Vietnam: access a thriving economy with international connections

Vietnam has been on a remarkable growth journey in recent decades. It implemented a series of “Doi Moi” liberalization reforms in 1986, joined the World Trade Organization (WTO) in 2007 and signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in 2018.¹ Over this time, it has transformed from one of the poorest nations on earth to a lower-middle-income country with a burgeoning economy.

Vietnam has taken major strides to open up its economy to global investment, adopting a pro-investor stance and reducing bureaucracy in order to facilitate foreign investment (FDI).² The economy grew by a robust 8% in 2022 and is forecast to grow at 6.3% in 2023.³ Forecasts project the economy to grow from US$327 billion in 2022 to US$470 billion by 2025, reaching $760 billion by 2030.⁴

FDI is a key pillar of Vietnam’s economic growth, accounting for 4-6% of GDP annually and having accrued US$438 billion as of December 2022⁵. Multinational businesses operating in Vietnam contribute more than 70% of the country’s export value and more than 45% of the country’s industrial output.⁶ Key to this growth is the country’s progressive regulatory environment, which presents many opportunities for foreign businesses seeking to enter Vietnam’s e-commerce, healthcare, infrastructure, logistics, and renewables sectors. The service sector is the largest sector of its economy, accounting for 41% of GDP in 2021⁷ and growing by 9.99% in 2022.⁸

Vietnam’s rising success is due in large part to its extensive trading corridors and progressive trading policies. It receives FDI from 100 countries around the world but has a special focus on the intra-Asian trading corridor. Singapore, South Korea, and Japan are among that country’s top investors, representing 58% of total FDI in 2022.⁹ In terms of exports, the US is now Vietnam’s largest export market, followed by China and the Eurozone.¹⁰ Businesses operating in the country are now able to access 55 markets around the world, including 15 within the G20.¹¹

As well as driving growth by encouraging external investment, Vietnam has undertaken significant trade liberalisation in order to build an export-oriented economy. To enable this, the country has established 15 Free Trade Agreements¹² as well as signing a number of regional Free Trade Pacts. Its electronics sector has grown from representing only 5% of exports in 2000 to more than 35% in 2023¹³, setting the country up as a global electronics production hub.

Vietnam’s rising economic fortunes have led to a growing private consumption market that may soon exceed that of the UK, Germany and Thailand, establishing its place in the top 10 largest consumer markets in the world by 2030¹⁴ . It’s population of almost 100 million has a median age of under 32¹⁵ and is host to a young and growing workforce.

Despite its progressive trade policies, challenges remain for businesses moving to Vietnam. In 2023, the country ranked 46 out of 78 in TMF Group’s Global Business Complexity Index¹⁶ . All reporting and filing paperwork must have certified Vietnamese translations notarised by courts in the business’s home country and verified by a Vietnamese embassy. While the Vietnamese Dong is pegged to the US Dollar, currency transactions – especially outflows – are heavily regulated.

While the country is streamlining regulations to attract foreign businesses, you will still need an experienced partner to help you navigate the country’s bureaucracy, which can be opaque and has not adopted international disclosure standards.¹⁷

You will also need to navigate language barriers to achieve success in Vietnam. Although basic English is fairly widespread throughout the country, most English speakers are not proficient in a business context. As well as this, social interactions and personal relationships play a key role in Vietnamese business culture. When you partner with HSBC you have access to our multilingual team; with fluency in 24 languages, to help you overcome any cultural or linguistic challenges of doing business in Vietnam.

To take full advantage of establishing your business in Vietnam, it is recommended to partner with a bank that has extensive experience of this growing market. HSBC’s International Banking team connects you with the flexible financing solutions you need to do business across borders.

We help you optimise the management of working capital and streamline your finances while leveraging our global network to identify growth opportunities in new markets. Our HSBCnet online banking solution gives you total visibility over your global finances in real-time and keeps you ahead of technological changes while navigating regulatory and local market challenges.

Our international banking model can help you expand into new countries like Vietnam while benefitting from our global network. Our team is structured to complement your own team, with dedicated local relationship managers for your subsidiaries and a global relationship manager for your parent company.

Vietnam offers significant opportunities for businesses seeking to establish a presence in the country. But to be successful you need a partner that combines local knowledge and market insights with global expertise. HSBC has had a presence in Vietnam for over 150 years and has developed a strong understanding of this thriving market and its local nuances. Administrative challenges still remain for businesses entering the country, but when you partner with HSBC, we can help you navigate these regulatory challenges.

We can also offer you access to effective digital solutions to manage all your treasury needs and structured trade solutions to optimise working capital. While in addition we are also here to support you in your sustainability journey. HSBC Vietnam has committed to supply up to US$12 billion of sustainable finance in Vietnam, in support of the country’s ambition to go carbon neutral by 2050¹⁸.

By leveraging the power of digital banking, our local knowledge, aligned with our global expertise and network connection, HSBC can help to provide the support you need to achieve your business ambitions in Vietnam.