strategic planning aimed at maximizing the efficiency of adopting and implementing cutting-edge foreign technologies in domestic production. Equally crucial is the successful integration of homegrown technology across diverse industries and fields. This pivotal stage serves as a catalyst for achieving swift and sustainable development, playing a vital role in ensuring long-term economic prosperity.

An overview of technology transfer in Vietnam

Over the past few decades, Vietnam has made significant progress in technology transfer through policies aimed at attracting foreign direct investment (FDI) projects. These initiatives have yielded substantial successes in acquiring technology for production and business development, gradually raising the country's domestic production capabilities. Notably, industries such as Post and Telecommunications, Banking, Oil and Gas, Construction, Traffic have successfully absorbed advanced technologies, placing Vietnam at the forefront of global innovation.

The increasing competitive pressure from FDI enterprises has prompted domestic companies to invest in importing new equipment and technologies, as well as establish dedicated departments and research and development (R&D) centers to enhance their technological capabilities. Among the economic sectors that have thrived due to technology transfer and R&D collaborations associated with FDI projects, the oil & gas, and communications sectors stand out. They have progressed rapidly and modernized, keeping pace with regional and global standards.

Vietnam's technology market has experienced a vibrant transformation following the enactment of the Technology Transfer Law in 2017. This legislation aims to encourage the transfer of advanced and clean technologies while discouraging the importation of outdated and hazardous technologies. As a result, the technology landscape in Vietnam has become dynamic, fostering sustainable development and innovation.

In the realm of high technology, foreign investors have been drawn to Vietnam's three national high-tech parks, with the Hi-Tech Park in Ho Chi Minh City achieving notable success. Over the course of its 20-year establishment, the park has attracted approximately 130 investment projects with a total registered capital of nearly $7 billion. It has become a hub for renowned global corporations such as Intel, Microsoft, Nidec, Sanofi, Nipro, and Samsung, manufacturing high-tech, value-added products. Notably, Samsung has invested hundreds of millions of dollars to establish an R&D center, further affirming the government's commitment to creating a favorable high-tech investment environment and promoting technology transfer in Vietnam.

Some limitations in technology transfer through FDI projects

From an objective standpoint, foreign investment has undeniably played a role in reshaping Vietnam's economic structure. Through FDI projects, technology has been transferred from overseas to Vietnam, leading to a gradual shift in the country's technological landscape. Nonetheless, the outcomes attained thus far have fallen short of Vietnam's socio-economic development goals and requirements.

While it is true that the technology transferred into Vietnam largely matches or even surpasses the existing technology in the country, its overall level remains only moderately advanced compared to other regional nations. Many cutting-edge and modern technology products are yet to penetrate the domestic market.

A significant portion of technology transfer contracts registered at regulatory agencies for science and technology primarily emphasize the transfer of technological processes, technological know-how (73%), technical assistance (77%), and training (71%). Conversely, technology transfer that involves industrial property objects represents a relatively small fraction (13%) of these contracts.

In addition, the number of enterprises holding core technology and engaging in high-tech investments in Vietnam remains relatively low, with many FDI projects primarily focusing on low-value assembly and processing operations, leading to a limited localization rate and inadequate value generation within the country. Consequently, the expected technology spillover from FDI enterprises to domestic counterparts has not materialized as anticipated.

How Vietnam can leverage tech transfer & knowledge with the high-quality FDI projects

In order to enhance the technology transfer from FDI enterprises and maximize the benefits derived from this capital flow, Vietnam should prioritize the implementation of various solutions, such as: Establishing robust FDI policies, Strengthening intellectual property rights (IPR) protection, Supporting research and development (R&D) initiatives, and Establishing Intermediaries in Application and Technology Transfer. 

Establishing effective FDI policies to promote technology transfer

To effectively attract high technology and technology transfer, particularly in high-tech fields and FDI projects, Vietnam should create and implement clear policies that incentivize technology transfer and knowledge sharing as a requirement for FDI projects. These policies can outline the expectations and obligations of foreign investors in terms of sharing their technology, expertise, and knowledge with local partners and employees.

A significant step in this direction was taken in 2021 when the Prime Minister issued Decision 29/2021/QD-TTg, which introduced special investment incentives designed to attract selective FDI investments. The decision offers preferential tax rates for corporate income tax to FDI enterprises that meet specific technology transfer requirements. For instance, investors who fulfill the level 1 technology transfer criteria can enjoy a reduced corporate income tax rate of 7% for 33 years, while those meeting the level 2 technology transfer requirements can benefit from a 5% corporate income tax rate for 37 years.

Notably, Vietnam has provided the highest level of incentives available under current laws to encourage hi-tech application projects and support hi-tech enterprises. Additionally, the Law on Investment recognizes high-tech enterprises as eligible for investment incentives, emphasizes investment incentives for hi-tech activities, and extends these incentives to hi-tech zones. This demonstrates the government's commitment to consistent policy-making in attracting foreign investment and promoting the inflow of advanced technology and high-tech expertise into Vietnam.

Enhancing intellectual property rights (IPR) protection

To facilitate technology transfer, it is essential for Vietnam to strengthen the protection of intellectual property rights (IPR).

FDI projects, particularly those of larger scale, are often undertaken by transnational companies (TNCs). Developing countries like Vietnam prioritize attracting such investments and offer various incentives to entice them.

However, TNCs face significant limitations when it comes to transferring new and highly competitive technologies to their overseas affiliates. They are concerned about potential risks of disclosure, loss of technology copyright, and unauthorized imitation or modification by local companies in the host country. While TNCs may often cite the host country's failure to meet their technology utilization requirements as the reason for not transferring new technologies, the underlying concern is the protection of their intellectual property.

By strengthening IPR protection, Vietnam can address these concerns and alleviate the fears of TNCs regarding technology transfer. This, in turn, will encourage TNCs to share their advanced technologies and knowledge with local partners and employees, promoting technological progress and fostering mutually beneficial collaborations.

Promoting research and development (R&D) initiatives

In addition to technology transfer, transnational companies (TNCs) also engage in research and development (R&D) activities within the host country. However, it is important to note that most R&D efforts conducted by overseas branches of TNCs primarily focus on adapting existing technologies to suit local conditions.

Therefore, to further bolster its technological capabilities, Vietnam should actively encourage FDI projects that prioritize R&D activities. By providing incentives and support for such initiatives, the country can attract foreign investors who are dedicated to innovation and technological advancement. These projects often involve a higher level of technology transfer and knowledge sharing, as they encompass the creation and dissemination of new technologies and expertise.

Establishing Intermediaries to facilitate technology transfer

As of 2022, Vietnam had 14 technology hubs and over 20 local technology exchanges designed to facilitate the connection, promotion, and transfer of technology to organizations, businesses, and individuals both domestically and internationally.

