From my perspective after 15 years on the ground, Vietnam's banking sector is undergoing a period of remarkable expansion, making it a focal point for global financial institutions from Southeast Asia and beyond.

Reflecting the Vietnamese market's potential, the updated figures from the State Bank of Vietnam (March 30, 2025) show that the country's current structure hosts 9 wholly foreign-owned banks, 56 bank branches in Vietnam, 63 representative offices, and 2 joint ventures.

With this growing international presence in Vietnam, I'm seeing many foreign investors actively exploring the best strategies for establishing a foothold, with many starting their journey in key hubs like Ho Chi Minh City.

This article, drawing insights from our comprehensive Ebook, is where I share the practical guidance on the regulations, entry modes, and strategies I believe you will need to successfully establish a bank in Vietnam.

Key Takeaways:

• A Thriving Market: I believe Vietnam’s strong macroeconomic performance provides a stable and high-growth environment for foreign banks to operate and expand their banking services.
• Multiple Entry Options: Foreign investors can choose from several entry modes, including a representative office, bank branches in Vietnam, a wholly foreign owned bank, and a joint venture bank, each with distinct strategic implications that we'll discuss.
• Updated Legal Framework: Recent legislative changes have created new opportunities and requirements. From what I've seen, the Law on Credit Institutions 2024 and Decree 69/2025 have opened up opportunities by raising the total foreign ownership limits in specific cases.
  In addition, the Law on Anti-Money Laundering 2022 imposes stricter requirements regarding customer due diligence and international cooperation. We've also seen regulations on IT system security and risk management also been tightened through legal documents such as Circular 50/2024 and Circular 62/2024.
• Strategic Growth Beyond Entry: I always stress that success in Vietnam extends beyond the initial establishment license to include strategic equity investments, M&A, and capitalizing on the rapidly growing digital banking and fintech sectors.
• Overcoming Key Challenges: Establishing a presence in Vietnam requires overcoming significant hurdles such as high legal capital requirements, a lengthy approval process, and strong domestic competition.

I. Choosing Your Entry: Key Modes For Foreign Banks in Vietnam

From my experience managing client relationships at Viettonkin, the first and most critical decision an investor makes is choosing the right entry structure. This choice dictates your operational scope, capital requirements, and timeline.

1. Representative Office Or Branch Office

This is the most basic presence, limited to liaison and promotional activities, not revenue generating activities. A representative office is not considered a separate legal entity.

The primary advantage is the quick licensing time of just 30 to 60 days.

2. Foreign Bank Branches In Vietnam

A branch in Vietnam is permitted to conduct business operations but requires an unequivocal guarantee from its parent bank.

The licensing process is extensive, and I typically advise clients to plan for 200 to 250 days to secure the necessary banking license, and its activities are restricted by specific SBV rules. These legal entities must be fully backed by their head offices in foreign countries.

3. Wholly Foreign-Owned Bank In Vietnam

This structure offers the highest degree of operational autonomy and permits a full range of banking services.

It demands a significant minimum charter capital of at least VND 3,000 billion (approximately USD 130 million) and strict adherence to international practices. To get approval, applicants must submit audited financial statements and detailed business plans.

4. Joint Venture Bank And Business Cooperation Contract

A joint venture bank involves a partnership with one of the local Vietnamese banks, providing immediate market insight.

The foreign ownership ratio is typically 30%, though this can rise to 49% for restructuring banks. A business cooperation contract offers an alternative collaboration model without forming one of the new legal entities, allowing for the sharing of jointly controlled assets for specific projects.

II. Understanding The Regulatory Framework: Key Laws Governing Your Entry

Once you have a potential entry mode in mind, understanding the legal landscape is the next critical step.

The legal documentation can seem straightforward until it meets Vietnamese regulatory reality. The Law on Credit Institutions 2024 has introduced stricter licensing and governance standards, while new circulars from the State Bank of Vietnam (SBV) address everything from M&A rules (Circular 62/2024) to cybersecurity for online banking (Circular 50/2024).

A critical development is Decree 69/2025. According to VOV English (2025), this decree officially expands the foreign ownership ratio, raising the cap to 49% for banks undergoing banking restructuring.

This is a significant shift. S&P Global (2024) previously noted how the old 30% cap held back foreign investment.

This change reminds me of a client whose investment was nearly blocked by the old rules. From our experience, we engineered an alternative ownership structure using nominee arrangements that fully protected his investment activities while ensuring compliance.

III. Mastering The Approval Process: From Application To Operation

I always tell my clients that getting a banking license from the State Bank of Vietnam (SBV) is no small task. Foreign investors should expect a rigorous multi-stage process that requires careful preparation and patience.

1. The journey begins with a detailed application, where banks must submit audited financial statements, a business plan, and a comprehensive risk management framework.
2. Once the application is submitted, the SBV conducts an extensive review, focusing on the parent bank's financial health, compliance with international standards, and leadership background.
3. If successful, the SBV issues the establishment license. However, to officially launch, banks must also obtain an Investment Registration Certificate (IRC), complete legal capital contributions, and implement all necessary systems.

Based on our experience, these are the approval timelines:

• Representative Office: 30–60 days.
• Bank Branch: 200–250 days.
• Wholly Foreign-Owned Bank: 200+ days, depending on complexity.

IV. Growing Your Presence: Strategic Insights For Long-Term Success

I always emphasize that securing a license is the beginning, not the end. Long-term success in Vietnam involves strategic growth.

1. Strategic Equity Investments In Banks In Vietnam

Strategic investors can acquire up to 30% of a local bank's charter capital, or up to 49% in restructuring cases. I've seen these equity investments are crucial for driving digital transformation and improving corporate governance, allowing a foreign partner to influence strategy.

2. Mergers And Acquisitions In The Banking Sector In Vietnam

M&A is a powerful tool for rapid market entry and expansion that I often recommend to clients. According to VIR’s Vietnam 2025 M&A Outlook: Trends, Deals, and Opportunities, in 2024 the sector saw 96 deals worth USD 3.2 billion, fueled by capital contributions from Japan, Korea, and Singapore.

The acquisition of GPBank by VPBank in 2025 is a notable example of this trend.

3. Digital Banking And Fintech Collaboration

With Decree 94/2025 establishing a regulatory sandbox, I see that Vietnam is actively encouraging innovation. This has led to powerful strategic partnership collaborations between banks and fintech platforms like MoMo and bePOS, creating new opportunities in digital financial services.

V. Anticipating The Hurdles: Key Challenges In The Vietnamese Market

While the opportunities are significant, so are the challenges. I always prepare investors for the reality of high legal capital requirements and lengthy, complex approval processes.

The domestic banking sector is highly competitive, especially in the digital arena, and compliance with international practices like Basel and IFRS adds costs.

I often advise clients that strategic planning is key. Take our long-term manufacturing client who trusted us with their expansion across five provinces.

The challenge was immense, but our systematic regulatory planning and proactive compliance monitoring led to a 300% growth in their investment value over four years. This same proactive approach is essential for navigating the banking sector.

VI. Your Roadmap To Success

From my experience, I can say that entering Vietnam’s banking sector is a promising but complex venture.

Understanding the entry modes, mastering the regulatory landscape, and planning for strategic growth are the keys to turning that promise into a successful reality.

Get the full step-by-step guidance on regulations, licensing, and strategies in our Ebook Foreign Bank Presence in Vietnam. 

Download the complete guide here: Foreign Bank Presence In Vietnam Ebook.

Frequently Asked Questions

How long does it actually take to obtain both the Investment Registration Certificate (IRC) and the banking license from the State Bank of Vietnam (SBV)?
In practice, the timeline is longer than the statutory guidance. The IRC can usually be secured within 60–90 days, provided the dossier is complete. The banking license review by the SBV often extends the overall process to 12–18 months, depending on the complexity of the application, the responsiveness of the parent bank, and the quality of supporting documents.

Are foreign banks restricted from opening multiple branches in different provinces at the same time?
Yes. Under SBV regulations, a newly licensed foreign bank or branch must demonstrate stable operations and compliance in its initial location before applying for additional branches. The SBV typically requires at least 2–3 years of proven performance and regulatory compliance before granting approval for expansion into other provinces.

How does the SBV assess technology capacity and information security when licensing foreign banks?
The SBV places strong emphasis on digital resilience and cybersecurity. Applicants must submit detailed documentation on IT infrastructure, data protection systems, and cybersecurity protocols. Independent audits or certifications aligned with international standards (e.g., ISO/IEC 27001) are often requested. During the licensing process, the SBV evaluates whether the proposed systems can support secure online banking, anti-money laundering monitoring, and customer data protection in line with Vietnamese law and international best practices.

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

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

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

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

Key Takeaways:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Building Trust And Opening Export Doors

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

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

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

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

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

3. Emerging Growth Segments And A Reshaped Global Landscape

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

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

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

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

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

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

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

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

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

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

1. Navigating Compliance With An Audit-Ready Mindset

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

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

2. Local Partnerships: Your Key To Smoother Market Entry

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

V. The Future Is Bright, But Preparation Is Key

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

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

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

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

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

VI. Conclusion

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

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

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

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

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

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

Frequently Asked Questions

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

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

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

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

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

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

Indonesia’s ecommerce is growing fast, driven by online shopping—are you ready to ride the wave or feeling the heat of missteps? For regional investors, the scale is huge, but the path is shrouded in legal ambiguities, complex compliance requirements and fragmented logistics. This is not just noise; these are real barriers that can derail even the best laid plans. As a cross-border advisory firm deeply embedded in ASEAN markets, we at Viettonkin bring both the broad regional perspective and the local nuance you need to succeed. We’ve seen how businesses can soar or stumble based on their foundation.

Here are your takeaways:

• Indonesia’s ecommerce is growing big time, huge opportunities.
• Success depends on understanding and navigating local complexities, legal, compliance and logistical hurdles.
• Mobile first consumer base and rapidly adopting digital payment methods are key drivers of growth.
• Platform dynamics are shifting, investors need to understand brand strategy beyond market share numbers.
• Strategic entry and operational planning is key to bridging infrastructure gaps and scaling.

