Articles
Published on
February 16, 2024

The Wallex Country Report: Vietnam

5
min read

One of the region’s fast rising stars, Vietnam has experienced nothing short of an economic miracle in the last decade with an average 6% GDP growth since 2010.  

Net foreign direct investment flows totalled US $17.9 billion in 2022, nearly twice the US $8.9 billion from 2013. This can be attributed to its prime geographic location, which connects Vietnam to China’s prosperous coastal cities as well as other Southeast Asian countries such as Laos and Cambodia. Because of this, Vietnam encapsulates the essence of Southeast Asia’s burgeoning potential, offering an attractive platform for businesses to enter the region and beyond.

Quick Facts

  • Population: 97.4 million
  • GDP (2022): US$408.8 billion
  • Currency: Vietnamese dong (VND)
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Vietnam Top Imports | Wallex
Vietnam Top Exports | Wallex

What are Vietnam's top emerging industries? 

Electronics Manufacturing

Philippines Top 5 Imports | Wallex

Vietnam is one of the world’s top exporters of electronics, having exported around US$114.4 billion of electronics in 2022, with $57.9 billion of those being mobile phones, a fast-rising sector in the country. This makes Vietnam a prime location for businesses involved in manufacturing components for electronic equipment, mobile phones, or appliances.  

It also helps that the Vietnamese government is supportive of the electronics industry, which has been listed as one of the top 10 priority sectors identified as core to the country’s industrial development strategy for the period between 2025 to 2035. Corporate income tax (CIT) breaks are also granted to businesses operating in specific industries and industrial zones.

Agriculture & Food Processing

In 2022, Vietnam’s agricultural sector saw its biggest boom in recent years, with growth of 3.36%. This was fueled by growth of 2.88% in farming, 4.43% in fisheries, and 6.13% in forestry. Export turnover for the agricultural sector stood at an estimated US$53.22 billion for the year.

The Vietnamese government recognises the importance of supporting this industry and the result was the launch of Decree No.57/2018/ND-CP. The decree offers several attractive incentives for agricultural enterprises such as exemptions from certain fees, land rental, and more favourable rates on commercial loans. These make Vietnam a very fertile ground for businesses in agricultural cultural technology or food processing and manufacturing.  

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Textiles and Garments

Trailing behind Vietnam’s top exports of smartphones and electronics are textiles and garments, an industry worth nearly US$44 billion in 2022 and was valued at US$24.6 billion in the first three quarters of 2023. Nike and Adidas are just some of the major global brands who have established their textile and garment manufacturing facilities in Vietnam.  

These brands are attracted to Vietnam due to low labour costs, as well as the many free trade agreements (FTAs) that Vietnam has with key export markets, including the Regional Comprehensive Economic Partnership (RCEP) and EU–Vietnam Free Trade Agreement. These FTAs help businesses to avoid paying the tariffs that these markets impose on textiles and garments, thus making Vietnam a good place for businesses involved in textiles and garment manufacturing, or supporting industries such as textile machinery, accessories production, or chemicals and dyes.

One challenge for the industry is that Vietnam is still largely dependent on imported raw materials for its output, being able to only produce and supply an estimated 25% of the fabric required. However, this opens up doors for businesses dealing with commodities or raw materials, who can help to bridge the gap.

Which key imports of Vietnam should we monitor? 

Electrical, Electronic Equipment

The Philippine population’s consistently high demand for consumer electronics and gadgets such as tablets and smartphones are one of the drivers of the country’s

Vietnam's dependence for electrical and electronic equipment mirrors its infrastructure advancements across diverse sectors. In telecommunications, Vietnam aims to bring 10G broadband to the country, setting a goal to provide fibre internet infrastructure for 80% of households by 2025. This requires the building of base stations, and vast quantities of fibre optic cables.

In addition to being a major exporter of consumer electronics, Vietnam is also a significant consumer of electronics such as smartphones, laptops, and televisions. Total imports of electronic goods, computers, and their parts for 2022 amounted to nearly US$81.9 billion.

Vietnam’s manufacturing sector, which is deeply integrated into global supply chains, requires large amounts of machinery and components as well. For instance, large companies like Foxconn and Intel have invested and set up facilities in the country. Foxconn, a major supplier for Apple, will build iPads and AirPods, while Intel assembles chips in Vietnam.  

Machinery, Nuclear Reactors, Boilers

Vietnam has set ambitious targets on power generation. Its Power Development Plan 8 (PDP8) aims to achieve a domestic offshore wind capacity of 6 gigawatts (GW) by 2030, or 4% of their total electricity generation capacity. Coal power plants remain the country’s largest source of energy and the need for boilers is expected to remain high for the near future. It is worth highlighting that Vietnam will not develop any new coal power plants after 2030, as part of its goal of achieving net-zero carbon emissions by 2050.

Construction and transport infrastructure projects are likely to be the largest drivers of demand for machinery imports, particularly in earthmoving, excavation, and building construction. In 2023, the World Bank approved a US$1.5 billion loan to Vietnam for the financing of the 1,811 kilometre North-South Expressway which will require a significant amount of machinery.

Port development plans are sustainaining demand for heavy machinery as well. The Vietnamese government anticipates that the volume of containerised cargo imports and exports is set to increase. Accordingly, they will be investing up to US$1.7 billion to build more inland container depots (ICD) by 2030. Wider plans to develop the country’s seaport system include the development of international transshipment ports at Van Phong and constructing more ports in Cai Mep and Tran De.

Plastics

Plastics are widely used in Vietnam for packaging a diverse range of products, from food and beverages to electronics and household goods. They feature frequently across many ongoing projects in Vietnam’s construction and infrastructure projects. These include pipes, fittings, panels, and roofing materials. As a major electronics manufacturer, Vietnam needs a substantial amount of plastic products such as housings, connectors, and insulation materials as well.  

Vietnam's agriculture industry is another heavy user of plastic. For instance, plastic bags, wraps, and containers are commonly used to package and store agricultural products, such as fruits, vegetables, and grains. Plastic greenhouses are also widely used by farmers to protect non-native plants from heavy rains and humidity, thus allowing them to be grown all-year round.

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Venture into Vietnam with confidence with Wallex

Expanding into Vietnam brings the challenge of managing payments and collections in VND. From making international payments in VND to your team to receiving VND from customers, these transactions are pivotal in your expansion endeavors.

Enter Wallex. Our fully digital platform enables your business to perform international payments with VND seamlessly. You can pay in VND with same-day settlements, and strategically time when you convert SGD to VND for better rates.

Fast, easy, and seamless – Wallex gives you all the tools you need for your cross-border transactions to simplify your business expansion. Enjoy comprehensive support from a dedicated Account Manager who ensures you get only the best rates and all the help you need.  

Speak to us today and find out how Wallex can help to make your venture into Vietnam a smooth and successful one.

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