The presence of these technology hubs and intermediary organizations strengthens the linkages between researchers, entrepreneurs, and investors. They provide a platform for knowledge and technology exchange, supporting the implementation of innovative solutions in industries, and driving economic growth through technology-driven advancements.

By fostering the development of such intermediaries, Vietnam can create an ecosystem that facilitates effective technology transfer, encourages collaboration between academia and industry, and promotes the commercialization of research and development outcomes. These initiatives will further enhance the overall competitiveness and innovation capacity of the country.

Final Thoughts

Through the implementation of robust FDI policies, reinforced intellectual property rights (IPR) protection, and active promotion of research and development (R&D) initiatives, Vietnam has established an environment conducive to unlocking new horizons in technological advancement.

By embracing these opportunities, investors and business owners can tap into Vietnam's vibrant market and contribute to its technological growth. To explore the multitude of business prospects that await, we extend a special invitation to join our upcoming webinar, "Unlocking Business Opportunities in Vietnam." This webinar will provide valuable insights into the dynamic Vietnamese market, showcasing the potential for FDI projects and demonstrating how technology transfer and knowledge sharing can yield remarkable returns.

Don't miss out on this chance to be part of Vietnam's transformative journey. Join us at the webinar and discover the immense possibilities that lie within Vietnam's high-tech landscape. Together, we can forge fruitful partnerships and unlock a future filled with innovation, growth, and prosperity.

Enabling technologies play a pivotal role in Vietnam's economic development. These technologies, which include advancements in areas such as information technology, telecommunications, and infrastructure, provide a solid foundation for growth and innovation. As Vietnam continues to leverage enabling technologies, it can unlock new opportunities, accelerate economic growth, and pave the way toward a more prosperous future. 

How technology is transforming Vietnam’s economy

According to the Ministry of Science and Technology's statistics, the significant contributions of science, technology, and innovation to socio-economic development are evident. This impact is not limited to a single sector, as technology is reshaping various industries such as healthcare, finance, and retail.

For example, in the healthcare sector, telemedicine has emerged as a transformative solution, sizing down crowds at clinics and hospitals by offering online consultation services. This enables doctors to make diagnoses and create treatment plans remotely, improving professionalism and reducing waiting times for patients.

Similarly, the retail industry has harnessed the power of e-commerce platforms, connecting businesses with customers, increasing convenience, and boosting revenue. By embracing digital storefronts, retail businesses can cater to customer needs more effectively.

Education is also experiencing a technological revolution, with online learning platforms and mobile learning apps providing students with flexible learning opportunities. Additionally, technology empowers lecturers to analyze student data and adjust teaching methods accordingly, enhancing the learning experience.

A significant driver of Vietnam's economic growth is the digitalization of the country. The digital economy is projected to play a pivotal role in achieving the goal of becoming a high-income economy by 2045. By 2025, the digital economy is expected to contribute around 20% to the GDP, with an estimated 30% contribution by 2030.

The digital economy is indeed on an upward trajectory, as evidenced by Vietnam's digital marketplace. The E-Conomy SEA 2022 report indicates a substantial 28% increase in gross merchandise value, reaching $23 billion in 2022. Projections suggest further growth, with the digital economy expected to reach $49 billion by 2025, reflecting a remarkable 31% expansion.

Tran Minh Tuan, Director of the Department of Digital Economy and Digital Society under the Ministry of Information and Communications, believed that digital market, digital space, and digital data are necessary for developing a digital economy, and to do that, the first thing is to ensure digital infrastructure. Recognizing the inherent potential of technology, leveraging its power becomes a pivotal undertaking not only for the digital economy but for the nation's economy as a whole.

Future Outlook and Recommendations for Investors

Vietnam's relentless pursuit of technological integration to propel economic development is evident as it prioritizes the infusion of technology across various sectors. There are four key trends that hold immense promise in shaping the country's economic growth, which include: AI and machine learning (ML), 5G, blockchain, and VR/AR. 

AI and machine learning (ML)

In Vietnam, AI and ML has made significant strides in recent years and this trend is expected to continue in 2023. According to Mr. Hoang Viet Tien - Deputy Secretary General of the Vietnam Digital Communication Association, in 2023, these technologies are becoming increasingly transcendent, with a particular focus on natural language processing and computer vision, thereby supporting businesses in enhancing operational efficiency.

Recognizing the immense potential, the Vietnamese government has outlined its commitment to AI and ML integration in the National Strategy on Artificial Intelligence, with the goal of becoming one of the leading AI brands in ASEAN by 2030.

As a result, the demand for skilled professionals in AI and ML has surged, particularly in sectors like electronics (E-commerce), digital marketing, fintech, education, healthtech, and emerging fields such as entertainment and human resource management. Roles such as AI Engineers, Big Data Scientists, and Business Intelligence Analysts are in high demand, reflecting the growing importance of AI and ML in Vietnam's commercial industries.

5G 

Anticipated for 2023, Vietnam is poised to embrace the widespread adoption of 5G networks, revolutionizing connectivity with faster and more reliable connections for an increasing number of devices. The advent of 5G technology promises immense benefits, particularly in high-tech manufacturing, logistics, and agriculture industries.

In the manufacturing sector, 5G is expected to enhance factory capabilities and operational efficiency by reducing reliance on wired connections. As highlighted in a KPMG report, a factory equipped with a wireless 5G network has the potential to generate an additional value equivalent to $1/m2. To put this into perspective, even the smallest factory area of 10,000m2, when leveraging 5G, could potentially yield nearly $4 million USD in added value per year. 

In the field of logistics, 5G networks will propel businesses currently utilizing IoT devices to new heights, resolving common issues such as shipping delays and improving the information flow to customers.

For the agriculture sector, the deployment of 5G infrastructure is a pivotal step toward achieving high-tech agriculture. Given Vietnam's emphasis on agricultural investment, the application of 5G in agricultural production is crucial and highly advantageous.

Beyond these key sectors, 5G holds immense potential for advancing various domains, including smart traffic management, energy management, construction and mining, digital education, telehealth, retail smart solutions, and the development of smart cities.

Blockchain 

In Vietnam, blockchain technology has emerged as a cornerstone of technological innovation, presenting a myriad of compelling applications across various sectors. It serves as a secure platform for storing diplomas in the education sector and facilitates processes such as letters of credit, contract guarantees, and payments within the banking industry.

However, according to Dr. Nguyen Quoc Hung, the General Secretary of VNBA, the current implementation of blockchain in Vietnam primarily revolves around the financial domain, particularly digital assets and currencies. Other promising applications, such as traceability in agriculture, logistics, healthcare, and education, have not yet been widely adopted.