Indonesia’s Ecommerce Engine: What’s Fueling the Growth

For regional investors, understanding the trend and the consumer base is key for 2025.

A big factor driving Indonesia’s ecommerce growth is the growing middle class with higher disposable income and increasingly using online shopping platforms.

2025 Gross Merchandise Value Forecast and Mobile First Dominance

The numbers don’t lie. Projections show a massive growth in market size. For example, GlobalData’s 2022 analysis, highlighted by Maritime Fair Trade, forecasts Indonesia’s ecommerce to reach US$46 billion in 2025, driven mainly by mobile commerce. This mobile first trend is not just a statistic; it’s a fundamental characteristic of the Indonesian consumer. Your strategies must be mobile optimized from marketing to the final transaction as the increasing preference for mobile shopping continues to influence online buying behavior.

Urbanization and Digital Wallets Adoption Stats

Urbanization is concentrating purchasing power and digital literacy in key city hubs. This demographic shift is accompanied by enthusiastic digital payment adoption, especially through digital wallets. The Paypers’ 2024 insight into Indonesia’s 2025 payment and ecommerce trends highlights the importance of these financial tools in simplifying transactions and building consumer trust in online platforms. Investors should watch these adoption rates closely as they signal maturing consumer behavior and infrastructure readiness.

Growing Middle Class and Consumption Patterns

A growing middle class with increasing disposable income is driving higher consumer spending, looking for more variety of goods and services. Their consumption patterns are shifting towards aspiration and convenience, making ecommerce an attractive channel. Understanding these evolving desires is key to curating a relevant product offering.

For growth analysts, the focus is on platform battles and the resulting market share shifts.

Platform Battles and Market Share Shifts

While market intelligence reports provide valuable numbers on gross merchandise value (GMV), they often don’t go into the underlying brand strategy or the “why” behind market share movements among popular ecommerce platforms. This is where deeper analysis matters.

Online Marketplaces: Shopee vs Tokopedia vs TikTok Shop—What’s Next

The competition among major ecommerce platforms like Shopee, Tokopedia and the rapidly emerging TikTok Shop is fierce. Each platform has different strategies on seller incentives, user acquisition and feature development. Predicting “what’s next” involves analyzing their investment in logistics, payment solutions and customer experience rather than just looking at current user numbers.

Investor Risk from Platform Dependency

A big risk for many businesses is over-reliance on a single ecommerce platform in the competitive landscape. Changes in platform policies, commission structure or even a platform’s strategic direction can impact sellers. Diversification and direct-to-consumer (DTC) considerations are becoming increasingly important strategic insights.

Why Indonesia Ecommerce Growth Rewrites the Rules for Cross-Border Entry

For ASEAN business leaders, understanding strategic market asymmetry is key. The ecommerce growth in Indonesia is part of a broader trend affecting the entire Southeast Asia region, driven by factors such as increased internet access and a growing middle class.### Beyond Resellers—Enterprise Gateway Mapping

Many reports focus on reseller activity. But for sustained growth, enterprises need a clear map of how to establish their own presence on online shopping platforms, control their brand narrative and build direct customer relationships. This means looking beyond simple distribution to strategic gateway mapping for market entry.

Urban vs Rural Expansion—Channel Differences

The approach for urban centers with relatively developed infrastructure and digitally literate population is vastly different from rural expansion. Channel strategies must account for the differences in internet penetration, logistics capabilities and consumer spending power across these diverse geographies. Mobile devices play a crucial role in bridging the digital divide, especially in rural areas where traditional internet infrastructure may be lacking.

Payment and Delivery as Infrastructure Gaps

Despite progress, payment systems and last-mile delivery remain significant infrastructure gaps, especially outside major urban areas. These are not just operational hurdles; they are strategic challenges that require innovative solutions, perhaps through partnerships or direct investment in logistics.

For risk-conscious investors, Indonesia’s “digital middlemen” dilemma is a nuanced challenge.

How Fragmented Fulfillment Ecosystems Erode Scale

A multitude of small-scale “digital middlemen” offering fulfillment services can create a complex and sometimes inefficient ecosystem for ecommerce transactions. While they offer flexibility, this fragmentation can erode economies of scale and make quality control a big issue for brands aiming for consistent customer experience.

Hidden Cost Structures in Seller Enablement

The costs associated with enabling local businesses from onboarding to training and support can be substantial and are often not immediately apparent. These hidden cost structures can impact profitability if not managed well.

Case Angle: Local Resellers vs Brand-Led Entry

Consider the strategic choice: partner extensively with local resellers who have market knowledge but offer less brand control or go brand-led and require more upfront investment but allow for direct customer engagement and consistent brand messaging. Each path has different risk-reward profiles. Understanding the preferences and behaviors of Indonesian consumers is key as many prefer cash-on-delivery due to trust issues with online transactions, though there is a significant rise in digital payment adoption, especially e-wallets.

Indonesia isn’t a single market—it’s a 10,000-island negotiation table.

Navigating Legal and Regulatory Gateways with Investor Confidence

For new entrants in the Indonesia ecommerce market, mastering incorporation and compliance is non-negotiable.

Sector Specific Licensing (FMCG, Fintech, Fashion)

Indonesia has sector specific licensing that varies greatly. Whether you are in FMCG, fintech, fashion or household appliances, understanding these different regulatory pathways from the beginning is crucial to avoid costly delays and penalties.

Local Nominee Structures and Restrictions

Foreign investment involves navigating regulations around local ownership or directorship which affects medium sized enterprises (SMEs). Understanding local nominee structures, their legal implications and restrictions is part of your market entry due diligence. Legal reforms are ongoing and staying updated is key. For example, general info on Indonesia’s investment climate is available but specific, up to date info on recent legal reforms affecting e-commerce must be actively sought. GlobalData’s report from 2022 talks about government support for digital economy which implies a regulatory framework that investors need to understand.

For compliance teams, clarity on taxation and reporting is key.

Digital Business VAT, Transfer Pricing Implications

Indonesia has implemented VAT on digital goods and services which impacts total online transaction value. Cross border transactions within multinational enterprises bring transfer pricing regulations into focus. Proper structuring and documentation is essential.

Avoiding Audit Triggers—Common Investor Mistakes

Key insights show that certain practices or oversights trigger tax audits. Common mistakes include improper documentation, misclassification of transactions or failure to comply with local reporting standards. Proactive compliance is your best defense.

Tax Incentive Zones and Ecommerce Policy Updates

Indonesia has various tax incentives sometimes linked to specific economic zones or industries which plays a big role in market growth. Staying updated on these opportunities and general ecommerce policy updates can give you a competitive edge.

ASEAN Investor Blueprint: Strategic Moves for Long Term Success

For e-commerce strategists, choosing the right entry model and operational control are fundamental.

JV, Franchise, Acquisition or Direct to Consumer: When Each Works

The right entry model—JV, franchise, acquisition of existing player, DTC or online marketplace—depends on your risk appetite, capital, desire for control and the nature of your business. There is no one size fits all.

Scaling from Pilot Cities to Nationwide Ops

Many businesses start with a pilot in a major city like Jakarta. The real challenge and opportunity is developing a scalable playbook to expand nationwide within the digital marketplace, adapting to local conditions while maintaining core efficiencies.

For portfolio builders, exit planning and identifying valuation levers are key from day one.

Brand Consolidation Trends in Indonesia

Indonesian e-commerce market with a notable compound annual growth rate is seeing trend towards consolidation where stronger brands acquire smaller players or niche specialists. Understanding these dynamics can inform growth and exit strategies.

Preparing for Regional M&A Opportunities

As your Indonesian business grows, the market size of USD 45 billion in 2023 makes it an attractive target for regional or global players looking for a foothold or expansion within ASEAN. Preparing your business for M&A opportunities means having clean books, strong governance and a clear value proposition.

Legal Safeguards for Exit Readiness

Implementing appropriate legal safeguards such as well drafted shareholder agreements, clear intellectual property ownership and robust compliance records and leveraging AI for enhanced compliance and operational efficiency is critical for a smooth exit.

The fastest growing players aren’t disruptors—they’re translators between regulation and innovation.

Digital Infrastructure and Human Capital: Scaling with Local Precision

For tech forward investors, tech savvy population is a key driver of e-commerce growth, making seamless platform and payment integration a key objective.

Logistics SaaS vs Full-Stack Warehousing—What Scales Better

A key decision is whether to use commerce platforms and Logistics Software-as-a-Service (SaaS) platforms for flexibility or invest in full-stack warehousing solutions for greater control. The “better” option depends on your volume, target geographic coverage and desired level of control over the customer experience.

API Ready Payment Stacks for ASEAN Interconnectivity

As cross border e-commerce grows, having API ready payment stacks that can easily integrate with various local payment methods including digital payments and potentially connect with systems across other ASEAN countries is a big advantage.

Cybersecurity Frameworks for Ecommerce Operations

With increasing transaction volume and data collection, understanding consumer behaviour is key. Robust cybersecurity frameworks are no longer optional but necessary to protect customer data, maintain trust and ensure business continuity.

For people leaders, crafting an effective HR and workforce strategy in e-commerce is vital.

Building Bilingual Cross-Border Teams

Effective communication is key. Utilizing social media platforms and building teams that are bilingual (e.g., Bahasa Indonesia and English) and understand cross-border business nuances can greatly enhance operational efficiency and market responsiveness.

Hiring for Compliance Sensitive Roles

Given the regulatory landscape, hiring skilled personnel for compliance sensitive roles (legal, tax, finance) who understand the local Indonesian context is a critical investment for online retailers.

Training Programs for Sustainable Logistics Ops

The human element in logistics is crucial. Investing in training programs for warehouse staff, delivery personnel and customer service teams ensures sustainable and high quality operations, especially with the rapid adoption of live shopping in Indonesia’s ecommerce landscape.

