Business Environments of Vietnam

Business environment is improving rapidly. Both our on-field experience, recent policy makings, and 3rd party institutional reports have confirmed a rapid acceleration toward a more open, and more stable business environment in the near term.
Last Updated: April 15, 2023
The Outlook

Business Environment Outlook in Vietnam

Political stability in Vietnam is quite stable as the Communist Party of Vietnam (CPV) has a firm hold on power. There are no significant changes expected in the near future, making Vietnam an attractive destination for people leaving a similar political situation in China.

Vietnam will benefit from its involvement in major trade agreements. It will benefit from being part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPPTP), the free-trade agreement (FTA) with the EU, and the Regional Comprehensive Economic Partnership (RCEP). Other areas that will see progress include financing and infrastructure, with wider access to capital markets, more reliable power supply, faster internet speeds, and more efficient distribution networks.

Despite these improvements, infrastructure bottlenecks will still remain an issue, with many major projects only completed towards the end of the decade. Policy towards private enterprise and competition improves, although the state still retains a major stake in many key industries. The long-running push for partial privatization has slowed down noticeably.

Table of Contents
The Labor

Labor & Productivity in Vietnam

With a population of approximately 99.5 million, Vietnam is the 15th most populous country in the world and the 3rd most populous country in Southeast Asia, after Indonesia and the Philippines. The current demographics are conducive to a stable economy, with the country achieving strong productivity and economic growth over the past few decades. As of 2021, the working-age population will be approximately 67 million, accounting for 71.6% of the total population. This part of the working population will increase over the next few decades and continue to support economic growth.

Such a population structure is supported by a stable population growth rate, which has remained at 1% for many years from 2000 to 2017. However, in recent years, due to the epidemic and the continued two-child policy to restrict births, the population growth rate has dropped below 1%, and it will be 0.8% in 2021, which is the same as the average level of middle-income countries.

Vietnam’s two-child policy is the main reason for maintaining the slow population decline. The government has strictly implemented the “one child policy” since the 1960s, restricting people to a maximum of two children, and formally legislated it in 1986. The government relaxed the two-child policy in 2003, allowing certain families to have a second child, but the restrictions remain strict, subject to approval from the local government. In 2009, the government reintroduced a strict two-child policy.

This policy has reduced Vietnam’s total fertility rate (TFR) from its peak of 6.0 in the 1970s to the current level of around 2.0, and has remained stable at this level for more than 20 years, effectively slowing down population growth.

The number of foreign immigrants in Vietnam is very small and the outflow is also one of the main reasons for restraining population growth. According to the report of the United Nations Department of Economic and Social Affairs (UNDESA), international immigrants accounted for less than 0.08% of Vietnam’s population in 2020 , only 76,767 people Registered immigrants. In contrast, Vietnam’s net population migration rate has averaged -0.8% over the past five years, making it one of the major exporters of labor.

There are 3.2 million Vietnamese living abroad, 47 percent of them in North America, and an average of 100,000 workers leave each year, with East Asia as the main destination. With declining fertility rates and rising life expectancy, Vietnam’s older population is projected to make up 10% to just under 20% of its population by 2035. The average life expectancy of Vietnamese is about 75 years old, which is quite high for a middle-income country, which has also caused Vietnam to face the problem of an aging society. And the prospect of getting old before getting rich means that Vietnam will face a series of important challenges.

Vietnam’s per capita income is 40% of the global average, and there is still a certain distance from the middle-to-high income level. And the speed at which its population is aging means it will have less time to adapt to an aging society than many advanced economies. According to the World Bank report , Vietnam’s old-age dependency ratio, which is the population over 65 divided by the working population, will increase from 13% in 2021 to 22% in 2039, close to the 26% of today’s high-income countries such as the United States.