Looking ahead, Vietnam anticipates the emergence of new blockchain-based applications and a surge in the utilization of smart contracts. These self-executing agreements, encoded within lines of code, hold the potential to revolutionize traditional contract frameworks, enabling seamless transactions between buyers and sellers.

VR and AR

In the upcoming year of 2023, widespread adoption of VR and AR in Vietnam is anticipated in key sectors such as gaming, retail, and education. This technological integration will empower businesses to deliver innovative products and services, elevate customer experiences, and foster higher levels of engagement.

While the benefits of AR-VR are undeniable, the challenges of its widespread application in Vietnam persist. Experts often attribute this barrier to the complexity of the technology itself, as its advanced nature poses difficulties for universal adoption. However, globally recognized brands like IKEA, Houzz, and Wayfair have successfully harnessed AR-VR applications in sales, proving the potential of these technologies.

The key to unlocking the true potential of AR-VR in Vietnam lies in simplicity and addressing the daily needs of users. Modern users prioritize practicality over extravagant graphics or overly complex experiences. They seek usefulness above all else.

An effective combination that has emerged in the retail industry is "E-commerce & AR-VR." Recognizing this trend, AR-VR businesses in Vietnam, such as ADT Creative, Holomia, and CO-WELL Asia, have collaborated with e-commerce giants Lazada, Shopee, Tiki, and others to provide enhanced buying experiences for customers. By offering the best deals and increasing competition in the market, these collaborations tap into the immense potential of AR-VR technology.

Investors must be keenly aware of the tremendous opportunities presented by the application of AR-VR technology in Vietnam. The market holds significant potential for growth, and it is crucial not to overlook the investment prospects that arise from this emerging field.

Bottom-up

The significance of enabling technologies in Vietnam's economic development cannot be overstated. These technologies provide a solid foundation for growth, innovation, and competitiveness across industries. By leveraging advancements in information technology, telecommunications, and infrastructure, businesses in Vietnam can thrive in the digital age, with enhanced efficiency, productivity, and market expansion.

To seize the immense potential, we would like to invite investors to explore the high-tech sector in Vietnam and join our upcoming webinar, "Unlocking Business Opportunities in Vietnam". Reserve your spot today by visiting our LinkedIn or contacting our team directly. Together, we can unlock the vast potential and contribute to the continued success of Vietnam's economic transformation!

Vietnam's gaming industry is experiencing a remarkable surge, positioning itself as a key driver of the country's economic growth. Despite its promising future, certain challenges persist, such as navigating complex legal frameworks, optimizing tax incentives, and dispelling misconceptions surrounding gaming in Vietnam. However, the government is actively working to enhance the gaming landscape, attracting top talents and fostering further growth. With these efforts, Vietnam aims to unlock the full potential of its gaming sector, solidifying its position as a powerhouse in the global gaming market.

Highlights of Industry Performance

Vietnam is quickly emerging as a force to be reckoned with in the global gaming industry. In 2022, the world’s total estimated revenue from the gaming industry was valued at US$202.7 billion. With an estimated revenue of approximately US739.76 million in 2022, Vietnam is ranked among the top countries with the highest number of game downloads worldwide. 

According to the latest report by Statista, the revenue of the video games market in Vietnam is projected to reach $847.16 million in 2023 with mobile games being the biggest segment, which is expected to reach a market volume of $696.70 million at the end of this year.

Currently, the country has more than 50 million people playing games, equivalent to half of the population. According to the statistics of the Department of Broadcasting, Television, and Electronic Information, by December 2022, there are 195 enterprises in Vietnam licensed with G1 operating licenses. Till December 2022, the whole market has 871 G1 games and 12.127 licensed G2, G3, and G4 games, being released in Vietnam.

However, the games that are licensed for release in Vietnam are mostly games imported from abroad, with China accounting for 76% of the gaming market in Vietnam, attracting a large number of players. Meanwhile, according to the data of the Department of Broadcasting, Television and Electronic Information, Vietnamese games only account for 12% of the whole industry picture.

In terms of genre, it can be seen that Hyper Casual game is a game series that is fully exploited by Vietnamese game developers, accounting for more than 90% of the number of games produced in Vietnam from 2006 to 2023, followed by other genres such as FPS/TPS and MMO, Cardgames, amongst others.

Game genres by Vietnamese publishers. Source: Internet

The Driving Force Behind Vietnam's Gaming Industry Development

Rising Tech-talented Workforce

Vietnam has a large, growing pool of skilled workers in the technology sector, including game developers and designers, who are able to create high-quality gaming content that is competitive on the global market. A survey by TopDev, a tech job site in Vietnam, found that the number of tech workers in the country increased by 40% between the period of 2015 and 2019.

According to the Report on the Global Crypto Adoption Index 2022 (Global Crypto Adoption Index - GCAI) Vietnam ranked #1 out of 154 nations in the Global Cryptocurrency Adoption Index (well above the USA, China, and other European countries), reflecting a high degree of tech-savviness.

Increasing Internet and smartphone penetration

According to Kepios, at the start of 2023,  there were nearly 78 million internet users in Vietnam, and internet penetration stood at 79.1%. This represents an increase of 5.3 million users from the previous year, indicating a 7.3% growth rate. 

Mr. Ta Manh Hoang, Chairman of the Vietnam Digital Content Creation Alliance highlighted the potential of Vietnam’s digital content industry. In terms of mobile connectivity, Vietnam had 161.1 million active mobile connections in early 2023, equivalent to 164% of the total population. These figures represent a significant opportunity for businesses and organizations looking to break into the gaming market as the thriving digital landscape is posing countless possibilities for the gaming industry to expand its reach.

Government’s support

The Vietnamese government has actively supported the growth of the gaming industry through initiatives such as tax incentives, investment in infrastructure, and the establishment of tech parks and innovation centers. In 2016, the government issued Decision No 1755 QĐ-TTgapproved a strategy for the development of Vietnamese cultural industries to 2020, vision towards 2030, which identified the development of entertainment software and games as one of the 13 important sectors.

According to Mr. Le Quang Tu Do, Director of the Authority of Broadcasting, Television and Electronic Information, the game industry is an industry with good development potential in Vietnam, especially in the context that our country is promoting digital transformation and building the industrial revolution 4.0. The Ministry of Information and Communications (MIC) is building a strategy for game development in the 2022-2027 period with an aim to design policies to protect and promote game manufacturing in Vietnam, reducing its dependence on foreign-published games and increasing the income of domestic firms, while preventing violations in the field.

At the Vietnam Game Forum 2023 taking place on April 1, 2023, in Ho Chi Minh City, Mr. Do affirmed that MIC is working with other ministries to have more priority policies for the game industry in the future.