Growth in Indonesia isn’t plug-and-play—it’s code-switching across tech, people and policy.

Conclusion: Indonesia’s Ecommerce Is Booming—But Only the Informed Will Scale

Indonesia’s ecommerce potential is huge. Indonesia’s ecommerce market is a rapidly evolving landscape driven by key industries, internet penetration, smartphone adoption and consumer preferences. But transforming that potential into profitable, scalable and sustainable growth requires more than just market entry; it demands strategic navigation. From untangling market chaos to achieving compliant clarity, Viettonkin is here to map your path to success. We believe that with the right insights and strategic partnerships, challenges become opportunities.

With over 2,000 projects delivered across ASEAN, Viettonkin empowers businesses like yours to expand with confidence, armed with precise legal, tax and operational strategies. Partner with us to turn challenges into strategic wins—because when it comes to securing your next breakthrough, the only way is forward! Ready to unlock your growth today?

Indonesia has become one of the largest economies in the Southeast Asia region. With the huge marketing potential, many foreign investors and entrepreneurs came into the country in search of their luck. These days, Indonesia has been doing many interventions in improving its business climate.

Still, businesses find their journey to build a nest in Indonesia tough with various stumbling blocks. The complications of local regulations combined with the fluctuating currency rate and regional disparity make for a somewhat unpredictable financial environment. According to Apindo, or Indonesian Employers Association, business in Indonesia generally spends higher than in other ASEAN-5 countries.

That is why companies must first understand how to build their nest in Indonesia; one of the most important steps, therefore, is to build a strategy for cost management in the market. Hence, understanding the financial implications of operating in this dynamic environment is critical both for local and foreign businesses.

Key Takeaways:

• Indonesia became one of the biggest economies in Southeast Asia.
• According to Apindo, or the Indonesian Employers Association, doing business generally costs more in Indonesia compared to the other ASEAN-5 countries.
• A number of emerging trends are pushing foreign investment upwards, making Indonesia one of the favorite destinations for companies seeking to expand their operations in Asia.

Why Do Business in Indonesia?

Since Indonesia has become the largest economy in Southeast Asia, Indonesia has been an appealing place to consider for any form of investment. Indonesia is the best investment for a foreign investor who is looking for great growth opportunities. It is a very strategic location for business who aim to tap into new markets due to its youthful workforce and a rapidly growing middle class.

The Indonesian government prioritizes the improvement of business environment. Some of the improvements were tax incentives, job opportunities expanding to expats, support for the New Capital Nusantara project, according to Jennifer Halim, Manager, International Business Advisory Unit, Dezan Shira & Associates, Jakarta (Jennifer Halim, 2023).

A number of factors make the country popular for foreign investors who seek to diversify their operations into Asia. It became relatively easier to reach ASEAN and South Asia, two booming markets with growing consumer bases. Besides, a number of companies are aiming to support their activities in China and, at the same time, consider alternative strategies that could diversify risks. With favorable trade agreements and business incentives, Indonesia is in a very good position to attract companies wanting to diversify their presence without relying solely on the Chinese market.

A number of recent disruptions to global supply chains and rising labor costs in China have helped more solidly position Indonesia as a comparator in a "China+1" strategy. Indonesia has earned its place among the most promising markets in the world, boasting a large and skilled labor pool, a growing middle class with increasing purchasing power, and an abundance of natural resources. According to Standard Chartered Bank, Indonesia's economy, currently valued at US$4.2 trillion, is expected to reach US$10.1 trillion by 2030, which could place it as one of the largest economies globally based on purchasing power parity. This growth presents a very exciting opportunity for investors looking to benefit from a fast-changing market.

To foreign investors, Indonesia offers a substantial market with ample room for further growth. A favorable investment climate, combined with a diversified economy and commitment to reform, makes Indonesia a promising destination for those who want to expand their business footprint in Asia.

Indonesia has also been incrementally moving the ranking pertaining to the ease of doing business through streamlining and enhancement of the general climate of doing business in the country. Some of the areas that have been enhanced by the country to favor EODB include the following:

• Ease of Starting a Business: The process is made simpler with the introduction of an online system for business licensing that issues electronic certificates.
• Paying taxes: An e-filing and e-payment system has been implemented for key taxes, thus streamlining the process.
• Enforcing contracts: Things have gotten better in that an online case management system for judges has been implemented to improve efficiency in filing and serving court documents.
• Trading across borders: There is increased efficiency regarding online processing of export customs, thus reducing time and costs traditionally involved in conducting cross-border trade.
• Access to electricity: The renovations and upgrading of the electric grid infrastructure have improved access to electricity for business.

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Ease of Doing Business in Indonesia-Process, Time, and Cost

Doing business in Indonesia, especially in metropolitan cities such as Jakarta, requires the acknowledgement of how doing business in Indonesia requires consideration of intricacy with regard to procedures and processes in place. Business setup in Indonesia requires an investment process that shall consider a wide array of regulatory frameworks along many lines of operation such as licensing and permits, which is often quite elaborate and time-consuming.

Explore Further Topic: Exploring Indonesia's Potential: A Snapshot of FDI Inflows

These processes may take a quite different time depending on the type of business and the place; usually, there is additional bureaucratic friction in urban centers. Besides financial costs, setting up operations in Indonesia includes all sorts of expenses: from paying registration fees and compliance costs to ongoing operational expenditures. It is important for businesses to understand these aspects in their effort to plan and allocate resources and make strategies that enable easy entry and expansion in this vibrant market.

Quoting from World Bank Group in the book with the title 'Doing Business 2020: Economy Profile - Indonesia', following are the details of the process, time, and cost of doing business in Indonesia, precisely Jakarta (World Bank Group, 2020).

1. Paying Fee to Obtain Company's Name Clearance

Some kind of fee is paid for clearance of a company name. It usually is done through the medium of a notary, using some kind of computerized processing system.

In real life, the notaries conduct name reservations and clearances. To obtain the clearance for a proposed company name, he has to pay IDR 100,000 to the notary. This fee is payable online through Yap. This step will take less than a day to complete.

2. Clearance of the Company's Name at the Ministry of Law and Human Rights

According to, the company cannot use a denomination that:

• has already been legally used by another company or is similar to the name from another company;
• offends public order and/or decency;
• represents, or contains, an expression identical or similar to the name of a state agency, government agency, or international agency, except with their approval;
• it does not state the purpose and objective and business activities of the company or it only mentions the purpose and objective of the company, but it does not have a name of its own;
• the company's name consists of mere numbers or figures or letter/l set of letters without forming any words; or
• means a Company, legal entity, or civil enterprise (persekutuan perdata).

If the name of the reservation is similar or identical to any other company, the Ministry of Law and Human Rights may refuse such an application. Based on Article 4 of the MoLHR Regulation No. 1/2016, an electronic application of the company name shall be submitted to the Minister of MOLHR through the Legal Entity Administration System (Sistem Administrasi Badan Hukum, SABH). This application includes the submission of the Application Form Company Name, which comprises:

• the Payment Number for the name of the company approval
• the Name of the reserved company

The electronic approval for the Company Name issued by the Minister of MOLHR, as mandated in MoLHR Regulation No. 1/2016, will comprise:

• the Booking Number of the company name
• the approved name of the company
• date of booking
• expiration date
• payment code

3. Non-Tax State Revenue (PNBP) Fee Payment of Legal Services

Pursuant to Attachment 1 of Government Regulation No. 45/2016, PNBP for legal services regarding the establishment of a PT shall be paid. The notary processes the payment through the Yap platform, which can be done in less than a day.

The fee schedule, in accordance with Regulation of the Ministry of Law and Human Rights of the Republic of Indonesia No. 8 of 2018, reads as follows:

• 500,000 IDR, to validate the company as a legal entity;
• 430,000 IDR for publication and supplement in the State Gazette

4. Coordination with a Notary to Obtain the Standard Form of the Company Deed and Notarize Company Documents

Here, the notary has to get the form of the deed in standard form for the company, which the founders of the business will fill in and consider with regard to the provisions agreed upon. Afterwards, the notary will be notarizing the documents of the company; the notarial deed, or in other words, the deed of establishment, and the articles of association.

Based on Regulation No. 8 of 2018 by the Ministry of Law and Human Rights of the Republic of Indonesia, the notary fee for drafting and notarizing company documents shall be as follows:

• IDR 500,000 if the share capital is up to IDR 25 million;
• IDR 2 million if the share capital is up to IDR 500 million;
• IDR 4 million for companies whose capital is up to IDR 1 billion.

5. Making of Company Stamp

Though company stamps are not legally required in Jakarta, nevertheless, all applications must be stamped by the companies. No institution will entertain and approve any document without a stamp of the company. It will take a day and cost IDR 30,000.

6. Filing the Application to the Ministry of Law and Human Rights for Approval of the Deed of Establishment

According to Indonesian Company Law No. 40 of 2009 Articles 9, 10, 29 and 30, the application for approval of the company establishment deed may be submitted electronically to the Ministry of Law and Human Rights ("Ministry of Law"). The bank account certificate and a copy of the relevant bank transmittal advice shall be attached to such application.

This is because the application and processing is an online process, and the submission may take less than one day. The steps of application are as follows:

• The application must be submitted within 60 days from the date of the establishment deed.
• In case the application meets the requirement, a statement of no objection shall be issued electronically by the Ministry of Law, if the application fails to meet the requirement, it shall issue a statement of objection electronically.
• The applicant needs to submit the original application, together with supporting documents, to the One Stop Service Center within 30 days from the no-objection statement date received from the Ministry of Law.
• Within fourteen days after the above two are satisfied, the Ministry of Law will issue the legalization of establishment of the company.
• Company information approved, including but not limited to company name, domicile, objectives, duration, and capital, shall be registered in the Company Registry.
• The Ministry of Law shall publish the establishment of the company in the Supplement State Gazette (TBNRI) within 14 days from the date of issuance of the Ministry's Approval Letter.

