Country Starter Pack
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Vietnam COUNTRY STARTER PACK Country starter pack 2 Introduction to Vietnam Vietnam at a glance POPULATION - 2018 GDP PER CAPITA (PPP) - 2018* SURFACE AREA US$7,482 Contents 331,200 1. Introduction 4 97.1 INCOME LEVEL 1.1 Why Vietnam? Opportunities for Australian businesses 5 square kmS 1.2 Vietnam at a glance 9 million lower middle 1.3 Vietnam and Australia: the bilateral relationship 16 *Gross Domestic Product (Purchasing Power Parity) IMF 2. Getting started in Vietnam 20 GDP GROWTH 2018 CAPITAL CITY GDP 2018 2.1 What you need to consider 22 2.2 Researching Vietnam 32 2.3 Possible business structures 35 US$ 241.43 billion 2.4 Manufacturing in Vietnam 40 POLITICAL STRUCTURE 3. Sales and marketing in Vietnam 42 6.6% 3.1 Direct exporting 43 3.2 Direct selling 46 3.3 Franchising 47 GDP GROWTH FORECAST (IMF) Single party socialist republic 3.4 Licensing 48 6.5% (2019-2023) 3.5 Online sales 48 Hanoi 3.6 Marketing 50 GENERAL BUSINESS HOURS 3.7 Labelling requirements 53 RELIGION CLIMATE CURRENCY FISCAL YEAR 4. Conducting business in Vietnam 56 Monday to Friday 4.1 Vietnamese culture and business etiquette 57 4.2 Building relationships in Vietnam 60 4.3 Negotiations and meetings 63 Jan - Dec 9am - 6pm 4.4 Due diligence and avoiding scams 66 INTERNATIONAL DIALLING CODE 5. Business practicalities in Vietnam 68 5.1 Laws and regulations 69 Diverse sub-Tropical Vietnamese Dong CALENDER YEAR 5.2 Import duties, tariffs and regulations 74 VIETNAMESE FOLK-RELIGION (73%), (VND) 5.3 Taxation 77 BUDDHIST (12%) CHRISTIAN (8%) 5.4 Audit and accountancy 82 5.5 Employing workers 83 > +84 5.6 Banking in Vietnam 86 5.7 Repatriating profits and getting paid 87 STOCK EXCHANGE 6. Visiting Vietnam 88 TIME DIFFERENCE AUSTRALIAN IMPORTS AUSTRALIAN EXPORTS EXCHANGE RATE Ho Chi Minh City Stock Exchange (HOSE) 6.1 Visas 89 FROM AUSTRALIA FROM VIETNAM (2017-18) TO VIETNAM (2017-18) (2018 AVERAGE) Hanoi Stock Exchange (HNX) 6.2 Currency 90 6.3 Air travel and airports 90 3 hours A$6.9 A$6.1 (vnd/AUD) OFFICIAL LANGUAGE 6.4 Ground transport 92 behind (AEST) billion billion A$1 = vnd 17,201.34 6.5 Hotels and dining 94 Vietnamese (Tiẽng Việt) 6.6 Health and welfare 96 7. Engage with us 100 Country starter pack Country starter pack 4 5 Introduction to Vietnam Introduction to Vietnam 1.1 WHY VIETNAM? OPPORTUNITIES FOR 1. Introduction AUSTRALIAN BUSINESSES Vietnam is one of Asia’s great economic success stories of the past 30 years. Since economic reforms were implemented by the national government from 1986, Vietnam has experienced unprecedented economic growth, with an average annual increase in GDP of 6.5 per cent. With a young and energetic population – 40 per cent of its 97.1 million people are under age 24 – Vietnam is projected to remain among the world’s fastest growing economies over the next decade, and one of Asia’s best business and investment destinations. As Vietnam’s Government continues to make the country an easier place to do business and encourage private enterprise – the standard corporate tax rate was cut from 22 to 20 per cent on 1 January 2016 – there has never been a better time for Australian companies to consider doing business there. Consider some key facts: • Thanks to the availably of cost-competitive labour, improving infrastructure and international trade links, the country has quickly established itself as the go- to destination for labour-intensive and increasingly advanced manufacturing. Vietnam’s production of textiles, vehicles and electronic devices has increased by 15 to 30 per cent in a few short years. • Economic growth in Vietnam in 2018 was 6.6 per cent. Over the coming decades, Vietnam is forecast to have some of the highest growth rates in the world. • Its January 2007 admission into the World Trade Organisation further established Vietnam's role in the global economy and reinforced the domestic economic reform process. • Vietnam has one of the highest internet penetration rates in Southeast Asia, with almost 54.7 million people having access to internet. • The Vietnamese workforce is young, dynamic and ready to transform Vietnamese industry. • Vietnam received USD 19.1 billion in foreign direct investment in 2018, a 9.1 per cent increase on the previous year, making it an investment hub that is primed for growth and participation in international markets. Country starter pack Country starter pack 6 7 Introduction to Vietnam Introduction to Vietnam In this environment of rapid economic transformation medium-sized Vietnamese food processors who prefer to There are also increasing opportunities for Australian between Vietnam and Australia. in Vietnam, it should not be surprising that trade buy in smaller amounts than by the container load. businesses in agricultural and fishery service industries, between Australia and Vietnam is flourishing. Other as Vietnam strives to modernise its farming sector to Tourism: Vietnam and Australia share a large flow of positive factors are at work too. In particular, a series Food and