The MIC has worked with the Ministry of Finance to remove the imposition of special tax because it is unreasonable. In addition, the management agency is studying more testing mechanisms, submitting to the government to remove the license, administrative procedures in game publishing for domestic enterprises

Mr. Le Quang Tu Do - Director of the Authority of Broadcasting, Television and Electronic Information

Emerging Trends that will shape the gaming sector in 2023

Mobile Gaming Dominance

Mobile gaming is witnessing tremendous growth and dominance in Vietnam's gaming export market. With the widespread adoption of smartphones and affordable data plans, mobile games have become more accessible to a larger population. Vietnamese mobile game developers, such as VNG Corporation and Amanotes, have achieved significant success with games like "ZingSpeed Mobile" and "Tiles Hop: EDM Rush," gaining millions of downloads and generating substantial revenue both domestically and internationally.

Esports and Competitive Gaming

Esports and competitive gaming are gaining significant traction in Vietnam. The rise of esports tournaments, both local and international, has sparked interest and enthusiasm among Vietnamese gamers. In 2020, the Ministry of Culture, Sports, and Tourism of Vietnam officially recognized esports as a professional sport, providing legal recognition and support for the industry. This move is expected to attract more investment, create new job opportunities, and help to develop the esports ecosystem in Vietnam.

The Rise of Hyper-Casual and Casual Gaming

Hyper-casual and casual games have become immensely popular in Vietnam's gaming export market. After the astounding success of Flappy Bird in 2014, many Vietnamese game development companies, including VGames and Emobi Games, have gained tremendous recognition for their hyper-casual and casual games such as Bumper.io and Crazy Racing. The lightweight nature of the games combined with easy distribution among portable devices has made this a top trend within the industry.

Use of Virtual Reality (VR) and Augmented Reality (AR)

One of the most significant trends of 2023 that will have an impact on Vietnam's games industry is the progression of augmented reality (AR) and virtual reality (VR). As technology advances and VR/AR devices become more affordable, Vietnamese game developers are exploring immersive and interactive experiences. AR games such as "Monsters GO" by Vietnamese developer Nianticlabs or VR games like "Viblast VR: Virtual Reality Drumming" developed by Elroware Studio are all demonstrating the country's capability in creating great VR/AR gaming experiences. 

Leverage Cross-Platform and Cross-Play Experiences

As gaming platforms continue to evolve, cross-platform compatibility and cross-play experiences are emerging trends in Vietnam's gaming export industry. Developers are focusing on creating games that can be seamlessly played across multiple platforms, such as mobile, PC, and consoles. This trend not only expands the potential audience but also enables gamers to engage with their favorite games regardless of the device they own, enhancing player engagement and driving exports.

Challenges and Implications for Vietnamese Companies

Fostering the Coordination Between Game Businesses

The Vietnamese game industry faces its most formidable challenge in the form of a glaring lack of coordination among game businesses. This absence of collaboration hampers the industry's ability to harness the strengths of individual enterprises, resulting in a discouraging reality where Vietnamese gamers indulge in foreign games while games developed by local businesses cater predominantly to international audiences.

In the Vietnam Game Day 2023 (Vietnam GameVerse 2023) which took place on April 1st and 2nd, General Director Le Quang Tu Do emphasized the event's significance as a platform for manufacturers, publishers, managers, and gamers to engage in candid discussions about the industry's current state and its future prospects. The occasion grants domestic companies the opportunity to forge alliances and support one another in their quest for global recognition. Simultaneously, the international presence of major players in the gaming industry serves as a catalyst, drawing attention to the potential and openness of the Vietnamese market and inspiring greater investment.

The development of games necessitates not only the support of the state but also financial resources and technological assistance from developed nations. Thus, the Director of VTC stresses that attracting more investment will pave the way for Vietnam to produce superior, one-of-a-kind products—infusing the industry with resilience and revolutionizing its landscape.

Paying attention to well-trained game design personnel

Amidst the vibrant and fast-paced growth of Vietnam's game industry, a critical challenge remains: the scarcity of locally designed games that truly meet international standards. In a recent survey conducted by LacBird, a startup specializing in user experience research and technology application development, it was revealed that the majority of game studios in Vietnam rely on an outsourcing model. Their involvement is limited to graphics processing, game programming, or even game cloning. Consequently, the industry suffers from a dearth of game designers equipped with the necessary expertise to conceive, craft, and deliver complete, remarkable, and distinctive gaming experiences. Essentially, Vietnam finds itself with an abundance of game programmers but a scarcity of true game designers.

Thus, to achieve the ambitious goal of bringing Vietnam’s gaming industry to the global map, the country must prioritize investments in cultivating a pool of well-trained game designers. These individuals should possess a comprehensive skill set and the adaptability to keep pace with ever-evolving technology and market trends. By nurturing such talent, Vietnam can unlock its full potential and establish a commanding presence in the global gaming arena.

Tax and Incentive policies

While Vietnam has established itself as a global powerhouse in the production and distribution of games, especially Casual and Hyper-casual games, Mr. Thai Thanh Liem, the CEO of Topebox, one of Vietnam's leading game companies highlighted that local companies face onerous procedures and extensive waiting times to obtain publishing licenses for these games. The current regulatory framework lacks flexibility and fails to keep pace with the fast-paced nature of the industry. Addressing these bottlenecks, Mr. Le Quang Tu Do emphasized that the Ministry of Information and Communications is currently formulating a comprehensive strategy for the development of the game industry. 

Turning attention to the issue of foreign games, Mr. Le Quang Tu Do acknowledged the prevalence of pirated games entering Vietnam. The Ministry of Information and Communications has taken proactive measures by collaborating with Apple Store and Google Store to combat cross-border piracy. To date, negotiations have resulted in the removal of 250 pirated games. Going forward, the Ministry will intensify its efforts to curtail piracy, including cracking down on payment intermediaries. At the end of each month, the Ministry will provide banks and payment channels with lists of pirated games, ensuring that payments for such games are prohibited.

By addressing the challenges surrounding taxation, licensing, and piracy, Vietnam's game industry can unleash its true potential and position itself as a thriving force in the global gaming landscape.

Final Thoughts

Vietnam's gaming industry presents a compelling opportunity for investors seeking to capitalize on a rapidly growing market. With its impressive growth trajectory and the government's proactive measures to support the industry, Vietnam has emerged as a promising hub for gaming ventures. However, navigating the intricacies of this dynamic landscape requires expertise and strategic guidance.

By partnering with Viettonkin, investors gain access to specialized knowledge, comprehensive market insights, and tailored strategies that can drive their success in the gaming industry. Whether it's understanding the legal and regulatory frameworks, leveraging tax incentives, or debunking misconceptions, Viettonkin's experienced team is equipped to guide investors every step of the way.