As from March 2014, the Ministry of Law and Human Rights issues approvals for the deed of establishment electronically.

7. Application for Certificate of Company Domicile

The founders of the business must secure a certificate of company domicile. This is given by the head of the village, Lurah, where the company is situated or by the management of the building if space there is rented for an office.

This may take two days. No fee pays for obtaining this certificate.

8. Single Business Number Application

In July 2018, the single business number, or NIB, took over for the permanent business trading license, or SIUP, and the company registration certificate, or TDP.

Starting on July 9, 2018, the launch of new electronic integrated business licensing services that can be accessed through the Online Single Submission (OSS) portal opens registration for the NIB. This can take from 1 day and with no cost.

9. Register with the Ministry of Manpower

According to Article 6 of Law No. 7 of 1981 on the Obligatory Labor Affairs Report, any company is required to provide a report on its labor affairs to the Minister of Manpower and Transmigration or his representative at the latest 30 days from the date of establishment of the company. Such a report shall relate to the following matters, among others:

• identification of the company;
• labor relations;
• protection of workers;
• job opportunities

The Labor report shall be submitted online through www.wajiblapor.kemnaker.go.id. The mandatory labor affair report registration is approved within one day from the receipt date of the complete application. The registration process will only take a day to finish with no charge at all.

10. Registration of Workers Social Security Program (BPJS Ketenagakerjaan) and Healthcare Insurance Program (BPJS Kesehatan)

There are two types of Social Security Programs from BPJS, obliged for the employees to participate in: the Workers Social Security Program (BPJS Ketenagakerjaan) and the Healthcare Insurance Program (BPJS Kesehatan).

BPJS Ketenagakerjaan provides insurance for workers related to work accidents, old age, pension scheme, and death. The employers shall contribute as follows:

• Large and medium-scale businesses participate in all the programs, including occupational accident, old age, pension, and death security.
• Small businesses shall enroll for occupational accidents, old age, and death security programs.
• Micro businesses shall include occupational accident and death security programs.

The workers also should be registered with BPJS Kesehatan, for which the employees have to provide data, such as full name, date of birth, selected health service provider, and other personal data concerning family members covered under health insurance, in addition to the salary data.

An application for both the Social Security Programs can be jointly made online using the form available on the website at www.bpjs.go.id. A soft copy of the certificate will be issued within a single day. The applicant will also be sent by post the membership card and the registration certificate.

11. Acquisition of a Taxpayer Registration Number (NPWP) and a VAT Collector Number (NPPKP)

It is mandatory to register with the tax authority in advance to obtain a VAT collector number, NPPKP Nomor Pokok Pengusaha Kena Pajak and a taxpayer registration number, NPWP Nomor Pokok Wajib Pajak. Applications can be submitted to the relevant tax office for where the company is resident or online via http://www.pajak.go.id.

Through online application, it can be done by registering yourself on the website as a taxpayer and then follow the procedure stated there, such as filling out the application form and attaching the document copies as mentioned below:

• The deed of establishment
• Identity card of one active Director, KTP
• Letter Statement assuring the place of business from one active Director- Form is Provided.

The NPPKP is issued online, and the NPWP card along with the Registered Statement Letter may be obtained within one calendar day after the submission of documents free of charge. NPWP can be collected from the tax office or delivered by post.

Viettonkin: Smoothening Your Way into Business in Indonesia

In the end, it is a question of how one wades through the cost of doing business in Indonesia, with so many different financial obligations and regulatory requirements, along with various administrative procedures. From securing basic permits and registrations to compliance with labour legislation and taxation- adequately equipped with the information on how to handle these costs, a business will be better situated to handle these costs intelligently. It will go on to grow and change continuously, and having a deep-seated understanding of such costs will be vital for any company looking to establish business in this thriving economy.

In such a case, Viettonkin Consulting stands in a strategic position to help businesses deal with all this complexity. At Viettonkin, we believe that with our custom solutions and deep knowledge of local regulations, combined with extensive experience in serving foreign investors, we know just how to make the commencement process as smooth as possible and continue operating smoothly in Indonesia. With the support of Viettonkin, one can optimize costs by receiving valuable insights into the marketplace, which enables smoother entry to and sustainable growth within the Indonesian business landscape.

Want to know more about how Viettonkin can help your company in an Indonesian business setting? Click this link to learn further.

Also Read: Comprehensive Guide to Obtaining Business Licenses in Indonesia for New Companies

Business, in simple words, implies organized efforts of individuals or groups to produce goods and sell them, or services, for profit. It lies in the ability of business to instigate economic growth, create employment opportunities, and give a contributory impetus to the development of society as a whole. In recent years, the global business environment has been undergoing rapid development, while Indonesia, considering it as one of the biggest economies in Southeast Asia, became very important in such dynamics.

With huge prospects, especially for foreign investors, in terms of its rich natural resources, burgeoning middle class, and strategic position, Indonesia presents a very vast potential. The Indonesian government has struck a pro-business posture: it has promised to pursue policies aimed at enhancing the country's competitiveness and integrating it further with the global economy. Accordingly, there is fresh optimism about the country's business prospects.

However, this opportunity does not come without its challenges in carrying out business in Indonesia. Setting up business here is more cumbersome than in most other markets. Businesses have to work their way through complicated regulatory frameworks, put up with local cultural peculiarities, and understand the particular aspects of how to do business in Indonesia. However, for players who would be willing to invest time and energy in learning such factors, the dividends that await them may just be worth their while, as Indonesia continues to offer good growth prospects and an expanding chance for success.

This article will be more about the challenges which may be met by any business sectors while doing their businesses in Indonesia.

Also Read: Examining Business Costs in Indonesia

Key Takeaways:

• Over the past years, the global business environment has grown rapidly. Indonesia is one of the major economies in Southeast Asia, growing into a key player among other dynamic environments.
• Businesses have to operate within complex regulatory frameworks, adapt to local cultural norms, and understand the intricacies of the Indonesian business climate.
• Business, in simple terms, is the production and trading of commodities and services with the motive of generating profit.
• Foreign or domestic entrepreneurs should be ready to face uncertainties, financial pressures, and keen competition-all affecting an individual's business performance.

Business Challenges in Indonesia

Business investment in the Indonesian market presents a unique set of opportunities combined with tremendous challenges. In simple terms, business is an activity of creation, sale, or exchange of goods and services with an aim of earning a profit. Still, Indonesian entrepreneurs will need to make sure they understand and are prepared for the hard realities of the business environment. Be they local or foreign, for an entrepreneur to be successful, they have to be ready to deal with uncertainties, financial constraints, and fierce competition, among other issues that might determine whether one will emerge successful.

This is based on an article by Mia C.D, who has been a member of Bisnis Indonesia since the year 2006, on bisnis.com, which is an online resource and community for aspiring and established business owners. In this work, some of the key challenges of doing business in Indonesia are listed as highlighted below (Mia C.D., 2023).

Insecurity and Risk

One of the most critical issues when venturing into business is the potential risk and uncertainty that accompanies every venture. No business venture is devoid of risk, but there are also situations when the market becomes unpredictable, and other impediments crop up. Hence, entrepreneurs must be resilient, prepared for contingency situations, and with alternative plans in store to meet the volatile situation.

Market Competition

One of the biggest challenges lies in the huge competition faced in the market. A large number of businesses, whether small or big and irrespective of their trade, find competitors who provide similar products or services at cheaper rates. This creates the need for companies to innovate continuously and differentiate their services or products for competitive advantage. In the absence of constant innovation in product development or service delivery, businesses stand a chance of losing out on market shares if other competitors are more aggressive or affordable.

Government Policies

Other major challenges are brought about by constant changes in government policy. A business has to update itself constantly in regard to new regulations or changes in the rule of law that might affect the operations of a company. Sudden changes in policy, whether regarding taxes, labor laws, or industry-based rules, create uncertainty that disrupts the plans of a business. In this respect, companies are advised to keep themselves updated on the regulatory environment and respond positively in order to maintain compliance with a minimum potential disruption.

Financial Constraints

Financial constraints are significant challenges too. Finding capital for starting and running a business might not be easy. One could have to seek means of financing through personal savings, loans, or investors, and this may take time before the business finally settles and runs profitably. Long-term success hence requires sound financial management bolstered by careful planning.

One of the big issues that faces many companies is financial. Many businesses seek to expand and scale their operations while finding good funding, which can prove to be a difficult challenge. Capital availability, therefore, becomes critical, and one may seek loans, investors, or other alternative means of funding. Of course, proper financial management is always the key to sustainability due to the necessity of balancing cash flow needs with investment in growth opportunities.

Technology Aspect

The integration and effective use of technology is also another key to business successes in today's context. While digital transformation has become an important aspect, most businesses have failed to fully apply technology in advancing efficiency, productivity, and engaging customers. Embracing technology is quite important both in ensuring smooth operations and keeping businesses competitive in a rapidly digitizing market environment.

Demanding Workload

The other challenge is about the heavy workload. Having a business is very demanding. Sometimes, entrepreneurs have to work long hours and even during weekends and holidays. Very often, as a business owner, one may be solely responsible for all the multiple aspects of the business, such as marketing, finance, operations, customer service, etc., and this is often demanding concerning workload and multitasking.

Employee Retention

Finally, there is the challenge of retention of skilled employees. Due to reasons such as salary packages and other benefits, many smaller business entities are finding it difficult to compete with much larger companies in retaining the best of their employees. In such cases, businesses have to ensure that a conducive work environment is provided, accompanied by opportunities for growth and remunerative packages to retain the services of key employees. Employee turnover can hamper productivity and growth; hence, businesses must put more investments into their workforces and work toward building a solid, committed work team.

