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Top 5 industries for foreign investors in Vietnam post Covid-19 pandemic

Top 5 industries for foreign investors in Vietnam post Covid-19 pandemic

Tuesday 12, 01 2021
Thanks to a timely and effective COVID-19 response plan, Vietnam's economy has overcome many difficulties during the pandemic, which helps it attract the attention of many investment funds and international businesses.

1. Construction industry

Construction is one of the fastest growing industries in Vietnam. Over the past 10 years, Vietnam's construction industry has grown at a rate of 8.5% per year. This growth momentum promises to remain high because the government will still promote infrastructure and transportation to meet the demand for travel and economic trade with other countries, and to attract more foreign direct investment resources into economic zones and commercial centers.
Construction industry
Urbanization is still happening and will continue to create demand for development and expansion of new residential areas. The increasing rate of urbanization has helped the real estate and construction materials market achieve positive growth.

According to Fitch Solutions, the Vietnamese construction sector is expected to grow rapidly with an annual growth of over 7% over the next decade with support from strategic investment funds. Foreign direct investment (FDI) will play an important role in the development of Vietnam's construction industry in the future when Vietnam becomes a global manufacturing hub. The COVID-19 epidemic has caused many trading companies to start shifting production lines from China to other countries, especially Vietnam.

2. Manufacturing

Vietnam is an attractive destination for international businesses and manufacturers of machinery and equipment. The impact of the COVID-19 pandemic and trade tensions have prompted the shift of production lines from China to Southeast Asian countries.
Currently, many manufacturing companies are planning to relocate their production sites to find alternative markets in the context of high prices. In particular, multinational trading companies such as Samsung, LG and many Japanese electronics manufacturers have moved factories from China and India to Vietnam, or set up new production facilities in Vietnam instead of China.

A huge advantage of setting up a manufacturing company in Vietnam is cost. Labor cost in Vietnam is only one third of that of China, while production line costs are low and there are more tax incentives.

3. Real estate

The trade war and the COVID-19 pandemic have once again brought great benefits to Vietnam, and real estate enjoys no exception. That factories are moving from China to Vietnam has created a great demand for this sector. Because of the pandemic outbreak, thousands of overseas Vietnamese all over the world have returned to their hometowns to establish a career, which is also a great opportunity for the real estate market in Vietnam.
Real Estate
Previously, foreign real estate funds had also entered the housing segment, often in the form of a partnership with a local developer. The current housing market has shifted its focus from the high-end to the affordable segment, as urbanization has created a continuing demand for housing in major urban centers.

International firms, especially those from India and Japan, are seeking to support, and at the same time find opportunities in projects such as roads, power generation and transmission, and rural electrification.

However, the reality will not be as easy as expected for international enterprises in Vietnam. There will be some key differences between investing in real estate as a domestic company and as a foreign company. Investors should learn how this market works and understand the procedures before making any decision. 

4. Ecommerce

In recent years, Vietnam has witnessed the resurgence of the e-commerce industry with growth rates ranging from 25-35% per year. These figures are expected to increase further this year as the COVID-19 pandemic has greatly affected goods transactions as well as consumer demand. It has even changed the shopping habits of consumers, from traditional shopping to cybershopping.
In 2020, Vietnam had a population of nearly 97 million with 67 million smartphone and Internet users, and 58 million social media users. This makes Vietnam an attractive country for e-commerce companies.

There are 3 popular types of e-commerce that international businesses in Vietnam should pay attention to:

  • Online retailers: Having their own online warehouse and distribution channel, not dependent on other e-commerce platforms.

  • Online marketplace: A website or application that supports shopping from many different sources. The owners do not sell products, but let other businesses do business on their platforms instead.

  • Online classifieds: In Vietnam, online classifieds sites are quite similar to online markets. The main difference is that this platform does not provide payment services and does not control the status of products sold.

5. Fintech

The Financial Technology industry in Vietnam is considered as a potential investment field, attracting capital from many "sharks". According to a joint report by PWC, United Overseas Bank (UOB) and Singapore Fintech Association, in 2019, Vietnam ranked second in ASEAN in terms of investment in Fintech, attracting 36% of foreign direct investment, which is second only to Singapore (51%).
Although the COVID-19 epidemic had a negative impact on many industries, it has created a great opportunity for the Fintech industry.
Assessing the opportunities for Fintech investment funds in Vietnam, Mr. Tran Viet Vinh, CEO of FIIN Financial Technology Innovation Co., Ltd. said that this period brings opportunities for businesses operating in the electronic payment and finance sector in Vietnam. Consumers are gradually using e-money to during the pandemic, and will continue to do so after they realize how convenient electronic payments can be.

Source: offshorecompanycorp

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