Don't miss the opportunity to be part of Vietnam's gaming revolution. Contact Viettonkin today and embark on your path to success in this flourishing sector.

In the face of the formidable challenges posed by global economic uncertainty, Vietnam's economy finds itself amidst a period of hardship. However, both the government and businesses are unwavering in their determination to steer the nation's economy through these turbulent times. Despite the trials encountered in the first half of the year, a renewed sense of optimism pervades the nation as the second half beckons with promise and potential. The revitalization of the tourism and service sectors emerges as a transformative force, casting rays of hope onto the economic landscape. With unwavering determination and concerted efforts, Vietnam remains poised to overcome obstacles and foster a resilient and prosperous economy.

Overview of Vietnam’s Economy in 2022 and Forecasts for 2023

GDP Growth

Based on the General Statistics Office, Vietnam's GDP in 2022 reached US$409 billion. This figure is slightly higher at US$413.81 billion in the calculation of the IMF. With this, Vietnam ranks 5th in Southeast Asia and 37th in the world in terms of economic size. 

According to the latest World Economic Outlook report released by the International Monetary Fund (IMF), in 2023, Vietnam’s GDP is poised for a growth rate of 5.8%, securing its position as the second fastest-growing economy in Southeast Asia, alongside Cambodia. In light of this positive outlook, the IMF anticipates Vietnam's GDP to reach approximately $449.09 billion by  the end of 2023.

Taking a different vantage point, the Asian Development Bank (ADB) offers a nuanced analysis of Vietnam's economic landscape. After a remarkable GDP recovery of 8% of the country in 2022, the ADB predicts a slight moderation to 6.5% in 2023. This adjustment is attributed to various factors, including the reverberating effects of the worldwide economic recession, the tightening of monetary policies in developed nations, and the repercussions stemming from global geopolitical tensions. While this tempered growth projection indicates some challenges on the horizon, it does not diminish Vietnam's overall economic trajectory.

FDI Inflows

In 2022, the total newly registered capital, adjusted and contributed capital to purchase shares, and capital contribution of foreign investors in Vietnam reached nearly 27.72 billion USD.

Notably, the amount of disbursed capital reached a record of more than 22.4 billion USD, up 13.5% compared to 2021. This is the highest amount of foreign direct investment capital realized in the past 5 years.

Foreign Direct Investment (FDI) inflows continue to be identified as one of the pillars of Vietnam’s economic growth in 2023. According to the leaders of the Foreign Investment Department, FDI attraction in 2023 can reach US$36-38 billion, up 37% compared to the year 2022. 

Inflation rate

According to the General Statistics Office, in 2022, core inflation increased by 2.59% compared to 2021, lower than the average CPI (increased by 3.15%), this reflects consumer price fluctuations mainly due to food prices, gasoline, oil, and gas increases.

The incessant rise in inflation since September 2022 has reached a turning point in January 2023, owing to waning consumer demand. This development is welcomed news for the nation's financial stability. As April 2023 unfolded, Vietnam witnessed a remarkable drop in its annual inflation rate, sinking to a 12-month low of 2.81%, down from the previous month's figure of 3.35%. This decline can be attributed to the downward trajectory of transport prices, primarily influenced by the fall in gasoline costs.

Buoyed by this positive trend, experts at ACB Securities offer reassuring insights, forecasting that there will not be a surge in inflation at least in the first half of this year and the government's concerted efforts to maintain control over inflation will yield fruitful results, with the inflation rate expected to remain within the manageable range of 3-4.5%. This aligns with the government's overarching goal of keeping inflation below the 4.5% threshold for the entirety of this year.

Source: Trading economics, General Statistics Office of Vietnam.

Vietnam 2023 Economic Outlook

Challenges Confronting Vietnam's Economic Growth in 2023

As of now, Vietnam is facing a myriad of challenges as it strives to achieve its GDP growth target of 6.5% set by the National Assembly for 2023. The latest data from the General Statistics Office (GSO) paints a picture of a volatile economic recovery, placing immense pressure on the forthcoming quarters to meet the government's socio-economic objectives for the year.

The socio-economic climate in the first quarter of 2023 unfolded against the backdrop of a global economy characterized by intricate fluctuations and instability. Although global inflation has somewhat subsided, it remains elevated, exerting its influence on the consumption patterns of key trading partners and subsequently impacting Vietnam's economy. Furthermore, the early 2023 bankruptcy of certain banks in the United States and Europe has significantly eroded people's trust in the banking system, while central banks continue to implement stringent monetary policies. Compounding these challenges are ongoing conflicts such as the situation in Ukraine, alongside disruptions in supply chains and escalating prices of essential raw materials. These factors collectively exert substantial pressure on the growth trajectory of Vietnam's economy.

Economists within the country also highlight the persistent inflationary pressures, citing delays in the implementation of the recovery package and warning against the sustainability of inflation moderation in other countries. Moreover, businesses are grappling with increasing risks, driven by shrinking foreign market demand and the gradual drying up of cash flow following two years of the pandemic. Accessing capital has become particularly arduous for businesses, exacerbating their predicament.

Government's Resilience in Rebuilding Vietnam's Economy

To combat the volatility in both domestic and international markets, the government has proactively formulated various measures to stimulate economic growth. These initiatives encompass tax reductions, monetary policies, and actions aimed at alleviating the current challenges faced especially with the real estate market.

Recently, the National Assembly Standing Committee announced the tax reduction policy in the second half of 2023, starting from 1st July to reduce the value-added tax (VAT) from 10% to 8% with the applicable scope of goods and services as of 2022. The impact of reducing state budget revenue in 2023 is expected to be about VND 24 trillion. Additionally, The State Bank of Vietnam issued Decision No. 576/QD-NHNN dated March 31, 2023, on the maximum interest rate for short-term loans in Vietnam dong, accordingly, the maximum short-term lending interest rate in Vietnam dong of credit institutions for borrowers for a number of economic sectors and fields will be reduced from 5.0%/year to 4.5%/year. According to statistics of the State Bank, by the end of February 2023, the average lending interest rate for new loans has decreased by 0.43% /year compared to the end of 2022, with 22 commercial banks reporting reductions in their average lending interest rates. This strategic adjustment aims to stabilize Vietnam's financial market and foster a more dynamic and efficient business environment.

In conjunction with the administrative measures outlined above, the government has also provided guidelines for banks to facilitate the rescheduling of loan repayments for real estate developers and businesses, among others. While the specifics of these forbearance proposals are still undergoing review, they signal the government's commitment to supporting and nurturing the resilience of key sectors during these challenging times.

