Why Vietnam Country Report 2022 by VietnamCredit?

Following the Vietnam Country Report publications of the previous years, Vietnam Country Report 2022 is another comprehensive report on the situation of Vietnam which is formed under the PEST analysis method, focusing on four major aspects including Politics, Economics, Society and Technology in order to give an overview of Vietnam in the past and forecast trends in 2022.

Information in Vietnam Country Report 2022 is deprived from reputable data sources such as General Statistics Office (GSO), General Department of Vietnam Customs, Ministry of Finance, Ministry of Labor - Invalids and Social Affairs, Ministry of Science & Technology, International Monetary Fund (IMF), Asian Development Bank (ADB), World Bank (WB), etc.

Moreover, the report is also based on business data provided by VietnamCredit, a business information company that has systematically collected information of companies for nearly 30 years.

Therefore, we believe that this report is an indispensable useful tool for policymakers, researchers, investors and large corporations in the business decision-making process in Vietnam.

An insightful overview of Vietnam in 2022

Political & legal environment

Vietnam was once an economically exhausted country which was isolated from the rest of the world. Since 1986, Vietnam has implemented an open-door policy, also known as “Doi moi”. After more than 30 years of following this policy in pursuit of a market economy, Vietnam has turned from a poor and backward country to a low-middle-income country.

Nowadays, many companies as well as individual investors around the world are paying special attention to Vietnam. They come looking for business opportunities in a country of 100 million people with a stable political environment that is integrating more and more deeply with the global economy.

According to the report of the World Bank 2021, the average political stability index of Vietnam from 1996-2020 was 0.22 points (on a scale of -2.5 to +2.5). This index scored Vietnam at -0.07 in 2020, with a maximum score of 0.53 occurring in 1996. In 2020, the World Bank ranked 194 countries and the overall average score for political stability was -0.07.

Vietnam’s business legal system is comprehensive. In addition, the Government has recently begun conveying a message of transparency in governance and is starting to remove privileges for certain groups.

The amended Law on Investment 2020 introduces detailed procedures to ensure that there is no overlap between areas that may lead to differing interpretations, resulting in the investors’ redemption. The State continues to affirm to protect investment as well as introduce many incentives to encourage investment, ensuring that those incentives remain effective for investors even when there are regulatory changes.

Economic environment

According to the IMF, the size of Vietnam's economy in 2021 ranked 6^th in Southeast Asia with an estimated value of USD 368 billion, following Indonesia, Thailand, Philippines, Singapore, and Malaysia.

Vietnam's economic growth rate hit 7% for the second straight year in 2019, with factories relocating from China as the Sino-U.S. trade war intensified. Vietnam was also one of only a few countries to post GDP growth in 2020 when the pandemic broke out. The IMF estimates that Vietnam's GDP will increase by 6.6% in 2022, with global companies apparently yet to lose their appetite for investing in the country.

Vietnam is in the top 20 economies with the largest trade scale in the world based on the value of import and export turnover in 2021. Import-export turnover of Vietnam exceeded USD 668.55 billion in this period.

Vietnam's economy is expected to surpass that of Thailand in the coming years. The prolonged US-China trade war spurred a wave of production being shifted out of China, with Thailand and Vietnam being considered as two promising destinations for foreign investors. In particular, Vietnam has competitive advantages over regional rivals thanks to many advantages.

In recent years, there has been a dramatic change in the structure of Vietnam's economy. Specifically, there is a tendency to decrease the proportion of agriculture, forestry, and fishery, and increase the proportion of industry, construction, and services.

Socio-cultural environment

The average population of Vietnam in 2021 was 98.51 million people, an increase of 927 thousand people, equivalent to an increase of 0.95% compared to 2020. The quality of the population has improved, fertility has decreased, and replacement fertility has been maintained since 2005. The mortality rate has remained at a low level and average life expectancy has increased.

In 2022, the population of Vietnam is expected to grow by 785 thousand people and reach 99.33 million people by early 2023.

Vietnam has a relatively even population structure, with 49.1 million males and 49.41 million females, comprising 49.8% and 50.2% respectively of the population. The sex ratio of the population in 2021 was 99.4 males/100 females, lower than the global sex ratio of 101.68 males/100 females (according to statisticstimes.com).

The Human Development Index (HDI) in 2020 of Vietnam was 0.706; higher than in previous years.

Regarding labor force, the number of the trained workforce aged 15 and over with degrees and certificates in 2020 was 24.05 million, the highest in the past 5 years. In particular, the labor force with university/postgraduate degrees accounted for the highest proportion of 46% with 11.12 million people.

The unemployment rate of working age workers in urban areas was 5.09%, down 0.45% from the previous quarter and up 1.39 percentage points over the same period of the previous year. However, Vietnam still has one of the lowest unemployment rates globally.

Technological environment

The total spending on R&D of Vietnam is USD 1.8 billion. Vietnam's average spending on R&D per labor is relatively low compared to other countries in the region, estimated at under USD 20 per labor.

Vietnam is in the group of countries with a relatively low R&D spending to GDP ratio, with a rate of 0.5% of GDP (2017) while the world average rate is 2.27%.

In terms of research area, Vietnam has the highest investment concentration in S&T and industry sectors, accounting for more than 70% of total R&D spending.

In 2020, Vietnam kicked off the national digital transformation goal with three main pillars: digital government, digital economy and digital society. Due to many factors, especially the COVID-19 pandemic, by the beginning of 2022 the number of public services integrated on the national public service portal had increased sharply to more than 3,500 types of services. The number of synchronous processing status records on the national public service portal was more than 102 million records, and the number of online applications made through the portal was nearly 3 million records.

Vietnam’s global innovation index (GII) in 2021 ranked 44^th out of 132 economies, achieving first place in the group of low middle-income countries. In Southeast Asia, Vietnam ranked 3rd after Singapore and Malaysia.

In 2021, Vietnam's input innovation ranking decreased by 2 points and output innovation remained at 2020’s level. The business sophistication level was significantly improved, up 12 points from a ranking of 34 in 2020.

VietnamCredit