Being an economic bright spot in Southeast Asia based on its impressive economic growth and foreign direct investment attraction, Vietnam has shown itself as an attractive destination for foreign investors. Besides various benefits, foreign investors also confront with some challenges when doing business in Vietnam. In this article,  Sunday Corp will show foreign investors 5 benefits and challenges registering a business in Vietnam that investors should know.


the benefits and challenges when setting up a business in Vietnam
the benefits and challenges when setting up a business in Vietnam

The benefits when registering a business in Vietnam

1. A young population and low expenses

The population in Vietnam is 95 million people, ranking 14 in the world. In addition, the average age of Vietnam is 30,8 years, lower than that of China with 37,3 years. In Vietnam, about 60% labor force is under 35 years. In addition, the average income of Vietnamese workers is about 240 USD per month, while other Asia countries’ labor incomes are 1800 USD per month.

Together with that, the foreign investors might take advantage of the young population and the lower salary compared to other Asia and Pacific. Setting up a company in Vietnam cost the investors cheaper for local employees.

2. Government support

Vietnam government introduces various preferential policies such as tax-free or tax incentives for foreign investors. According to current regulations, the highest preferential tax rate is 10% within 15 years and tax exemption for 4 years.

In addition, a 50% reduction of payable tax amount for the next 9 years is allowed for new investment projects in some specific fields to encourage development such as information technology, software, renewable energy, energy from waste destruction, environmental protection; manufacturing sector.

3. Trade agreements

The other attractive benefits when establishing a company in Vietnam is numerous trade agreements to make this market more liberal. Some of the memberships and agreements:

  •  Member of ASEAN and ASEAN Free Trade Area (AFTA)
  • Free Trade Agreement with the European Union
  • Member of the World Trade Organisation (WTO)
  •  Bilateral Trade Agreement (BTA) with the US

The challenges that foreign investors can confront with

4. Dealing with Construction Permits

It takes a long time to receive the construction permits in Vietnam, about 100 days. The foreign investors could go under more than 10 steps with the Firefighters Prevention Department, the Department of Construction, and the Department of Natural Resources and Environment.

5. Paying Taxes

Although the Vietnam government attempts to simplify all tax calculation and declaration procedures, the investors have to pay more than 10 corporate tax each year such as corporate income tax, value-added tax, social insurance, etc. Due to this complicated tax system, it affects on company resources.

There are 5 benefits and challenges registering a business in Vietnam that foreign investors should pay attention to. If investors have any questions so far, please do not hesitate to contact us by the following information. Sunday Corp will help investors with the 8-years experience of us.


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