Why are companies heavily expanding investment in Vietnam?
- The investments are profitable
65.1 percent of Japanese businesses operating in Vietnam reported profits while 70 percent are making plans for expansion in Vietnam, as pointed out by Hironobu Kitagawa, chief representative of Japanese External Trade Organization (JETRO) at a meeting in the beginning 2018.
In the mean time, most of Korean companies in Vietnam reported profits as well, and many plan to increase investment.
- Favorable business conditions
Foreign investors in Vietnam are enjoying rapidly improving business conditions. For politics and social state of affairs are between the most stable in Southeast Asia. For GDP growth achieved 6.7% in 2017 and the domestic consumer market of 92 million people will exceed $ 3000 GDP percapita by 2020. For administrative procedures (tax, custom, etc.) and documentation are being cut and digitalized. Vietnam has also been proactive in intergrating its economy to the global value chain by engaging in 16 Free Trade Agreements with developed countries across the world.
Furthermore, the best tax package is unconditionally granted to companies operating in special economic zones, for the DEEP C Industrial Zone is a particular example. Tenants in the zone will have corporate tax reduced down to the extent of one third the normal tax scheme of 20% annual profit in the first 15 years, depending on the project’s revenue, and 50% personal income tax reduction for the entire project’s life.
- Infrastructure development
Apart from being the destination for most of Japanese infrastructure investment in Southest Asia, Vietnam itself has been ugrading its facilities dramatically.
In Hai Phong, the nothern port city of Vietnam, several expressways, crossborder railways, and international airport systems have been newly developed and are fully operational. A deep sea port with -14m draft is under final construction and will be receiving the first vessel in May 2018.
In the epicenter of these infrastructure developments, investors can already find the fully developed DEEP C industrial zones equiped with reliable utilities such as power, water, wastewater treatment, etc., which make it easy and quick to set up a business and operate hassle free.
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