The Politics

Political Environment in Vietnam

After Vietnam gained independence in 1945, the government split into a communist-backed North Vietnamese government and a U.S.-backed South Vietnamese government. Ultimately, the civil war ended with a North Vietnamese victory in 1975 and established Communist Party rule over all of Vietnam. Subsequently, in 1978, Vietnam launched an aggression against Cambodia on the grounds of national security, and the Chinese government responded by invading Vietnam.

This series of events made Vietnam have very little contact with the Western world, and its economy and domestic political stability depended heavily on the Soviet government. It was not until the Vietnamese government launched the reform and opening up policy in 1986 that Vietnam began to increase political and trade exchanges with other countries, and made more progress after joining the World Trade Organization in 2007.

In recent years, as many enterprises in advanced countries have transferred many labor-intensive manufacturing industries to Vietnam due to cost considerations, Vietnam received more than US$1.5 trillion in foreign direct investment between 2010 and 2019. In recent years, considerations such as the Sino-US trade war, China’s continued zero-clearing policy, and improving supply chain resilience have also led more companies to shift investment to Southeast Asian countries and India.

Vietnam, which has relatively advantages in trade agreements, labor costs and infrastructure construction, has consolidated its position in undertaking these capital investments and has become the main beneficiary country in this wave, which has greatly stimulated Vietnam’s economic development. It is one of the fastest growing countries in ASEAN and even in the world.

However, corruption, the business environment, continued privatization and infrastructure are still unresolved issues in the country. As far as corruption is concerned, although the ten-year anti-corruption strategy plan launched in 2019 resulted in the punishment of more than 160,000 party members and the conviction of more than 7,000 party members, institutional factors still exist, so corruption persists . Nguyen Phu Trong, who will be re-elected for the third time in 2021, said in a speech broadcast on Vietnamese national television in October 2022 that he will continue to increase efforts to combat corruption.

As can be seen from Vietnam’s five-year plan, the current policy focus of the Vietnamese government will continue to focus on market liberalization and reduce government intervention in business, markets and the overall economy. There are not only political elements to this move, such as incentivizing foreign investment through greater market freedom, but also operational considerations. In Vietnam, so-called state-owned enterprises account for 30 percent of the state budget and 28 percent of GDP, and are also responsible for 60 percent of the country’s non-performing loans.

Based on the remarkable success of the Vietnamese government in trade and investment agreements, its follow-up policies will also increase productivity, especially labor supply, land supply and industrial infrastructure. Especially for land supply, the Vietnamese government also stated that it will reform land use, even foreign ownership (currently only restricting 50-year use rights, and lack of clear mechanisms and regulations on transactions), and provide new means of control.

Vietnam is expected to remain a one-party state with tight control from the Communist Party of Vietnam (CPV) throughout the forecast period (2023-27). This is largely due to the absence of significant sources of political instability in the public sphere. Employment and household income growth are expected to reduce general discontent while expanding restrictions on freedom of speech are likely to suppress political dissent.

Nguyen Phu Trong is predicted to complete his third term as general secretary in 2026, but his frail health and advanced age (he will turn 80 in 2024) increase the risk of him vacating the position before his term ends. However, Mr. Trong’s successor is expected to be the current prime minister, Pham Minh Chinh, a close ally of Mr. Trong. Other potential candidates for general secretary are also aligned closely with Mr. Trong, making the risk of a disruptive succession period low.

Reports of improper financial dealings by officials are likely to be sensitive topics for the public, and the government is expected to continue its anti-corruption drive to mitigate public anger and defend the party’s legitimacy. However, prosecuting grand corruption cases rather than implementing institutional reform to reduce corruption at the middle and lower levels of the public sector will remain the primary focus of the anti-corruption drive, posing only minor risks to wider political stability.

The preservation of domestic ownership and national sovereignty remain significant political ashpoints in Vietnamese society. Public pressure on the government regarding disputes in the South China Sea is expected to continue, with criticism of the CPV’s reluctance to respond more forcefully to perceived Chinese provocation. Large Chinese investments in the country and long-term land-licensing arrangements are also likely to be subjects of occasional public outcry due to concerns over China’s growing influence over the Vietnamese economy.