A Bright Spot on the Economic Landscape in 2023

Amid the global economic downturn and challenges in the domestic market, an optimistic projection was highlighted during the seminar "Update the world economic and financial outlook in 2023 and its impact on Vietnam," jointly organized by the Ministry of Foreign Affairs and Standard Chartered Bank in March 2023. Standard Chartered Bank expressed its confidence in Vietnam's economic potential, particularly emphasizing the revival of the tourism industry as a key driver of growth.

The second half of this year is likely to see China's economy recover faster than expected. This should lead to an improvement in exports. The reopening of tourism will also help the service industry grow again. We believe in Vietnam's strong growth potential in the medium term

Mr. Tim Leelahaphan, an economist in charge of Thailand and Vietnam, at Standard Chartered Bank.

Further reinforcing this positive outlook, the World Bank (WB) provided recommendations for reforms to harness the potential of Vietnam's service sector in its March 2023 edition of the "Taking Stock" report titled "Harnessing the Potential of the Services Sector or Growth " The report highlights the main driver of growth will be domestic demand, likely to be impacted by higher inflation estimates (average 4.5%) in 2023..

The service sector has already emerged as a cornerstone of Vietnam's economy, accounting for 44.6% of GDP in 2019, up from 40.7% in 2010. WB senior economist, Dorsati Madani, highlights the pivotal role the service sector can play in achieving Vietnam's sustainable economic growth and its aspiration to become a high-income economy by 2045. To unleash the full potential of the service sector, priority should be given to dismantling trade and foreign investment barriers, initiating reforms to enhance competition, and improving access to finance for domestic firms. Additionally, services that can catalyze growth in other industries, particularly manufacturing and processing, should be given due attention.

Final Thoughts

With an optimistic outlook for the second half of 2023, supported by the recovery of the tourism industry and a focus on maximizing the potential of the service sector, Vietnam stands poised to navigate its economic landscape with resilience and determination. By seizing opportunities, implementing strategic reforms, and aligning fiscal and monetary policies, Vietnam is positioning itself for sustainable growth and economic prosperity.

Investors looking for successful investment opportunities in Vietnam's promising market can benefit greatly from Viettonkin's consulting service. With a deep understanding of the Vietnamese market, regulatory landscape, and industry trends, Viettonkin can provide invaluable guidance and support for investors. From market research to legal assistance, our comprehensive services empower investors to make informed decisions and navigate the complexities of Vietnam's business environment. Partnering with Viettonkin allows investors to unlock the full potential of their investments and capitalize on Vietnam's thriving economy. Don't miss out on this opportunity to maximize your investment success in Vietnam—choose Viettonkin for expert insights and strategic guidance.

The fact is, in recent decades, Vietnam has emerged as a significant player in the global gaming industry. However, to elevate Vietnam's gaming industry to the same level of recognition as Japan's manga or Korea's K-pop, concerted efforts are needed from Vietnamese game developers, publishers, and the government to promote the industry's potential and unique gaming products. By highlighting the country's unique cultural identity and creative talents, Vietnam can showcase its soft power to the world and join the ranks of nations with significant gaming exports.

Highlights of Vietnam’s Gaming Exports

Vietnam’s Gaming Export Revenue

According to Newzoo's forecast, the global gaming market is projected to exceed $200 billion by 2023, representing a significant milestone for the industry worldwide. In Vietnam, the game industry is experiencing substantial growth and expansion, fueled by the advancements in information technology and the ongoing process of digital transformation. This growth presents Vietnam with promising prospects to establish itself as a lucrative export industry with high value-added potential.

Latest report by the General Statistics Office of Vietnam revealed that in 2020, Vietnam's gaming exports reached $195 million, a significant increase from $130 million in 2019. The United States is Vietnam's biggest market for gaming exports, accounting for more than 50% of the country's gaming export revenue. Other major markets include Southeast Asia, Japan, South Korea, and Europe.

As of 2021, Vietnam ranked seventh in the world in terms of the dollar value of video games-related equipment exported, worth $853.2 million, equivalent to 3.2% of global exports. While this is still a relatively small percentage compared to China ($14.6 billion), Poland ($1.5 billion), and the US ($1.17 billion), the country has been showing significant potential for growth in the gaming industry, with continuous success in creating games that appeal to both local and international audiences. 

The significance of Vietnam's gaming industry is further supported by the App Annie 2020 rankings. The country claims the 7th position globally and secures the 2nd spot in Southeast Asia for the highest number of game downloads. Additionally, Vietnam stands strong as the 3rd largest game application manufacturer in the region. These statistics emphasize the impressive growth and influence of Vietnamese gaming studios, with every 25 games downloaded originating from local developers.

Major Game Developers

Amanotes

Founded in 2014, Amanotes has become the world’s #1 Music Games Publisher, with over 2.8 billion downloads worldwide and 120 million monthly active users. While Amanotes’ games are popular in Vietnam, their main market is global. In Q4 2019, Amanotes was the top-downloaded mobile game publisher from Southeast Asia across both Android and iOS. They also ranked 8th in game downloads for Q4 2019 in the United States. On an international level, Amanotes is among the top 15 mobile game publishers and the top 20 publishers of mobile apps across all categories.

VNG Corporation

VNG expanded its presence beyond Vietnam and successfully entered other Southeast Asian markets. Their games, including Sky Garden, Audition, and CrossFire, gained popularity in countries like Indonesia, Thailand, and the Philippines. The company has also established partnerships with major international game developers and publishers, allowing them to bring successful global titles to the Vietnamese market. Notably, VNG has partnered with US-based Riot Games  to publish League of Legends in Vietnam, contributing to the game's popularity and the growth of the Vietnamese esports scene.

Hiker Games

Hiker Games is a Vietnamese game development studio known for its involvement in exporting games to various markets. The company's titles, such as The Darkest Nightmare and Fantasy Stars, have found success in markets like Southeast Asia, Japan, South Korea, and China. Notably, in 2018, Caravan War made a significant impact by securing a spot among the Top 10 most downloaded games in both the Chinese and Korean markets. Achieving such recognition is no small feat, especially considering the formidable dominance of these markets as leading hubs for mobile gaming worldwide.

Topebox

Over the past 10 years, the company has created more than 80 games and attained a remarkable track record of over 30 notable achievements on global charts, with more than 100 million downloads worldwide. Some of the most popular games published by Topebox include Politaire which was featured by Apple for Game of the Year on App Store in 2016, Pocket Army (the first Vietnamese game to enter the top of the highest-grossing apps in the US), Gun & Dungeons (top 9 “Best user choice” and “Best game of 2022” by Google Play), among others.

