Doing Business in Vietnam
Last updated 12 July 2024
Exploring Business Opportunities for Australian Enterprises
Australia's businesses seeking expansion are setting their sights on Vietnam, a rising star in Southeast Asia. The nation boasts robust economic growth and a strategic location, offering a diverse range of opportunities for companies looking to invest.
In my previous articles, I have looked at what is driving the core sectors and key countries set for growth in Southeast Asia. In this article, we are taking a closer look at the opportunities, initiatives, and challenges that have made Australian enterprises start looking to Vietnam for business growth and expansion.
Why Vietnam?
Vietnam’s economy is one of the fastest-growing in the world, driven by a youthful population, economic openness, political stability, and ambitious growth targets. For Australian businesses, Vietnam represents a chance to diversify trade partners and products.
Like many countries, enhanced commercial links are expected to fuel prosperity and security between countries, promising more and better-paid jobs in Vietnam and increased national income for both regions.
Sectors to Watch
Agriculture and Food
With Vietnam's economy expanding, the demand for premium food and beverages is rising. Two-way trade surpassed A$6 billion in 2022, with the key industries for trade including agriculture, fisheries, and forestry. As the barriers to doing business relax, there are potentially new opportunities for Australian investors to expand food production and add value to downstream processing industries.
Resources and Energy
Energy and resources exports constitute over half of Australia’s exports to Vietnam. There's a growing demand for coal, iron ore, aluminium, copper, zinc, and lead. At the same time, the renewable energy sectors such as solar, wind, and battery storage present significant investment opportunities as reliable energy options are sought to support a growing population.
Education and Skills
Vietnam is actively seeking educational partnerships, presenting opportunities for universities in program delivery, staff and student exchanges, and collaborative research. This means that vocational education and training (VET) also hold great business potential, as does attracting more tertiary, VET, English-language, and school students from Vietnam to Australia.
Healthcare
There are growing healthcare needs of the Vietnamese population, and with need is the potential opportunities to promote Australian private care models for disability care, aged care, and childcare to support the needs of the growing Vietnamese population.
Digital Economy
I have previously touched on the digital and sustainable economy, a high-growth sector across Southeast Asia, and Vietnam is no different. In fact, broader cooperation mechanisms are being developed under the Digital Economy Memorandum of Understanding, which is set to open doors for Australian tech companies and support businesses in better understanding digital trade rules.
Tourism
A sought-after destination for many Australians, expanding tourism promotion and building industry capability to meet Vietnamese demand is another area ripe for investment, and promoting newly established direct flights between Australia and Vietnam is expected to further boost tourism flows.
Challenges to Consider
Vietnam's regulatory and investment framework and complex approval processes can pose significant challenges for foreign entities looking to do business in the region. So, it is important that businesses be well-prepared, strategic and patient when establishing a foothold in the region.
To date, commercial ties have been limited by a lack of business awareness, regulatory barriers, and the opportunity costs of doing business with the region. Active efforts from both governments are required to address these issues, so it is promising to see the establishment of initiatives designed to address some of the challenges of doing business. One such initiative is the Enhanced Economic Engagement Strategy (EEES), which is a framework aimed at strengthening the trade and investment relationship between Australia and Vietnam.
Key initiatives of the EEES include:
Investment Missions: Establishing missions to deepen the understanding of opportunities in Vietnam.
Digital Trade Facilitation: Supporting businesses in understanding digital trade rules.
Ministerial Dialogues: Holding Energy and Resources Ministerial Dialogues to foster collaboration.
Attracting Students: Increasing efforts to attract more students from Vietnam to Australia.
Promoting Direct Flights: Enhancing connectivity with newly established direct flights to bolster tourism.
At CSLB Asia, we understand the challenges and the opportunities and have assisted a range of businesses in setting up and operating successfully in the region. While the potential rewards are significant, the need for a strategic approach that leverages initiatives like the Enhanced Economic Engagement Strategy is equally important. It is also important to consider that achieving Vietnam’s ambitious growth targets, such as net zero emissions by 2050, requires substantial market and institutional reforms; this means we are likely to see even more changes to the business landscape over the coming years.
At the end of the day, navigating the Vietnamese market is significantly easier with a partner who understands both the culture and the business requirements. If you are ready to explore the opportunities in Vietnam, please reach out for a chat and find out how we can help your business expand into Southeast Asia!
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Disclaimer: This article reflects my personal interpretations and opinions as a thought leader in compliance in Asia.
Last updated 12 July 2024