Doing Business in Indonesia: Challenges and Opportunities with Viettonkin

Indonesia is a vast land of many business opportunities, but equally great are the challenges that must be overcome. From complex issues related to government policy to the dynamics of the Indonesian market, it is cut out for the foreign investor to try and adapt or strategize. This is because cultures and economic settings change greatly from one country to another, mostly requesting a different approach-one steeped in local knowledge and guided by expert advice.

This is where Viettonkin can make the difference. Being a consultancy firm with in-depth knowledge of the Indonesia market, Viettonkin is well-placed to help businesses overcome such challenges. With a focus on successful market entry, compliance, and sustainable growth, Viettonkin will go all the way to empower foreign companies to conquer the vibrant yet complex business environment in Indonesia. Partnering with Viettonkin gives you the key to unlock your business potentials in this dynamic market.

Please feel free to contact our firms for further details on how we can help you conduct business in Indonesia's business environment. Click this link to know more.

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In the dynamic realm of international trade, making wise decisions is crucial for investors. Whether you are an experienced entrepreneur or a new business owner, selecting the ideal location to do business holds significant importance. This article embarks on a comparative analysis of doing business in Vietnam and Thailand, examining their distinct regulatory environments, company registration processes, and the unique aspects that shape these two Southeast Asian nations. Whether you are considering setting up a company or exploring new markets, gaining insights into the intricacies of these countries will empower you to make well-informed decisions, regardless of the stage of your entrepreneurial journey.

Ease of Doing Business in Vietnam: Regulatory Environment and Company Setup

Unpacking the Company Registration Process in Vietnam

When delving into the process of company registration in Vietnam, investors often face various options for foreign-invested corporate vehicles. However, three of the most common structures are the Representative Office, Branch Office, and 100% Foreign-Owned Limited Liability Company (LLC). Understanding the distinctions between these vehicles is essential, as they each come with unique benefits and regulations.

• A Representative Office serves as an extension of the foreign parent company, focusing on market research and liaison activities. It is limited in its ability to engage in commercial activities.
• A Branch Office, on the other hand, can partake in some revenue-generating activities but operates under certain restrictions defined by the parent company's business scope.
• LLC is a separate legal entity that can conduct various commercial activities. This structure offers more control and flexibility to foreign investors in running their operations in Vietnam.

Navigating these options is a crucial first step when considering doing business in Vietnam, as it lays the foundation for the regulatory processes that follow.

Timing Matters: How Long Does It Take to Set Up a Company in Vietnam?

The timeline for setting up a company in Vietnam varies depending on the type of business structure. For instance, an LLC typically requires 3 to 4 months to establish. Representative Offices can often be set up in half the time, around 2 months. Meanwhile, Branch Offices generally require 3 months for setup.

It's important to note that some businesses might need to secure pre-investment approval from Vietnamese authorities. Furthermore, acquiring the essential Investment Registration Certificate (IRC), a prerequisite for establishing new companies, typically takes 15 working days, unless the business sector falls outside the scope of the World Trade Organization (WTO). In such cases, the process might take longer.

Once the IRC is obtained, companies can progress to subsequent steps, including securing a physical business address and obtaining an Enterprise Registration Certificate (ERC). The latter usually takes 3 working days. While many sectors and business lines have no specific minimum capital requirements in Vietnam, some, such as finance, banking, insurance, fin-tech, language centers, vocational schools, and real estate companies, do have particular mandates.

Post-licensing procedures, which typically require 30 working days, encompass the public announcement of company establishment, seal registration, bank account registration, tax token acquisition, online declaration, business license tax payment, and labor registration. These timelines reflect Vietnam's commitment to offering a streamlined and efficient process for investors looking to do business in the country.

Ease of Doing Business in Thailand: Regulatory Framework and Company Formation Procedures

The Steps to Starting a Business in Thailand: From Concept to Company

Commencing a business venture in Thailand begins with thoughtful planning. Before delving into the business setup process, it's essential to determine the type of business you want to establish. It's noteworthy that, unless your company falls under a Board of Investment (BOI) program, the majority of shareholders must be Thai citizens, while foreigners can own a maximum of 49% of the company. This stipulation may be exempted if your business secures a Foreign Business License (FBL), typically granted to foreign-owned businesses that don't compete with Thai enterprises. Acquiring the FBL may take a few months, and the application can be submitted to the Foreign Licensing Department of the Ministry of Commerce.

When it comes to business structures, the private limited company is a popular choice among entrepreneurs. In this structure, shareholders enjoy limited liability, while directors assume unlimited liability. Understanding these initial steps is crucial for a smooth setup process.

Time Is Money: How Efficient Is the Business Setup Process in Thailand?

Efficiency is the hallmark of business setup in Thailand. The process typically commences with reserving a company name, a task that can be efficiently completed by registering an account with the Department of Business Development online. The subsequent step involves preparing the necessary documents, a process that varies depending on your business type. Required documents may include the Memorandum of Association, application forms, shareholder lists, director forms signed by each director, the Declaration of Business Operation form, and details regarding your business's offices and branches. Additionally, obtaining a company stamp is crucial as it will serve as your company's signature in various business transactions.

The final stage involves registering the company at the Business Registration office located in your company's area. During this step, you'll also receive a taxpayer identification number for your business. Typically, the registration of a private company takes approximately one week, while public companies may require up to one month. Thailand's efficient setup process highlights the country's commitment to attracting foreign investment and fostering a conducive business environment for investors.

Comparative Analysis: Vietnam vs. Thailand for Business Setup - Pros and Cons

Weighing the Pros and Cons of Doing Business in Vietnam and Thailand

When choosing a location to set up a business, it's essential to weigh the pros and cons. Both Vietnam and Thailand offer compelling advantages and exhibit distinct challenges. Vietnam boasts a burgeoning market with over half of its population under the age of 35, promising a youthful and productive workforce.  The country's geographical location, as part of Southeast Asia, provides strategic access to regional markets. However, navigating Vietnam's complex regulatory landscape can be daunting. The limited transparency and occasional bureaucratic inefficiencies may pose challenges for newcomers.

On the other hand, Thailand offers remarkable strengths, including robust digital connectivity and a highly skilled workforce. These factors, combined with the Thai government's comprehensive policies and investment incentives, position Thailand as the preferred investment destination in the region. Nonetheless, Thailand may present more competition in some sectors, and the business environment can be somewhat more costly due to stringent regulations.

Comparing Business Opportunities: Vietnam vs. Thailand

In terms of business opportunities, Vietnam's rapid economic growth and evolving middle class offer promising markets for a wide range of industries. While its regulatory environment can be challenging, it's worth noting that Vietnam has been actively making improvements to facilitate business setup. This commitment is showcased through its various Free Trade Agreements (FTAs), such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA).

Thailand, on the other hand, beckons with a well-structured framework of investment policies that actively endorse liberalization and open trade. The government actively encourages foreign investments that contribute to skills, technology, and innovation, fostering a welcoming environment for innovative enterprises.

The choice between Vietnam and Thailand ultimately hinges on an investor's unique business objectives. For those seeking high-growth markets and willing to navigate a learning curve, Vietnam may be an ideal choice. On the other hand, Thailand offers stability, a strong legal framework, and established business networks.

Final Thoughts

In this comprehensive analysis of the business setup landscape in Vietnam and Thailand, we've explored the unique opportunities and challenges each country presents to investors. The decision to establish your business hinges on a careful evaluation of the pros and cons, and aligning these with your specific objectives. Whether you're drawn to Vietnam's dynamic growth or Thailand's well-established market, Viettonkin is your trusted partner in navigating the complexities of both regions. Our expertise and guidance are your keys to a successful business setup. Unlock new horizons, explore more with Viettonkin, and embark on a seamless journey to establish and thrive in either Vietnam or Thailand.

Vietnam's role in intra-ASEAN trade and economic cooperation is pivotal in shaping the region's dynamics. Situated at the crossroads of Southeast Asia, Vietnam's strategic geographical location has transformed it into a trade hub of immense importance. In this article, we delve into Vietnam's significance within ASEAN, exploring its location advantages, involvement in key trade agreements, and its contributions to investment and economic cooperation. As we navigate these crucial facets, it becomes evident that Vietnam plays a central role in facilitating and driving intra-ASEAN trade, fostering economic collaboration, and contributing to the region's prosperity.

Vietnam's Growing Significance as an ASEAN Trade Hub

Vietnam's Strategic Geographic Position

Vietnam's strategic location within Southeast Asia positions it as a linchpin for regional trade and economic activities. Bordered by China to the north, Laos, and Cambodia to the west, and flanked by the South China Sea to the east, Vietnam enjoys proximity to key ASEAN countries. This geographical advantage has transformed Vietnam into a bustling trade hub, facilitating the movement of goods, services, and investments throughout the region.

Over the recent period, there has been a swift and substantial development in transportation and logistics infrastructure. The country boasts a network of ports, including major ones in Ho Chi Minh City and Hai Phong, providing vital access for sea-borne trade. Furthermore, an extensive road and railway system connects Vietnam to neighboring nations, facilitating overland transportation. The ongoing development of highways, expressways, and railways continues to enhance the nation's connectivity and accessibility.

Vietnam as an Investment Hub and ASEAN Trade Facilitator

In addition to its geographical and transportation advantages, Vietnam's open-door policy and commitment to economic reforms have attracted an influx of foreign investment. During the year 2022, Vietnam attracted investments from 108 countries and territories, with Singapore leading the way by contributing nearly 6.46 billion USD, representing 23.3% of the total foreign direct investment (FDI) received by Vietnam during that period. The Republic of Korea ranked second, providing 4.88 billion USD, followed closely by Japan with an investment of 4.78 billion USD.

Recent statistics also underline Vietnam's importance as an intra-ASEAN trade hub. For instance, the country's total trade volume with ASEAN reached over 60 billion USD in 2021, showcasing the increasing economic cooperation within the region. This dynamic environment positions Vietnam as a strategic gateway for businesses and investors looking to tap into the burgeoning opportunities of the ASEAN market.