Challenges and Implications for Vietnamese Companies Eyeing on foreign markets

Challenges Facing Vietnamese Companies

Fall short of Quality and Production Standards

Maintaining high-quality standards in game development is essential for success in foreign markets. However, many Vietnamese companies may face obstacles in meeting the quality expectations of more mature gaming markets, such as North America, Europe, or Japan.

One of the most prominent examples is the case of Studio 99, a Vietnamese game development studio. In 2018, the company encountered difficulties when exporting its game “ Lost Route” to the global market. The studio then had to invest additional time and resources to improve the game's graphics, gameplay mechanics, and overall polish to meet the expectations of international players.

Limited Distribution and Marketing Channels

A lack of necessary networks and expertise to navigate international distribution and marketing processes is undoubtedly detrimental to the expansion of any game product in any foreign market.

In 2019, Appota, a Vietnamese mobile game publisher, encountered difficulties in expanding its presence and promoting its games such as “Gunny Mobi" and "Dawn Break: The Flaming Emperor” in the Chinese market. This was partly due to the limited slots for promotion as distribution platforms in China typically prioritize the most promising and lucrative titles. Appota, as an outsider in the Chinese market, faced the challenge of convincing the distribution platforms that their games were worth allocating valuable promotion slots, which required demonstrating the potential for high user engagement and revenue generation.

Incomprehensive Understanding of Language and Localization

Adapting games to the linguistic and cultural preferences of foreign markets is significant. However, Vietnamese companies often face difficulties in translating and localizing their games effectively, which can result in a lack of appeal and understanding among foreign players.

When VNG Corporation, one of Vietnam's leading game developers, first entered the Indonesian game market with Sky Garden in 2017, they faced critical localization challenges that required a significant investment of resources. As the localization process involves more than just direct translation; it requires adapting the game's content, user interface, dialogues, and instructions to ensure they are culturally appropriate and resonate with the target audience. The company had to invest resources in hiring professional translators and linguists who could accurately convey the game's content in Indonesian while maintaining its original intent and quality.

How should companies adapt for success?

Focus on Quality and Competitiveness

To thrive in the highly competitive global gaming industry, Vietnamese game developers must ensure their games meet international quality standards. Improving graphics and audio quality, optimizing performance, and incorporating innovative gameplay elements will help them stand out from competitors. By offering unique features and polished experiences, Vietnamese games can attract a dedicated player base.

Conduct Thorough Market Research and Localization

Understanding the target market is essential for success. It’s important for Vietnamese game companies to conduct comprehensive market research to identify the preferences, demographics, and trends of their target audience. This information can guide them in adapting their games effectively. Localization efforts should go beyond language translation and consider cultural nuances, player behaviors, and market-specific modifications to create a truly immersive experience for players.

Establish Distribution and Marketing Channels

Having reliable distribution and marketing channels is crucial for reaching the target audience. Vietnamese companies should consider partnering with international publishers or distributors who have experience in the target market. Leveraging digital platforms, app stores, and social media advertising can significantly amplify their reach.

Ensure Regulatory Compliance

Compliance with local laws, regulations, and industry standards of the target country market is absolutely paramount for Vietnamese game companies seeking to export their products to foreign markets. In the context of expanding their operations internationally, these companies often face legal barriers to market entry that can pose significant concerns. To overcome these challenges, it is crucial for Vietnamese game companies to consult with market entry consultants who possess expertise in navigating foreign markets. By working closely with market entry consultants, Vietnamese game companies can ensure they are well-informed about the legal landscape and can make informed decisions about modifying their games to meet the statutory requirements for ease of market entry.

The Bottom Line

As the gaming industry continues to mature, it is believed to become a major contributor to Vietnam's economy and a force to be reckoned with on the global stage. The country's talent pool, coupled with initiatives like tax incentives and funding programs, creates an ideal environment for innovation and entrepreneurship.

Investors looking for lucrative opportunities in the gaming industry need to look no further than Vietnam. Investing in this industry could yield significant returns for investors, but it is crucial to have a reliable and experienced consulting partner to guide you through the investment process. At Viettonkin, we can provide you with customized solutions that meet your specific investment needs, ensuring that you make informed decisions and avoid costly mistakes. Our team of experts is here to assist you with every step of your investment journey, from market research and strategy development to due diligence and risk assessment.

Together, we can make your investment in Vietnam's gaming industry a profitable and rewarding experience. Contact Viettonkin Consulting today!

As investors flock to the country's promising markets, they may find themselves navigating unfamiliar communication styles, traditional values, and business practices. By exploring the impact of Vietnamese culture on FDI inflow, we can uncover valuable insights into the country's dynamic market and gain a better understanding of how cultural differences can shape successful cross-border collaborations. In this blog article, we will delve into the fascinating interplay between Vietnamese culture and FDI inflow, and explore how investors can harness cultural insights to unlock new opportunities in Vietnam's thriving economy. 

Highlight of Vietnam’s FDI Inflow

Vietnam's thriving economy and strategic location have always been an attractive hub for foreign investors. With its young and dynamic workforce, business-friendly policies, and stable political environment, Vietnam has emerged as a prime investment destination in Southeast Asia.

According to the Foreign Investment Agency under the Ministry of Planning and Investment (MPI), Vietnam's upward trend in attracting foreign direct investment (FDI) is set to continue in 2023. The agency has projected that Vietnam will likely attract a staggering $36 ~ 38 billion in FDI next year, surpassing the impressive record of $22.4 billion in 2022.

Ways Culture Influence FDI Inflow in Vietnam

Business Etiquette and Social Norms

In the dynamic realm of foreign direct investment (FDI), the significance of cultural nuances cannot be overstated. Within the vibrant business culture of Vietnam, an age-old concept known as guanxi holds the key to unlocking immense opportunities for foreign investors.

It’s critical to know that Vietnamese business people place great importance on face-to-face meetings, social gatherings, and informal settings to cultivate relationships. They invest time and effort in getting to know their partners, demonstrating respect, trustworthiness, and shared values. Regular communication and reciprocal favors are integral to maintaining guanxi. These relationships usually extend beyond mere business transactions, incorporating social activities and personal interactions. Through established relationships with local partners, investors can gain insights into potential investment projects, mitigate information asymmetry, and uncover hidden opportunities that may not be easily accessible otherwise.

Traditional Values and Beliefs

Understanding and respecting Vietnamese traditional values and beliefs when conducting businesses is more than a cultural gesture, it is a strategic move that enhances market acceptance and competitiveness. However, it’s important to note that this recognition goes beyond mere acknowledgment and demonstrates a genuine effort to integrate into the Vietnamese business environment.