beverage: Rising consumer spending and increase its efficiency, output and global competitiveness. tourists in both directions. Australia is the 6th most of new regional trade deals and bilateral partnerships changing lifestyles in urban areas are increasing demand Primary industries – particularly rice farming, coffee popular non-Asian tourist destination for Vietnamese, involving the two nations – including the landmark for snacks, convenience and luxury food and beverage production and fisheries – are major components of with more than 1.5 million trips made annually. Despite ASEAN-Australia-New Zealand Free Trade Agreement items in Vietnam. As many Vietnamese become wealthier the Vietnamese economy, with agriculture contributing relatively low average incomes in Vietnam, its outbound (AANZFTA) – have lowered barriers to Australian and their tastes become more varied, they are also about 14.6 per cent to annual GDP in 2018. Vietnam tourism sector is one of the fastest growing in Asia, and exports to Vietnam and been a strong driver for growth in becoming more health conscious, providing opportunities is expected to become the world’s largest producer of holds significant opportunities for Australian tourism two-way trade in goods and services, which is now worth for food and beverage manufacturers that specialise in coffee in coming years, and already ranks as the fifth operators. AUD 13 billion annually. health-oriented products. largest producer of rice. Vietnam is the third largest A push by the Vietnamese Government towards rubber producer in the world and produces 7.3 per cent Health: Dairy: Due to the French influence in Vietnamese achieving universal health cover has prompted predictions More opportunities for Australian exporters are set to of the world’s rubber. open up as Vietnam’s economic growth fuels higher history, dairy products are more widely embraced than in of massive growth in the markets for pharmaceuticals disposable incomes and increased demand for imported some other Asian cultures. But per capita consumption As these sectors continue to grow and require ever- and healthcare services in coming decades. About 60 per goods, including western-style food and other consumer remains relatively low, and growth potential is huge. more sophisticated supply management options, cent of pharmaceutical products in Vietnam, and 90 per goods. The Trans-Pacific Partnership (TPP) holds the The planned development of new supermarkets and opportunities for Australian service industries will also cent of active ingredients, are currently imported. Trust prospect of further reductions in barriers to trade with hypermarkets will present opportunities for suppliers of grow. Agricultural producers across the country are in in locally-made pharmaceuticals is limited, given the issue Vietnam. Australian suppliers of energy, dairy products, dairy consumer goods such as milk, powdered milk, dairy need of new technologies and improved physical and with counterfeit medicines and lack of quality control, meat, consumer goods, packaged food and beverages, spread, ice cream and cheese. technical infrastructure – areas in which Australia is which means imported goods with established brands can wheat and machinery are particularly well placed. Growth take advantage of this. The Government has allocated Australia is a major exporter of live cattle highly credentialed as a potential supplier. in personal incomes has also increased demand for Agribusiness: AUD 1.9 billion (VND 32.7 trillion) preferential tax to Vietnam (it accounts for 19 per cent of our total live education and training services, an area in which Australia Another area of opportunity is in the supply of animal conditions for foreign participation in the local industry, cattle exports) and wheat. We are also one of the five is particularly strong. feed. Demand for animal feed is growing rapidly, and in creating an opportunity for well-regarded Australian biggest suppliers of cotton to Vietnam’s massive textile recent years the industry has welcomed more foreign healthcare providers. Australian products are perceived in Vietnam to be of industry and, since 2012, the Out of Vietnam project at investment. As local production of animal feed only meets high quality; allowing them to be positioned in higher- Australian Wool Innovation (AWI) has been transferring about one third of demand, the opportunities for foreign Aged care is another area of opportunity. Although only priced market segments. Australian suppliers also have advanced wool processing technologies to Vietnamese firms to invest and expand their businesses in Vietnam are seven per cent of the population is aged 65 and older, this quicker response times to market needs than suppliers textile and apparel makers, generating increased demand considerable. figure is estimated to double within 20 years. The next from Europe and the USA, due in part to geographic for Australian wool. Opportunities in all of these core generation of elderly people in Vietnam will be wealthier proximity.