As more Vietnamese call for adherence to international norms of civil and labor rights and improvements in environmental protection for local communities, social tensions are expected to emerge. The government may adjust policy occasionally to placate protesters, but this often coincides with the persecution of movement leaders.

In summary, Vietnam is expected to remain politically stable under CPV control throughout the forecast period. However, the government will need to address sensitive issues such as corruption, sovereignty, and environmental protection to maintain the public’s trust and legitimacy.

The progress on political and administrative reform in Vietnam is expected to be slower than what the authorities have proclaimed. Divisions between competing factions within the CPV and the party’s desire to avoid reputational damage will result in a gap between rhetoric and action. The bureaucracy’s quality will remain inadequate due to the overlapping roles and responsibilities of civil servants and CPV officials. Although the National Assembly’s deputies are CPV members, the body will become more transparent but will not be able to act as a genuinely independent branch of government.

The CPV will take strict actions to eliminate corruption within the party and the government, partly to protect its own position. However, corruption will remain pervasive despite these measures. The CPV’s primary approach of making an example of high-profile offenders will prove ineffective in instilling better behavior and reducing graft across political structures. Limited progress is expected on tackling entrenched lower-level corruption during the forecast period. Vietnam’s global ranking in the Corruption Perceptions Index compiled by Transparency International is expected to remain low.

In summary, Vietnam’s political and administrative reforms are expected to progress slowly due to the CPV’s desire to avoid reputational damage and divisions between competing factions within the party. Corruption remains pervasive, and the CPV’s primary approach to eliminate corruption by making examples of high-profile offenders is unlikely to be effective in reducing graft across political structures. Limited progress is expected on tackling entrenched lower-level corruption during the forecast period.

The Vietnamese communist government system is a one-party dictatorship, similar to the Communist Party of China. The general secretary (successor) of the Communist Party of Vietnam is completed by appointment, and in practice, he will only serve two terms, one for five years each. In the recent election (February 2021), General Secretary Nguyen Phu Trong continued to take over the position of General Secretary based on the issue of successor, and his term of office will end in 2026.

Due to the advanced age of Nguyen Phu Trong, the probability of subsequent re-election is generally considered to be low, and the successor is generally speculated to be Prime Minister Pham Minh Trung, based on his relationship with the General Secretary and the general perception of the people.

Vietnam’s foreign policy is expected to remain non-aligned while also aiming to restrain China’s influence on the country. Territorial disputes in the South China Sea will continue to strain relations with China, resulting in frequent small non-naval maritime confrontations without loss of life. Vietnam will maintain cordial diplomatic relations with China due to extensive economic links but will forge stronger economic and security ties with regional powers such as India and Japan, which also have territorial disputes with China. However, disputes over maritime territories will limit relations with some ASEAN members such as Indonesia and the Philippines.

Vietnam will continue to take a neutral stance on the Ukraine-Russia war due to Russia’s long-standing diplomatic partnership with Vietnam. While high-level diplomacy between the two countries will continue, Western sanctions have already reduced bilateral trade and investment. Vietnam will make efforts to diversify its sources of arms and military equipment procurement to avoid international controversy and because of dwindling supply from Russia. This could include new purchases from South Korea, India, Israel, Japan, and the US.

Vietnam will gradually strengthen security ties with the US as it seeks to counterbalance China’s regional influence, but relations will be based on intelligence-sharing and coastguard assistance rather than official military cooperation due to geographic proximity and economic reliance on China. Regular diplomatic contact with the US due to substantial goods exports will sometimes result in minor trade disputes, but these are not expected to cause major ruptures in relations between governments.