In Vietnamese culture, consumers tend to have a higher opinion on businesses that demonstrate a deep understanding of their cultural heritage and preferences. This alignment can be reflected in various aspects, including product development, marketing strategies, customer service, and corporate social responsibility initiatives, etc. Investors who pay close attention to and embrace these traditional values can establish strong and meaningful connections with their Vietnamese counterparts and consumers, which helps pave the way for long-term success in the Vietnamese market.

Hierarchy and Status

Hierarchy and status influence the dynamics of business relationships in Vietnam. As Vietnamese culture places a strong emphasis on showing deference to authority and seniority, investors who display this respect are often perceived as culturally aware and sensitive. This allows investors to navigate the appropriate channels and engage with the right individuals, establishing a strong foundation for business interactions and earning the trust of their Vietnamese counterparts.

By comprehending the Vietnamese hierarchical system, investors have the opportunity to foster a positive image among local partners, employees, and stakeholders. This positive perception paves the way for smoother business operations and garners increased support, ultimately contributing to the success of their ventures in Vietnam.

How should investors adapt for success?

Making FDI decisions is a complex and challenging process that requires careful consideration. To navigate through the complex cultural tapestry and ensure a successful investment in Vietnam’s dynamic market, investors often rely on consulting services for support. At Viettonkin, our consulting service encompasses five essential phases: Market Readiness Assistance, Initial Setups & Establishment of Operation, Transition Assistance, Optimization & Improvement, and Evaluation & Strategy Consulting. In each phase, we highlight the importance of local culture in shaping one’s development strategies and how investors should adapt and leverage those cultural factors for long-term investment success. 

Phase 1: Market Readiness Assistance

The initial phase, Market Readiness Assistance, is the gateway to success, where it highlights the importance of having a comprehensive understanding of Vietnamese culture and the local consumer market. It gives investors a competitive advantage, allowing them to navigate the cultural landscape with finesse, harmonizing their strategies and offerings with local preferences. This can be done by engaging in thorough market research to gain insights into consumer behaviors, market dynamics, and cultural factors impacting purchasing decisions; collaborating with local consultants, advisors, or business partners and leveraging their extensive expertise to gain valuable guidance and facilitate cultural integration. Investors can even immerse themselves in Vietnamese culture by engaging with locals, attending cultural events, and exploring the local lifestyle. This hands-on experience helps develop a deeper appreciation and understanding of cultural values, traditions, and consumer behaviors.

Additionally, Vietnam is home to a variety of religious beliefs, including Buddhism, Christianity, and several minority religions. However, a significant portion of the population holds personal beliefs without adhering strictly to any particular orthodox religion. This unique religious landscape adds another layer of complexity to consumer behaviors and preferences. Incorporating religious sensitivity into consumer research allows investors to identify potential opportunities and challenges associated with specific target markets, tailoring their messaging, branding, and communication strategies to effectively engage with different religious communities and foster a sense of inclusivity.

Phase 2: Initial Set-up & Establishment of Operation

Moving to the second phase, to navigate through these cultural factors successfully, investors should prioritize cultural intelligence and adaptation. Conducting thorough cultural research and seeking guidance from local consultants or advisors with deep cultural understanding can provide valuable insights and strategies. It is important to customize corporate functions and operational systems to align with local norms, values, and work practices. This includes tailoring recruitment and management practices to emphasize teamwork, fostering a collective work environment, and promoting professional development opportunities. Adhering to local legal requirements and regulations is also critical for a successful establishment of operations.

Phase 3: Transition Assistance

Transition Assistance is a pivotal stage where cultural factors wield tremendous influence. It’s critical for investors to recognize the paramount importance of developing a localized product strategy that speaks directly to the aspirations and needs of the local population. It addresses unique market dynamics, adapts to local competition, and differentiates the product from standardized offerings. This strategic approach not only boosts consumer satisfaction and loyalty but also establishes a strong market presence, driving business growth and maximizing the chances of investment success.

Another critical aspect during this phase is the development of a localized corporate culture. Setting up a localized corporate culture involves understanding and adapting to the cultural nuances of Vietnam's business landscape. It entails embracing local customs, communication styles, and hierarchical structures prevalent within Vietnamese organizations. Building a strong localized corporate culture, investors are strengthening their reputation, creating a competitive advantage and ultimately setting a solid foundation for long-term success in the dynamic market of Vietnam. It's an investment in a shared destiny, a tribute to the profound respect for Vietnam's heritage, and a testament to the transformative power of cultural integration.

Phase 4: Optimization & Improvement

In the Optimization & Improvement phase, it’s important to continue to analyze cultural factors that may affect business performance as well as identify areas for improvement by considering cultural nuances in customer feedback, employee engagement, and market trends.

One key aspect investors should focus on in this phase is customer feedback as cultural nuances can shape customers' preferences, expectations, and purchasing behaviors. By closely examining customer feedback, investors can identify patterns and insights that are influenced by cultural factors so that they can tailor products, services, and marketing approaches to better resonate with the target audience.

At Viettonkin, we also help investors closely monitor market trends and shifts influenced by cultural factors. Cultural preferences, social values, and emerging trends can shape consumer demand and market dynamics. By analyzing these trends, we help investors stay informed and adapt their strategies and processes accordingly. This includes making informed decisions about product development, branding, pricing, and distribution channels, ensuring alignment with cultural expectations and preferences.

Phase 5: Strategy Consulting

Lastly, in the Evaluation & Strategy Consulting phase, investors must pay close attention to the evaluation process of the effectiveness of existing strategies while looking for strategies for future growth. This stage demands a meticulous analysis of market trends, consumer behavior, and the ever-evolving cultural landscape. It is imperative to acknowledge that cultural shifts, whether stemming from within or influenced by external forces, wield tremendous power in shaping business dynamics, creating fresh opportunities or presenting challenges. Thus, keeping a close eye on these shifts, including social, technological, and demographic changes can provide investors with comprehensive insights for strategic decision-making. At Viettonkin, our evaluation and consulting services assist investors in refining their long-term strategies to remain responsive to cultural changes, ensuring their continued relevance and competitive edge in the market.

Final Thoughts

To sum up, the cultural factors play a significant role in shaping foreign direct investment (FDI) inflows in Vietnam. Investors who take the time to understand the local culture and its impact on business practices are more likely to succeed in the market. Whether it's navigating the language barrier, incorporating traditional values, or tailoring marketing strategies to resonate with local consumers, cultural insights can provide valuable guidance for investors breaking into the market.

To ensure a successful investment in Vietnam, it's crucial to work with a consulting service that deeply understands the local culture and has experience navigating the market. At Viettonkin Consulting, we provide a range of services to help investors succeed in Vietnam, from market research and strategy development to legal and financial support. Contact us today to learn more about how we can help you achieve success in Vietnam's dynamic market.