Vietnam's Trade Agreements in ASEAN and Across Border

Vietnam's Role in ASEAN Trade Facilitation

Vietnam's proactive engagement in trade agreements within the ASEAN region has fortified its position as a cornerstone for economic cooperation. The nation's commitment to regional economic integration and cooperation has opened doors to a multitude of opportunities for businesses and investors.

Vietnam's journey towards trade liberalization gained momentum with its entry into the ASEAN Free Trade Area (AFTA) in 1995. This crucial step paved the way for reduced tariffs and enhanced market access among ASEAN member states. AFTA has been a driving force behind increased intra-ASEAN trade, contributing to Vietnam's economic growth.

The establishment of the ASEAN Economic Community (AEC) in 2015 marked another milestone. AEC aimed to create a single market and production base within ASEAN. Vietnam actively participates in AEC initiatives, aligning its policies and regulations with regional standards. This alignment has streamlined cross-border trade, making it easier and more cost-effective for businesses to navigate the ASEAN market.

Furthermore, Vietnam's proactive leadership in regional trade initiatives, such as the Regional Comprehensive Economic Partnership (RCEP), bolsters its reputation as a pivotal player in shaping the future of intra-ASEAN trade. RCEP's ratification promises a new era of trade opportunities within the Asia-Pacific region.

Vietnam's International Trade Agreements

Vietnam's commitment extends beyond ASEAN, as it is a signatory to various international trade agreements. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) are prime examples. These agreements grant Vietnam preferential access to a vast network of global markets and contribute significantly to the nation's export-oriented economy.

Notably, Vietnam's stellar performance in implementing these trade agreements has led to substantial benefits. As of 2021, Vietnam's exports constituted 19% of its GDP, marking a significant rise from the less than 1 percent recorded in 2010. Remarkably, Vietnam's export sector has now outpaced that of Malaysia and Thailand, underlining its remarkable growth in international trade.

Vietnam's strategic involvement in trade agreements and partnerships, both regional and international, underscores its commitment to fostering economic integration and cooperation. These agreements have not only facilitated the movement of goods and services but also propelled Vietnam into the global trade spotlight. The nation's robust trade agreements present compelling opportunities for businesses and investors seeking to tap into the dynamic ASEAN market.

Vietnam's Economic Cooperation and Investment Landscape 

Vietnam's Investment Landscape within ASEAN

Vietnam's role as a beacon of economic cooperation within ASEAN extends beyond trade; it also encompasses investment and strategic economic partnerships. The nation's pro-business environment and strategic location have made it a magnet for foreign direct investment (FDI) from ASEAN countries and beyond.

Vietnam's investment landscape is an alluring canvas for ASEAN nations seeking lucrative opportunities. The country's thriving manufacturing sector, fast-growing technology hubs, and dynamic consumer market captivate the interest of regional investors. In recent years, Vietnam has been a top choice for ASEAN nations looking to expand their footprint. For instance, Singapore has consistently ranked as one of the largest sources of FDI in Vietnam, with investments spanning various sectors, including manufacturing, real estate, and finance.

Moreover, Vietnam's position as a manufacturing and export hub in ASEAN has attracted significant investment from countries like Japan, South Korea, and Taiwan. These investments, often in high-tech sectors, contribute to Vietnam's economic diversification and bolster its status as a regional economic powerhouse.

Regional Economic Collaboration and Influence in ASEAN

Moreover, Vietnam actively participates in regional economic cooperation projects, fostering synergies for collective growth. The ASEAN Single Window (ASW), a digital platform aimed at expediting customs procedures and trade facilitation, is one such initiative. Vietnam's seamless integration into ASW exemplifies its commitment to enhancing economic cooperation and streamlining trade processes among ASEAN nations.

The nation's pivotal role in the Mekong Subregion, where it collaborates with Laos, Cambodia, Thailand, and Myanmar, amplifies its influence. Initiatives like the Greater Mekong Subregion Economic Cooperation Program (GMS) promote sustainable development and infrastructure connectivity, driving economic growth in the region.

In conclusion, Vietnam's active participation in investment and economic cooperation initiatives within ASEAN underpins the region's shared prosperity. The nation's welcoming investment climate, dynamic sectors, and strategic collaborations fortify its position as a key player in regional economic development. For ASEAN nations and investors, Vietnam remains an enticing destination, offering a strategic gateway to a vibrant and interconnected Southeast Asian market.

Intra-ASEAN trade thrives thanks to Vietnam's pivotal role in the region. With its strategic location and active participation in trade agreements and economic cooperation, Vietnam has become an essential hub for business within ASEAN. As the region's economies continue to grow, Vietnam's significance in facilitating trade and investments remains on an upward trajectory. For those eager to explore the vast opportunities presented by intra-ASEAN trade, Viettonkin is your trusted partner. With our expertise in navigating the dynamic landscape of trade and investments in Vietnam and the ASEAN region, we invite you to connect with us. Let Viettonkin be your gateway to success in this flourishing market.

ASEAN Economic Integration, a dynamic and transformative process, is reshaping the economic landscape of Southeast Asia. At its core, this integration represents the commitment of the Association of Southeast Asian Nations (ASEAN) member countries to foster closer collaboration and integration in various sectors, including trade, investment, and finance. The primary aim is to create a unified and seamless economic region. In this article, we'll delve into the details of ASEAN Economic Integration, exploring its historical context, goals, and the pivotal role of intra-ASEAN trade in shaping the region's economies.

Understanding ASEAN Economic Integration

A History of ASEAN Economic Integration

The journey of ASEAN towards economic integration is rooted in its historical context. Since its establishment in 1967, ASEAN has progressively evolved from a region characterized by political and security cooperation to one focused on economic collaboration. A notable milestone was the signing of the ASEAN Free Trade Area (AFTA) agreement in 1992, which aimed to reduce tariffs and promote trade among member countries. This commitment to economic integration laid the foundation for the more comprehensive ASEAN Economic Community (AEC) launched in 2015.

The Pillars of ASEAN Economic Integration

At the core of ASEAN's economic integration efforts lies the ASEAN Economic Community (AEC). This ambitious initiative aims to create a single market and production base across ASEAN member countries. It envisions a region where goods, services, investments, and skilled labor can move seamlessly. The AEC is one of three pillars of ASEAN, complemented by the ASEAN Political-Security Community and the ASEAN Socio-Cultural Community. This multi-dimensional approach reflects ASEAN's commitment to fostering not just economic but also political and social cooperation.

Synergistic Efforts and Collaboration within ASEAN Economic Region

The success of ASEAN Economic Integration hinges on the principles of cooperation and collaboration. ASEAN operates on a consensus-building model, wherein decisions are made collectively and every member's opinion is valued. This approach, coupled with the principle of non-interference in each other's internal affairs, creates an environment of trust and mutual respect. As a result, member countries can work together effectively, even when addressing complex issues.

ASEAN Economic Integration in Numbers

Statistics and research demonstrate the progress of ASEAN Economic Integration. Intra-ASEAN trade has seen substantial growth, with the volume of trade among member countries steadily increasing. According to a report by the ASEAN Secretariat, intra-ASEAN trade accounted for around 23% of total ASEAN trade in 2019, highlighting its importance in the region's economic landscape. Moreover, foreign direct investment (FDI) flows into ASEAN have surged, reflecting growing investor confidence. A study by the United Nations Conference on Trade and Development (UNCTAD) noted that ASEAN was the second-largest recipient of FDI in developing regions in 2021.

Goals and Objectives of ASEAN Economic Integration

Establishing a Unified Market and Production Base in ASEAN

One of the central goals of ASEAN Economic Integration is to establish a single market and production base. This ambitious aim has its roots in the ASEAN Free Trade Area (AFTA), which, through years of negotiations and agreements, has significantly reduced tariffs on intra-ASEAN trade. As a result, businesses across member countries can now access a larger consumer base with fewer restrictions. This has led to increased efficiency, economies of scale, and a tangible boost in regional trade. A study by the Asian Development Bank (ADB) found that the average applied tariff rate for ASEAN countries fell from 3.11% in 2005 to 0.20% in 2017, showcasing the concrete progress made in this regard.

Stimulating Economic Growth and Ensuring Stability in the Region

Another key objective is to promote economic growth and stability in the region. The ASEAN Economic Community (AEC) envisions a region where there is equitable economic development, thus reducing income disparities among member countries. The aim is not just economic growth but inclusive growth that benefits all citizens. For example, Vietnam's rapid economic growth, partly attributed to its participation in ASEAN Economic Integration, has resulted in poverty reduction. According to the World Bank, the poverty rate in Vietnam dropped from nearly 60% in the early 1990s to 5% by 2020, indicating the positive impact of economic integration on the well-being of the population.

Boosting Regional Competitiveness through ASEAN Economic Integration

ASEAN strives to enhance its regional competitiveness on the global stage. By integrating their economies and collaborating, member countries can compete more effectively with other global economic powerhouses. Initiatives like the ASEAN Investment Area (AIA), the ASEAN Single Window (ASW), and the ASEAN Comprehensive Investment Agreement (ACIA) contribute to streamlining investment processes, reducing trade costs, and promoting transparency and protection for investors. This attracts foreign direct investment (FDI) and fosters innovation. A case in point is Singapore, which has consistently ranked highly in the World Bank's Ease of Doing Business Index. Its success as a regional hub for businesses and investments illustrates the benefits of such initiatives.

Aligning Objectives with Broader Regional Aspirations

The goals and objectives of ASEAN Economic Integration align with the broader aspirations of ASEAN countries, which encompass political stability, social progress, and regional peace. Economic integration is seen as a means to achieve these ends. By fostering economic interdependence, member countries are incentivized to maintain peaceful relations and collaborate on shared challenges, such as climate change and disaster management. A notable example is the ASEAN Plus Three (China, Japan, and South Korea) cooperation in disaster management, where nations work together to mitigate the impact of natural disasters. These initiatives not only enhance regional stability but also reinforce ASEAN's role on the global stage, making it a formidable force in addressing common challenges.