The larger economic risk to relations between Vietnam and the US will be the exchange rate. Vietnam is expected to allow a slow nominal appreciation of the dong against the US dollar, a policy introduced in 2021 following the US labeling Vietnam a currency manipulator. While the baseline forecast does not expect Vietnam to receive this designation again, the risk will grow later in the forecast period.

The Infrastructure

Infrastructure Development in Vietnam

Vietnam’s first Law on Public-Private Partnerships (PPPs) that came into effect on 1 January 2021 marked a significant turning point in the nation’s approach to PPPs. With a more streamlined legal framework, the country has been able to attract more private investment in infrastructure.

The new PPP Law broadens the scope of industries in which PPPs are allowed, encompassing transportation, power transmission, power generation (excluding hydropower plants), irrigation, clean water supply, water drainage, sewage and waste treatment, healthcare, education, and IT infrastructure. Additionally, the law introduces standard contracts and revenue-sharing systems for PPPs. Although the PPP Law marks a considerable stride in drawing private investment into infrastructure, it has generated concerns among investors due to the lack of explicit government assurances for state-owned enterprise commitments and the mandate that project agreements be subject to Vietnamese law (rather than English or Singaporean Law as in previous instances). Nevertheless, considering the government’s past favorable disposition towards foreign investors, it is expected that the number of PPPs in the infrastructure sector will increase. The successful allocation of three segments of the North-South Expressway to the private sector between May and August 2021 under the new PPP Law further demonstrates investors’ positive reception of the legislation.


Infrastructure improvements have been crucial as Vietnam positions itself as a viable alternative to China in the regional supply chain. The country’s geographical location and extensive network of free trade agreements place it in a favorable position to benefit from ongoing trade disputes between China and the US. The government has implemented reforms that have opened up the economy, accelerated the privatization of state-owned enterprises, and brought about a steady recovery in real GDP growth.

Historically, the Vietnamese government has been the primary sponsor of the country’s transportation infrastructure sector. Although private sector involvement has been permitted in roads and ports, several other sectors, such as rail, airports, and pipeline infrastructure, continue to be state monopolies. However, due to budgetary limitations, escalating public debt, and the need to prioritize health and social expenditures amid the COVID-19 pandemic, the government’s capacity to finance infrastructure projects will be restricted. As a result, the private sector’s involvement in the development of national infrastructure is anticipated to increase significantly. The development plans for the nation’s roads, railways, and seaports from 2021 to 2030, as outlined in the Power Development Plan (PDP8) for the same period, alongside the approved list of 157 projects across various economic sectors requiring a total of USD 71.4 billion in foreign direct investment from 2021 to 2025, signify a major shift in the government’s strategy. This presents robust growth opportunities for both domestic and international investors.

Vietnam’s booming trade and increasing foreign direct investment have also led to significant growth in the country’s transportation infrastructure. As one of the most promising consumer markets in the Asia-Pacific region, Vietnam has experienced rapid economic growth, prompting the need for improved freight services and infrastructure to keep up with the increasing demand. Over the medium-term forecast period, real trade growth in Vietnam is expected to increase by an annual average of 8.5% YoY between 2022 and 2026, further highlighting the need for infrastructure improvements.

The country’s efforts to liberalize trade and engage in regional and international trade agreements have contributed to the expansion of its transportation infrastructure. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) have bolstered Vietnam’s trade ties with multiple countries, creating a positive outlook for Vietnamese trade and infrastructure development through to 2026.

Vietnam’s gross domestic energy consumption is projected to increase by 4.3% in 2022, driven by a robust economic growth of 7.6%. OOSGA forecasts an average annual growth in energy consumption of 4.3% per year in the 2023-32 forecast period. Petroleum products and natural gas consumption are expected to rise by 4.1% and 4.4%, respectively, with coal consumption up by 3%. The country will become increasingly reliant on energy imports as demand outstrips supply, with Vietnam projected to become an importer of liquefied natural gas (LNG) and continue its role as a coal importer.

