As Vietnam places a greater emphasis on its digitalization effort and continued focus on technology-backed industries, it is drawing comparable investments, with revenue amounting to 861 million USD in 2021, up 27% from 2020. Singapore has been a significant contributor to Vietnam’s FDI inflows during the last few years and retained its place as the number one foreign investor in the country. The expanding middle class, competent and inexpensive labor, and extensive trade linkages that present varied attractive prospects to those investing in this flourishing young economy are the reasons why Singaporean tech companies are primarily interested in Vietnam.
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Furthermore, due to the outstanding bilateral connections between these two countries, Singapore’s overall FDI contribution to Vietnam in the first 10 months of 2021 was USD 6.7 billion, accounting for 32.5% of all FDIs into Vietnam, according to Vietcetera. Cementing Singapore as the principal FDI contributor, some of the compelling arguments for investing in Vietnam are highlighted in this article.
In this article, we will highlight some of the compelling reasons for investing in Vietnam that could be highly lucrative for Singaporean tech companies.
MRA Grant – Helping Singaporean SMEs Expand
The Market Readiness Assistance Grant (MRA) provided by the Singaporean government provides financial assistance to Singaporean small & medium enterprises looking to expand overseas. The MRA grant opens up a world of possibilities for Singaporean SMEs by allowing them to scale their business globally. Budget 2021 offered a maximum level of support of up to 80%, with the grant being extended for six months until March 31, 2022. Furthermore, through March 31, 2023, a level of support of up to 70% would be continued.
Additionally, starting April 1, 2021, Trade Credit Insurance (TCI) has been added as a viable sector for businesses to safeguard against buyer defaults when entering new international markets.
RELATED: Singapore’s MRA Grant – Market Expansion into Vietnam
Vietnam’s Strong Tech Foundations
Over the previous five years, Vietnam’s information technology market has been fostered at a rate of 26.1% per year, making it one of the country’s most important economic sectors and a major source of income for the government. Furthermore, an increasing number of small-scale technology businesses are transitioning and seeking new business prospects aggressively. Some examples of impressive Vietnamese tech startups are listed below:
Some significant examples of Vietnam-based IT businesses with strong foundations and worldwide expansion potential include:
VNG is one of Vietnam’s most well-known native IT firms. Cloud Computing, E-payments, Cloud Computing, and Mobile Application Development are among its goods and services. It’s most famous product is messaging app Zalo, which is the most popular in Vietnam.
NFQ is a big software outsourcing company with European clients. Although it was founded in central Europe, the company’s primary office in Ho Chi Minh City handles all engineering and operations.
Mobile Money and 5G telecommunications networks are two recent advancements that have a positive long-term influence on telecom firms’ future.
The Current Tech Landscape
According to a report by TechInAsia, Southeast Asian firms tend to have their base set up in Singapore, with designers in Thailand, customer support in the Philippines, engineers in Vietnam, and customer base in the United States and European Union.
Vietnam has made major expenditures in science, technology, engineering, and education during the past 15 years. Due to greater internet access and a young, low-cost workforce, it has resulted in a growing IT outsourcing sector.
According to the Ministry of Science and Technology of Vietnam, the country boasts more than 30,000 IT businesses and generates over 80,000 IT graduates each year.
Furthermore, it has surpassed China as Japan’s second-largest software outsourcing partner, behind only India. IBM, Intel, Oracle, Samsung, and Grab have substantial research and development centers there according to TechInAsia.
Fintech – Digital Payments, an Untapped Goldmine
Vietnam has set the stage to become Southeast Asia’s next fintech hotspot, following Singapore and Indonesia. With over 70% of the country’s population having limited or no access to banking services, there is plenty of room for players who can provide various financial services.
Two financial businesses, MoMo and VNPay, have secured some of the few significant agreements announced in Vietnam in 2019. Despite the shifting narrative, investors continue to be positive about the country’s fintech prospects. In this extremely receptive market, Singaporean IT businesses that deal in digital payments must figure out how to increase their product offerings.
Intel opened a $1 billion chip manufacturing facility in Ho Chi Minh City, Vietnam, in 2010, solidifying the country’s reputation as a growing manufacturing hub. Vietnam’s ambition to become a global leader in electronic manufacturing has been realized. People have recently started welcoming tech businesses from Singapore with open arms instead of textile and food exports. One of the most prominent entrants is Samsung, which accounts for producing 120 million units annually in Vietnam.
Vietnam is poised to become a leader in high-tech manufacturing due to its low-cost workforce. Textiles are no longer the country’s most important export. Consumers are on the cusp of a hardware-oriented Vietnam, with tiny businesses like Semtech Viet producing low-cost consumer goods and larger businesses like TOSY producing robots. Vietnam’s most famous foray into manufacturing is of course its revolutionary new electric car company VinFast, owned by Vietnam’s giant conglomerate VinGroup, in fact, they are posed to commence sales of their electric vehicles in the USA competing directly with the likes of Tesla.
RELATED: Why Vietnam is Becoming Southeast Asia’s Silicon Valley
How Can Cekindo Help?
Company incorporation for Singaporean tech companies in Vietnam consists of multiple time-consuming and overly official procedures. Having company registration professionals, like Cekindo, by your side can save you a great deal of time and provide you with a hassle-free experience. Cekindo provides a broad spectrum of ancillary services related to company registration, like legal consultancy, license and other documents acquisition, tax and accounting, and HR services.
Let’s start by filling out the form below and talking to one of our professional counselors.