The Significance of Intra-ASEAN Trade

Intra-ASEAN trade is at the heart of ASEAN Economic Integration, and its significance cannot be overstated. It plays a pivotal role in fostering regional development, enhancing economic growth, and creating opportunities for businesses.

Driving Regional Progress through Intra-ASEAN Trade

Intra-ASEAN trade has been instrumental in driving regional development. As member countries increasingly trade with one another, economic activity flourishes, leading to infrastructural advancements and job creation. For instance, the Greater Mekong Subregion (GMS) Economic Cooperation Program, involving several ASEAN countries, has seen substantial investments in transportation networks, energy infrastructure, and trade facilitation projects. These developments improve connectivity and pave the way for further economic integration.

Streamlining Trade via Comprehensive Integration Measures

The integration of ASEAN economies has led to a reduction in trade barriers and an increase in the flow of goods and services among member states. The ASEAN Free Trade Area (AFTA) and the elimination of tariffs on thousands of products have incentivized trade within the region. This has made it easier for businesses to access neighboring markets, boosting export opportunities.

Advantages for Enterprises in the ASEAN Economic Partnership

Businesses within ASEAN member states reap significant benefits from intra-ASEAN trade. With access to a larger consumer market, companies can expand their customer base and scale up operations. Reduced trade barriers, simplified customs procedures, and harmonized standards make it cost-effective for businesses to engage in cross-border trade. For instance, the ASEAN Single Window (ASW) streamlines customs clearance processes, reducing delays and costs for exporters and importers. This favorable business environment has attracted foreign investment and encouraged the establishment of regional supply chains.

Real-World Cases: Exploring the Significance of Intra-ASEAN Trade

Several real-world examples illustrate the success of intra-ASEAN trade. The automotive industry, for instance, has seen extensive intra-ASEAN trade in vehicle components and finished automobiles. Companies like Toyota have established regional production hubs, taking advantage of the integrated supply chain. Additionally, the ASEAN Banking Integration Framework (ABIF) has enabled financial institutions to expand their operations seamlessly across ASEAN countries. This has led to greater financial inclusion and access to banking services for the region's population.

The journey of ASEAN Economic Integration has been nothing short of remarkable. This concerted effort among Southeast Asian nations to foster stronger economic ties and shared prosperity has led to the removal of trade barriers, the harmonization of standards, and the creation of a vibrant regional marketplace. At the heart of this integration lies the crucial role of intra-ASEAN trade, serving as the lifeblood that fuels progress.

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Over the past 50 years, the Vietnam-Australia relationship has steadily developed, becoming increasingly profound, sustainable, and pragmatic. This has been achieved through the increasing strategic trust between the two countries, their shared interests in an international order based on international law, and the growing economic relations and strong people-to-people exchanges.

Establishment of a strategic partnership between VietNam and Australia

Since the establishment of diplomatic relations in 1973, VietNam and Australia have built strong and substantive relations on the basis of mutual respect and interest. Converging security and economic interests and deepening people-to-people links anchor our bilateral relationship and cooperation.

In 1991, Australia was one of the countries to remove the trade ban against Vietnam . A number of Australian companies were recognised as pioneers in economic cooperation with Vietnam such as Telstra, BHP and ANZ. The ties developed rapidly and strongly since 1993 when the two countries celebrated their 20th anniversary of diplomatic relations. In May 1993, then Prime Minister Vo Van Kiet paid an official visit to Australia , the first high-level visit in the history of relations between the two sides.

In September 2009, the relationship between Vietnam and Australia was upgraded to a “Comprehensive Partnership”. The partnership was enhanced in 2015, underlines the concerted efforts of the governments and peoples of the two countries to advance bilateral relations. The Vietnam-Australia Action Programme for the 2010-2013 period was also implemented, further strengthening and expanding their political ties, economic and trade cooperation as well as development and technical assistance and cooperation in a series of fields such as defence, education, the environment and people exchange. Later, the two countries released The Viet Nam – Australia Plan of Action 2016-2019.

Recognising that 2018 marks the 45th anniversary of diplomatic relations between Viet Nam and Australia, the two countries jointly decide to elevate the bilateral relationship to the level of a Strategic Partnership, on the occasion of the Official Visit to Australia by H.E. Nguyen Xuan Phuc, Prime Minister of Viet Nam.

In declaring a Strategic Partnership, Viet Nam and Australia pledge our commitment to deepening ties based on respect for the United Nations Charter, international law and each other's sovereignty, independence, territorial integrity and respective political systems. We will enhance mutual trust and understanding to strengthen the bilateral relationship and contribute to peace, stability and prosperity in the region. In particular, we commit to work intensively to ensure that our region remains peaceful, resilient and shaped by the rules and norms that have prevailed for decades.

On 1 November 2021, Australia and Vietnam launched the Australia-Vietnam Enhanced Economic Engagement Strategy (the Strategy), which supports our two countries’ joint ambition of becoming top ten trading partners and doubling two-way investment.

Key milestones throughout 50 years of diplomatic relations between Vietnam and Australia

Following the Paris Agreement of 1973, Australia was one of the first Western countries to establish diplomatic relations with Vietnam. Over the past 50 years, the Vietnam-Australia relationship has developed steadily and robustly, becoming increasingly profound, sustainable, and pragmatic. This has been achieved through the increasing strategic trust between the two countries, their shared interests in an international order based on international law, and the growing economic relations and strong people-to-people exchanges. The highlights in the diplomatic relations between the two countries have provided momentum towards the goal of upgrading the relationship to a comprehensive strategic partnership.

Political cooperation between the two countries reflects the increasing level of trust under the framework of comprehensive partnership and strategic partnership. The two countries not only respect "the independence, sovereignty and territorial integrity of each other" but also respect "each other's political system". Australia commits to strengthen political engagement through regular and high-level exchanges, which will be complemented by existing bilateral meetings, which include the 2+2 Strategic Dialogue, Viet Nam-Australia Human Rights Dialogue, Viet Nam-Australia Consular Consultations and Viet Nam-Australia Agriculture Forum.

Defense and security cooperation is a bright spot, and continues to rise to new heights. The two sides maintain regular exchanges of delegations, cooperate in crime prevention and control, immigration management, illegal migration prevention, information exchange, experience, and English training.

Educational cooperation has developed rapidly and deeply. Australia is one of the most popular foreign education markets for Vietnamese students. Vietnam is currently the fifth largest market in the international education sector in Australia with 31,000 students and researchers studying in Australia and more than 8,000 Vietnamese studying Australian degrees in Vietnam.

Since the establishment of diplomatic relations, Australia has provided 3 billion AUD (about 47,000 billion dong) in ODA to Vietnam. In particular, during his visit to Vietnam, Prime Minister Anthony Albanese announced a support package of 105 million Australian dollars for Vietnam for cooperation on infrastructure, climate change adaptation and energy transition. Australian non-governmental organizations, through their aid projects in the fields of economy, health, community health care, education, etc., have contributed to poverty reduction, socio-economic development, and sustainable development in Vietnam and friendly relations and cooperation between the peoples of the two countries.

Vietnam - Australia trade and investment

Economic and trade cooperation is a priority area in the development of relations between Vietnam and Australia. After establishing a strategic partnership, bilateral trade and investment cooperation has grown rapidly. The two countries set a goal of becoming one of each other's top 10 trading partners soon and this goal has become a reality despite the impact of the COVID-19 pandemic and the global economic recession. In 2022, the two-way trade turnover reached nearly $15.7 billion, up 26.7% from 2021; In the first quarter of 2023, bilateral trade turnover reached $3.41 billion, making Australia the 7th largest trading partner of Vietnam and Vietnam the 10th largest trading partner of Australia. Of which, Vietnam's exports to Australia reached $5.6 billion, up 26.2%; imports of goods from Australia reached $10.1 billion, up 27.3%. The main export groups of Vietnam to Australia include:

• Mobile phones and components: $765 million, up 12.5%;
• Machinery, equipment, tools, and other spare parts: $564.6 million, up 62%;
• Computers, electronic products and components: $522 million, up 7.4%;
• Fishery: $365 million, up 37%;
• Textiles and garments: $446 million, up 27%.

Vietnam imports many raw materials and inputs for production such as coal, wheat, cotton, steel scrap, steel, etc., especially coal. Australia has opened the door to Vietnamese mangoes, rambutans, dragonfruit, lychees, and frozen shrimp. Vietnam is promoting Australia's permission to import passion fruit, rambutans, rambutans, fresh coconut, durian, and fresh prawns. Australia is promoting Vietnam's opening to import deer meat, kangaroo meat, honey, peaches, and apricots.

As of February 2023, Australia has 590 investment projects in Vietnam with a total capital of about $2 billion. Meanwhile, Vietnam has invested in Australia 88 projects with a total investment of $592.3 million. In the field of agriculture, fisheries and forestry, trade turnover for the first time exceeded the impressive mark of $6 billion Australian dollars in 2022, which has more than doubled in the past two years.

Fostering stronger bilateral relations between Vietnam - Australia

At the invitation of Prime Minister Phạm Minh Chính, Prime Minister Anthony Albanese of Australia paid an official visit to Vietnam on June 3 and 4. On the morning of June 4, immediately after the official welcome ceremony, the prime ministers of the two countries held a meeting at the headquarters of the Government Office. At the meeting, Prime Minister Anthony Albanese stressed that Australia values the Strategic Partnership with Vietnam and identifies Vietnam as a central part of Australia's strategic relationship with Southeast Asia.