Despite continued reliance on fossil fuels, Vietnam’s power capacity will steadily increase in the next decade, with recent policy statements indicating a growing preference for renewables. However, the latest version of the draft National Power Development Master Plan 8 for 2030 with a vision to 2050 (PDP-8) shows that coal would remain Vietnam’s main energy source until 2030. Vietnam aims to achieve net-zero emissions by 2050, but repeated delays in finalizing the PDP-8 and the increased role of coal in the latest draft have raised doubts about the country’s commitment to energy transition. By the end of the forecast period, combustible fuels (mainly coal and gas) are expected to account for 54% of Vietnam’s power generation.

The government has identified several issues that impact the drafting and finalization of the PDP-8, including a lack of appropriate legislative and regulatory mechanisms, lack of flexibility in negotiating feed-in tariffs, and further considerations relating to energy imports from neighboring countries. In November 2022, a leaked draft of the PDP-8 revealed that Vietnam had backtracked on a draft released just one month earlier that aimed to slow the growth in coal use by the end of the decade. The latest draft failed to draw interest from developed countries to strike a “Just Energy Transition Partnership” (JETP) with Vietnam. Indonesia signed a JETP during the G20 meeting in Bali in November 2022 with a group of developed countries.

Vietnam committed to reducing greenhouse gas emissions by 9% by 2030, but OOSGA expects total CO2 emissions from fuel combustion to grow by an average of 4% per year during the 2023-32 forecast period. New legislation on public-private partnerships came into effect in 2021, creating challenges for foreign-owned coal projects unless they have build-operate-transfer contracts and government agreements in place.


Industries & Regional Incentives

Law 32/2013/QH13 significantly altered and simplified Vietnam’s investment incentives regime, offering benefits to new investment or expansion projects in areas with socio-economic challenges and selected sectors. This reform amended the Law on Corporate Income Tax (14/2008/QH12) and provides tax incentives to large manufacturing projects that meet specific criteria. Both wholly local and foreign-invested companies can access these incentives.

Various incentives are available, such as a preferential 17% tax rate for ten years, a 10% tax rate for 15 years in localities with extreme socio-economic difficulties, and a 10% tax rate for 15 years for large manufacturing projects meeting certain criteria. Following the initial tax holiday periods, the enterprises are entitled to a 50% corporate income tax (CIT) reduction for a set number of years. The incentives do not apply to mining projects and the production of goods and services subject to special sales tax.

Decision 29/2021/QD-TTg, issued by Prime Minister Pham Minh Chinh in October 2021, introduced special incentives for larger-scale projects. Three schemes offer various benefits, such as reduced tax rates for extended periods, tax holidays, and land and water surface rent exemptions. These incentives apply to companies involved in high-tech, supply chain, technology-transfer, and production of goods with significant added value.

To qualify for incentives, expansion projects must increase output, productivity, or upgrade existing production technology. Incentives will not be granted to projects resulting from a merger or acquisition or those part of ongoing projects. Enterprises posting losses may carry forward their losses to the subsequent year, with a five-year limit.

Since early 2020, the government has introduced a series of measures to protect workers and businesses from the negative economic impacts of the coronavirus pandemic. Donations by corporate taxpayers to support and finance coronavirus prevention and control may be claimed as deductible expenses for the 2020, 2021, and 2022 tax years. The government also reduced corporate taxes for small and medium-sized companies during the 2020 and 2021 tax years and waived late payment interest arising in 2020 and 2021 on outstanding tax debts, land use levy, and land rent.

The Vietnamese government provides favorable tax incentives for companies engaged in environmental protection activities located in areas with difficult or extremely difficult socio-economic conditions, as stated in Decree 04/2009/ND-CP and its implementing Circular 230/2009/TT-BTC of the Ministry of Finance. These incentives include a preferential 10% tax rate throughout the operational period and corporate income tax (CIT) exemption for four years (from the first profitable year), followed by a 50% CIT reduction for nine consecutive years. Machinery, equipment, and materials not produced domestically and imported for direct use in these projects are also exempt from value-added tax. Environmental protection projects outside of these locations may qualify for the second incentive only.