Prime Minister Phạm Minh Chính affirmed that Vietnam will create favorable conditions for Australian businesses to invest in Vietnam in the fields of infrastructure development, telecommunications, finance and banking, education, high-tech agriculture, green transition, digital transformation, and population data construction. Prime Minister Chính also requested Australia to create favorable conditions for Vietnamese businesses to invest in Australia in the fields of mining, agriculture, e-commerce, aviation, and tourism; requested Australia to create conditions to expand the market for Vietnamese exports; appreciated Australia's decision to increase ODA to Vietnam by 2.5% in the 2023-2024 fiscal year, and suggested that ODA cooperation be an important component in the future partnership.

Prime Minister Anthony Albanese affirmed that Australia looks forward to further expanding security and defense cooperation with Vietnam; affirmed to continue maintaining ODA cooperation; agreed to promote two-way investment cooperation; continue to increase scholarships for Vietnamese students; agreed to review the Air Services Agreement (1995) to adjust the number of flights between the two countries; agreed to actively implement cooperation in new areas of cooperation such as the digital economy, digital transformation… Prime Minister Anthony Albanese announced a support package of 105 million Australian dollars for Vietnam for cooperation on infrastructure, climate change adaptation and energy transition.

Conclusion

In 2023, Vietnam and Australia celebrate 50 years of diplomatic relations between the two countries. The two countries have a strong economic relationship, with trade and investment growing steadily in recent years. Australia is Vietnam's 7th largest trading partner, and Vietnam is Australia's 10th largest trading partner. There is also significant cooperation in the areas of education, defense, and tourism.

The future of the Vietnam-Australia relationship is bright. There are also many opportunities for businesses and individuals from both countries to work together. If you are an Australian 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!

Vietnam and India have a longstanding and resilient relationship, stemming from over 2,000 years of cultural exchange, which was established and nurtured by the leaders of both countries, including President Ho Chi Minh, spiritual leader Mahatma Gandhi, and Prime Minister Jawaharlal Nehru. The people and leaders of both nations have continuously worked to develop this relationship.

Vietnam - India diplomatic relations

India is one of the countries with which Vietnam has established a comprehensive strategic partnership since September 2016. India is an important partner in Vietnam's priority policy for the South Asian region and a reliable traditional friend of Vietnam. In Southeast Asia, Vietnam is a crucial pillar in India's Act East Policy and the Indo-Pacific vision, which emphasize openness and inclusivity. Vietnam is one of India's key partners and closest friends in ASEAN. The India-Vietnam relationship is one of India's most important bilateral relationships in Southeast Asia.

On December 21, 2020, the governments of Vietnam and India approved the "Vietnam-India Joint Vision for Peace, Prosperity and People" to guide the comprehensive strategic partnership between the two countries. This partnership covers traditional areas of cooperation such as politics, trade, investment, energy, defense, security, and people-to-people exchanges, as well as new areas of cooperation such as space cooperation, civilian nuclear cooperation, information technology, and marine science.

In 2022, at the invitation of the Chairman of the National Assembly of Vietnam, Vuong Dinh Hue, the Speaker of the House of the Republic of India, Om Birla, and the delegation of the Indian Parliament visited Vietnam from April 19 to 21. This visit was an important highlight for the comprehensive strategic partnership between Vietnam and India, especially as the two countries celebrate the 50th anniversary of diplomatic relations in 2022.

During the visit, through the activities of the Speaker of the House of the Indian Parliament meeting with high-level leaders of the Vietnamese Party and State, as well as the activities of the Secretary General of the Parliaments of the two countries, both sides discussed and agreed on many issues related to the bilateral relationship and legislative bodies of the two countries.

Strong economic & trade partnership between Vietnam - India

In South Asian countries, India is Vietnam's most important market, accounting for 80% of Vietnam's total trade turnover in the region. In 2017, bilateral trade between the two countries reached $7.5 billion, an increase of nearly 38% compared to 2016. By 2022, India had become Vietnam's eighth largest trading partner.

Bilateral trade between Vietnam and India has increased rapidly from $200 million in 2000 to $13.2 billion in 2021. This is the first time that two-way trade between Vietnam and India has exceeded $13 billion. In particular, only five years after the two countries upgraded their relationship to a comprehensive strategic partnership, bilateral trade turnover doubled and reached $15.05 billion in 2022.

In the first eight months of 2021, Vietnam-India bilateral trade showed positive growth. Exports to India reached $3.955 billion, up 26.7% compared to the same period in 2020, with key export items including phones and components (20.7%), computers, electronic products and components (13.8%), and machinery, equipment, tools, and spare parts (10.5%). Compared to the same period in 2020, chemical exports to India increased significantly (126.5%), metal and product exports increased by 45.2%, plastic raw materials increased by 432%, rubber increased by 121.2%, textile, garment, leather and shoe raw materials increased by 86.9%, and agricultural products such as pepper increased by 58.5% and vegetables and fruits increased by 51%.

Vietnam's imports from India in the first eight months of 2021 reached $4.689 billion, up 60.7% compared to the same period in 2020. The main imported items were iron and steel (16%), corn (6.5%), and machinery, equipment, tools, and spare parts (6.2%). Corn imports increased sharply, with a total value of $306 million. Imports of animal feed and raw materials were $203 million, up 219.4%.

As of the end of the first quarter of 2022, total trade turnover between the two countries reached $4.09 billion. The main export items from Vietnam to India in this quarter were phones and components ($464.6 million), computers, electronic products and components ($223.4 million), and other common metals and products ($180.5 million). The main import items from India to Vietnam in this quarter were various types of iron and steel ($306.5 million), corn ($155.8 million), and various types of cotton ($152.2 million).

Robust investment cooperation between Vietnam - India

India and Vietnam have not only established an important trade partnership but also a cooperative investment relationship with the participation of numerous Indian corporations and Vietnamese enterprises.

As of August 2022, Vietnamese enterprises had invested in 10 projects in India with a total capital of $6.2 million, ranking 44th out of 79 countries investing in India. India ranked 24th out of 139 countries and territories investing in Vietnam with 334 projects and a total investment capital of around $1 billion.

The average scale of Indian projects is $2.9 million per project, lower than the national average of $11.8 million per project. Indian projects focus mostly on the processing and manufacturing industry with 60 projects and a total investment capital of $459.6 million, accounting for 50.5% of the total investment capital. The electricity production and distribution sector has six projects with a total investment capital of $236.3 million, accounting for 26% of the total investment capital. The mining sector has five projects with a total investment capital of $96.5 million, while the remaining projects are in other sectors.

Excluding three oil and gas exploration projects, India has invested in 28 localities. Ninh Thuan province leads with four projects and a total investment capital of $195.1 million, of which the INFRA 1 solar power plant project has a total investment capital of $71.9 million. Phu Yen province has eight projects with a total investment capital of $189.64 million, of which the Son Hoa sugar factory project is the largest Indian project with a total registered capital of $94.5 million. Binh Duong province ranks third with 10 projects and a total investment capital of $116.26 million, including the TAT Coffee Vietnam Co., Ltd project with a total investment capital of $67.5 million. The remaining projects are located in Ho Chi Minh City, Nghe An, Long An, and other provinces.

Prospects and trends in future bilateral relations

Vietnam and India share a common desire for peace, stability, and security in the region, as well as a similar foreign policy approach based on multilateralism. Both countries share a vision for the Indian Ocean - Pacific Ocean region. They always support each other in regional and global issues through ASEAN-led mechanisms or the Mekong-Ganges Cooperation. In 2021, as non-permanent members of the United Nations Security Council, Vietnam and India collaborated closely to achieve consensus on many important documents such as resolutions or statements of the Council's President.

India has been and is promoting economic integration with CLMV countries (Cambodia, Laos, Myanmar, Vietnam) and the Mekong-Ganges Cooperation initiative. Recently, at the ASEAN-India Ministerial Meeting, the parties reviewed the ASEAN-India Free Trade Agreement, upgrading it to enhance economic connectivity with India. Meanwhile, Vietnam holds a central position in India's Look East Policy and its vision for the Indian Ocean - Pacific Ocean region. Under the framework of the Mekong-Ganges Cooperation, India has sponsored 37 Quick Impact Projects (QIPs) worth $50,000 each, which have been completed and brought positive results to people in difficult areas of Vietnam.

These are the premises and favorable conditions for developing trade and investment cooperation between the two countries. To leverage these advantages and promote economic cooperation between Vietnam and India, the following issues need to be addressed:

• Firstly, each side needs to leverage their strengths. India is leading in areas that Vietnam can learn from, such as science and technology, especially digital technology, energy, and nuclear technology. On December 15, 2021, the Indian Ministry of Technology announced a $10 billion plan to attract screen and semiconductor manufacturers with the ambition of making India a global electronic manufacturing hub. India also approved a plan to support 100 domestic companies in the field of chipset and IC design. Additionally, Vietnam can share its experience in social management, poverty reduction, and other social policies with India.
• Secondly, it is necessary to leverage the similarity in policy and the spirit of self-reliance of the two nations to unlock the potential for trade and investment cooperation. India is expected to be the fastest-growing major economy in the world, with some bold reforms to be implemented in agriculture, manufacturing, education, and labor. Vietnam aims to become a high middle-income country by 2030 and a high-income country by 2045.
• Thirdly, create a platform for strategic interests, economic interests, and emotional ties between the two nations.
• Fourthly, strengthen the connection and cooperation between small and medium-sized business communities in Vietnam and India to support each other's development.
• Fifthly, continue to enhance exchanges at all levels, fields, and strengthen people-to-people exchanges to constantly reinforce trust, sharing, and cooperation.

Vietnam and India are two rapidly developing economies in the region. The economic relationship between India and Vietnam is a pillar of the comprehensive strategic partnership between the two countries. In the coming time, the pillar of Vietnam-India development cooperation in the economic field will be further developed.

Conclusion

In the coming years, investment relations between the two countries will have new breakthroughs, focusing on the fields of seaports, energy, infrastructure, oil and gas, information technology, digital transformation, digital economy, marine science, processing and manufacturing technology, automotive supporting industries, and more.

If you are an Indian 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!