In addition to the above, the Law on Corporate Income Tax (14/2008/QH12) outlines tax incentives for various other sectors. The Investment Law (61/2020/QH14) and Law 71/2014/QH13 also expand the list of sectors and industries entitled to incentives. These include new investment projects in high-tech, science research, technology development, development of the state’s infrastructure works, manufacture of computer software, education, vocational training, healthcare, culture, sports, environmental protection, production of high-grade steel or energy-saving products, manufacture of machinery and equipment for primary industry sectors, and micro-finance institutions.

Other sectors eligible for incentives include industries whose products support high-tech companies, production of new materials, new energy and renewable energy, production of electronics, key mechanical products, agricultural machinery, automobiles and automobile parts, and shipbuilding, among others. Investment in gerontology centers, psychiatric centers, treatment of patients poisoned by Agent Orange, and facilities for the care of the elderly, the handicapped, and homeless children are also eligible.

Circular 83/2016/TT-BTC exempts projects in the “specially encouraged sectors” from paying non-agricultural land-use tax as required under Law 48/2010/QH12. Furthermore, Decree 57/2021 (issued and effective June 2021) grants incentives to manufacturing projects that support the above industries, even if they commenced operation before 2015.

Law 04/2017/QH14 aims to support small and medium-sized enterprises (SMEs) and start-ups by providing various incentives such as corporate tax exemption for SMEs investing in distribution chains, access to credit guarantees and office/laboratory space for incubators, simplified accounting regime, free consultancy services and staff training, and exemption from enterprise registration fees.

Decree 13/2019/ND-CP also provides incentives for science and technology enterprises that derive at least 30% of their revenue from inventions, utility solutions, industrial designs, integrated circuits, novel technologies, and new livestock, plant and aquatic breeds. These enterprises are eligible for four years of CIT exemption and a 50% reduction in CIT payable for nine years. They also qualify for exemption from, or reduced fees for, land-use rights and may apply for government grants.

Finally, Decree 94/2020/ND-CP grants incentives to technology start-ups operating at several parks of the National Innovation Centre (NIC). The incentives include exemption from payment of land rentals during the entire lease term, which could last up to 50 years. Start-ups within the NIC park at Hoa Lac may also be eligible for a preferential income tax rate of 10% for 30 years from the first year revenue is earned, followed by a four-year income tax exemption and a 50% reduction in income tax for up to nine years.

The Vietnamese government offers preferential corporate income tax rates for investment projects in areas facing difficult conditions, including Lao Cai city, Ham Yen, Son Duong and Yen Son districts, Luc Ngan, Luc Nam, Yen The and Hiep Hoa districts, and Van Don district. These areas can attract a corporate income tax rate of 17% for ten years from the year revenue is first generated. Enterprises in these areas may also be granted a two-year CIT exemption (from the first profitable year) and a 50% CIT reduction for four consecutive years. Decision 353/QD-TTg identifies 74 other districts in 26 provinces that also qualify for these incentives. A new list is valid up to 2025.

Investment projects in extremely difficult areas, economic zones or high-tech parks are entitled to a preferential tax rate of 10% for 15 years from the year revenue is first generated. Enterprises in these areas may also be granted four years of CIT exemption (from the first profitable year) and a 50% CIT reduction for nine consecutive years. Decision 353 identifies all districts and towns of Bac Kan, Cao Bang, Dien Bien, Ha Giang, Lai Chau, Lao Cai, and Son La, as well as the Hoang Sa Island district of Da Nang, as extremely difficult areas. It also identifies 54 additional districts in 12 coastal provinces facing extremely difficult conditions.

The Vietnamese government provides more favorable incentives to new investment projects with capital of over D4,000bn at the Hoa Lac Hi-Tech Park in Hanoi, including a 10% income tax rate for 30 years, reduced land rent, simplified procedures for work permit applications for foreign employees, and multiple entry visas for foreign experts, investors, and their families. Under Decree 74/2017/ND-CP, companies investing in the infrastructure construction are exempted from paying land rent for the entire lease term.

Under Decree 142/2005/ND-CP, companies may be exempt from paying land rent for 11 years if they invest in difficult areas and for 15 years if located in extremely difficult areas. Circular 83/2016/TT-BTC of the Ministry of Finance provides additional incentives to businesses in difficult areas, including a 50% discount on non-agricultural land-use tax, while businesses in extremely difficult areas are exempt from paying the tax.

Circular 83/2016/TT-BTC provides an additional incentive to investment projects in extremely difficult areas: a duty exemption on imported fixed assets for a period of five years from the start of the production date. These benefits apply to first-time investments in hotels, offices, residences, audit and consulting services, technical services, supermarkets, golf courses, resorts, amusement parks, clinics, and financial institutions. These incentives are in addition to corporate income tax incentives granted to businesses in areas with difficult and extremely difficult socio-economic conditions.

An industrial zone (IZ) or park is an area where enterprises focused on producing industrial goods and providing services for industrial production are concentrated. Export-processing zones (EPZs) are industrial zones specializing in the production of goods for export and services for such production and export activities. Economic zones (EZs), intended to drive regional economic growth, are not different from EPZs.

  1. Decree 91/2014/ND-CP and the new Investment Law (61/2020/QH14) restored incentives for developers of IZs and businesses within these zones, including industrial parks in major cities, from January 1st, 2009. However, these incentives were lost under the Law on Corporate Income Tax (14/2008/QH12) if they were located in areas with difficult socio-economic conditions.
  2. The Law on Corporate Income Tax retained incentives for EPZs, high-tech parks, and EZs. New infrastructure projects in these zones receive a preferential 10% tax rate for 15 years, a tax holiday for the first four years of profitable operations, and a 50% tax reduction for nine years after the tax holiday.
  3. Services generated in EPZs receive a preferential tax rate of 15% for 12 years, with a two-year tax exemption and a 50% tax reduction for seven years after that. Businesses in EPZs also benefit from expedited customs clearance for both exports and imports.
  4. Decree 164/2013/ND-CP offers an additional incentive for IZs, EPZs, and EZs: a deduction from corporate income tax for the cost of building, maintaining, and renting apartments and other buildings for employee use. However, the 50% personal income tax reduction for employees in these zones was revoked under Decree 82/2018/ND-CP.
  5. The prime minister may grant tax incentives to businesses employing at least 500 people and investing in EPZs. These incentives include a tax exemption for up to four years and a 50% tax reduction for up to nine years. Circular 40/2009/TT-LDTBXH provides guidance on calculating the number of regularly employed workers.
  6. Vietnam opened its first EZ in 2003 and has since established at least 17 others, intending them to drive regional economic growth. However, Vietnam’s EZs have become ordinary EPZs, with incentives similar to those for high-tech parks and EPZs. Vietnam has over 300 IZs and EPZs, most of which are in EZs. Enterprises in these zones pay no duties on imported raw materials if the end products are exported.
  7. Decree 154/2013/ND-CP defines concentrated IT parks and grants incentives to their developers and tenants, including a 10% corporate tax rate for 15 years (or up to 30 in special cases), a four-year tax holiday, and a 50% tax reduction for nine years. Additionally, they are exempt from import tariffs for goods used in production and are given priority for land assignment by the state. To qualify, the park must employ a specific number of IT specialists or have a certain percentage of IT-specialized employees.
  8. Decision 52/2008/QD-TTg approved a plan to develop border-gate economic zones near Vietnam’s borders with Cambodia, China, and Laos to attract companies involved in trading, export, re-export, import, goods transport, and tourism services. The largest of these zones are Moc Bai on the Vietnamese-Cambodian border and Cao Bang near the border with China.
  9. Decision 33/2009/QD-TTg provides incentives for border-gate economic zones similar to other EZs, such as a preferential CIT rate of 10% for 15 years, a possible four-year CIT exemption from the first profitable year, and a 50% CIT reduction for nine years. The 50% personal income tax reduction for Vietnamese and foreign employees working in these zones, initially provided under Decree 164/2013/ND-CP, was revoked under Decree 82/2018/ND-CP. The government also offers state funds to support crucial infrastructure projects within these border-gate zones.

Financing in Vietnam

Vietnam’s financing sector is set to improve significantly, with its score increasing from 5.1 to 6.3 between 2022 and 2026, raising its global ranking from 59th to 50th and from 13th to 10th in Asia. This reflects extensive enhancements in both the banking sector and companies’ access to finance. The efforts to eliminate non-performing loans (NPLs) should expand companies’ access to credit, and although the pandemic has caused setbacks, the IMF’s Financial Soundness Indicators show that the NPL ratio has improved overall.

Financing conditions are expected to be tight in the first half of the forecast period, partly due to the pandemic-related increase in NPLs. Regulatory changes have also impacted short-term deposits and bond issuances, while policymakers are concerned about financial risks associated with speculative activities in the real estate sector. In response, the State Bank of Vietnam (SBV) has taken steps to restrict loans for property buying.

The government will continue its efforts to clear NPLs from banks’ balance sheets during the forecast period. The SBV’s proposal to extend the 2017 settlement scheme, Resolution 42, has been approved, extending the program until August 2025. This will enable the government to establish a lasting settlement framework, supported by initiatives such as the Vietnam Asset Management Company (VAMC) trading floor launched in October 2021.

Foreign access to Vietnamese stocks remains limited, primarily due to caps on foreign ownership of equities. Accounting and transparency rules for listed companies also do not meet the standards of advanced economies. The planned consolidation of the Hanoi and Ho Chi Minh Stock Exchanges into a single Vietnam Stock Exchange by June 2025 should enhance the markets’ efficiency and attractiveness for raising capital.

Following the restructuring of the stock exchanges, the Hanoi Stock Exchange will focus exclusively on bonds and derivatives, while the Ho Chi Minh Stock Exchange will serve as the primary platform for shares. This reorganization is expected to bolster the markets and create opportunities for businesses to access funding more effectively.

Venture capital is poised to play an increasingly crucial role in financing high-technology and startup sectors. Local startups raised $1.3 billion in 2021, up from $451 million in 2020, positioning Vietnam second in Southeast Asia. This growth indicates that industries such as logistics, ride-sharing, payments, smartphone messaging, and cloud computing will increasingly benefit from venture capital investments.

We are actively seeking experienced professionals in the field of finance, specifically for local markets. If you believe that our objectives align and there are potential collaborative opportunities, we kindly invite you to get in touch with us.

We are actively seeking experienced professionals in the field of finance, specifically for local markets. If you believe that our objectives align and there are potential collaborative opportunities, we kindly invite you to get in touch with us.

We are actively seeking experienced professionals in the field of finance, specifically for local markets. If you believe that our objectives align and there are potential collaborative opportunities, we kindly invite you to get in touch with us.


  • Infrastructure Developments: ICBOH, Energy Research Advisory Group
  • Labor & Productivity: UN, OOSGA, Expert Interviews, Country Statistics Office
  • Industrial & Regional Incentives: OOSGA Regulatory Database, Local Expert Partnership
  • Financing: Minister of Finance
  • Doing Business in Vietnam 2020 Report: World Bank
  • Doing Business in Vietnam 2022 Report: EY
  • Business Guide in Vietnam: HSBC
  • Legal Document: LuatVietnam
  • Infrastructure Developments: World Bank Project Database
Author: BE Team

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