Entrepreneurship in Vietnam influencing the startup culture in Southeast Asia

Entrepreneurship in Vietnam is making a mark on Southeast Asia's startup culture. Here's why you should set up a legal entity for your idea.

With a thriving entrepreneurial environment and booming startup culture, Vietnam is often equated to Southeast Asia’s Silicon Valley. Backed by a young, qualified and well-educated labor force, entrepreneurship in  Vietnam has witnessed an unprecedented rise, which is especially evident in the tech industry. Since 2017, Vietnam has measured a total of 39,580 startups.

In this article, you’ll find some advice on establishing your startup and regulations you should keep in mind, based on our experience working with foreign investors.

Top Markets for Entrepreneurship in Vietnam

Startups in Vietnam span multitudes of business lines, from heavy industry to lifestyle technology. Here are five industries where opportunities are most attractive, as of 2022.

1. F&B Business

Vietnam’s food and beverage (F&B) sector boasts a great deal of potential. According to BMI (Euromonitor), the country is Asia’s 10th most attractive food and beverage market. Foreign food & beverage brands have thrived in Vietnam because of the sector’s accelerated growth. 

2. Real Estate and Property

Based on the findings published by Vietnam Report Joint Stock Company, Vietnam’s real estate market has been on the rise since COVID-19 and is expected to grow further in the coming years. The Report forecasts a short-term increase in the real estate market thanks to the increasing purchasing power of the people and expected income growth despite government efforts. Moreover, the government has provided an economic support package worth USD 15.3 billion for the infrastructure sector.

3. Tourism and Hospitality

In recent years, Vietnam’s tourism and hospitality sector has drawn a growing number of investors. Between 2022 and 2026, the combined industry revenue of hotels in the country is expected to grow by USD 2.12 billion with a compound annual growth rate (CAGR) of 14.43%. 

4. Dropshipping & Fulfilment

With cheaper land prices, lower wages, and reasonable operating costs, Vietnam could soon replace China as the dropshipping hotspot of the world. Moreover, as per a report released by Vietnam’s General Statistics Office, the country’s economy grew by 5.03% in the first quarter of 2022, compared to 4.8% for China. 

5. Export Industry

In terms of coffee exports, Vietnam ranks second in the world. Rice, rubber, leather, timber, electronics, and textiles, among others, are among the country’s top exports. Exports from Vietnam have soared following the ratification of 14 free trade agreements spanning over fifty countries. 

Biggest Startups in Vietnam in 2022

Tracxn’s start-up data platform reports that the country now has more than 3,000 start-ups, including four unicorns since the COVID-19 pandemic began. Besides supporting government policies and a surge in foreign funding, a large, young population is driving the country’s digital economy.

Despite Vietnam’s relatively low per capita GDP, its economy is growing faster than any other in the SEA region. Based on the World Bank estimates, growth will reach 5.5% in 2022 and 6.5% in 2023, a level near that of pre-COVID-19 expansion. 

Following are some of examples of thriving startups based out of Vietnam:

VNLife

The pandemic boosted e-commerce, deliveries, and online media in Vietnam, resulting in VNLife becoming the country’s second unicorn. A total of USD 1.1 billion was invested as venture capital in 2021, an increase from USD 301 million in 2020.

Propzy

The company was founded in 2016 and offers a wide range of real estate technology solutions, including sales centers, online marketplaces, and enterprise software for property managers and tenants.

Sipher

Arrington Capital, Hashed, and Konvoy Ventures have led a seed round of USD 6.8 million for Sipher, a blockchain gaming studio based in Vietnam. In comparison to Sky Mavis, the developer of Axie Infinity, which became a global sensation, this is the second-largest seed round for a Vietnamese blockchain gaming startup.

VNG

According to DealStreetAsia, VNG, which started as a gaming startup, will be listed on the Nasdaq later in 2022, selling 12.5% of its shares in an initial public offering. The company has also developed a messaging app called Zalo. The app is backed by Tencent, which is one of the first unicorns in Southeast Asia.

Why should you create a legal entity as an entrepreneur?

Domestic Sales and VAT invoices

For claiming expenses and tax deductions, domestic businesses require VAT invoices, also called “Red Invoices.” In addition, many local businesses refuse to purchase products without valid VAT receipts.

Therefore, setting up a company for registering your taxes and VAT is essential to conduct operations in Vietnam. 

RELATED: How to Comply with Mandatory E-Invoices in Vietnam

Have a team working for you to support your entrepreneurship in Vietnam

entrepreneurship vietnam

A legal employer-employee relationship must be put in place at some point in your entrepreneurial journey when you have employees working for you.

As a company owner, you are responsible for your employees’ taxation, insurance, pension plans, compensation, sick leaves, maternity leaves, and other benefits that require compliance with tax and labor laws. Failure to comply will result in serious legal complications.   

Long-term residence in Vietnam as an ex-pat

A temporary residence card (TRC), with 2-5 years of validity, is required for foreigners who intend to remain in Vietnam long term, but the Vietnamese government only grants TRCs to foreigners who are either investors with an investment value of more than USD 3 billion or skilled foreign laborers who have already been granted the work permit. It is possible to renew the TRC in Vietnam indefinitely.

Fundraising for your entrepreneurship in Vietnam

Investment in a Vietnamese company is the only legal way for foreign investors to gain profits. Due to the higher transparency and credibility of your company, external investors will be more comfortable investing in it.

However, foreign businesses will be hesitant to invest in your venture if it lacks a legal entity structure that’s compliant and safe for investment. Limited liability companies (LLCs) and joint-stock companies (JSCs) are common options for startups in Vietnam.

RELATED: Should You Establish an LLC or JSC When Entering Vietnam?

This article was originally published in June 2019, and was updated in November 2022 with more accurate information and advice for the currect economic situation.

Establish Your Company: Get Started Today

If you are still looking for assistance with your company incorporation in Vietnam, an outsourced business setup expert can help you throughout the entire process by choosing the right legal entity and complying with complex Vietnamese laws.

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InCorp Vietnam (formerly Cekindo) is a leading provider of global market entry services. We are part of InCorp group, a regional leader in corporate solutions, that encompasses 8 countries in Asia-Pacific, headquartered in Singapore. With over 1,100 legal experts serving over 15,000 Corporate Clients across the region, our expertise speaks for itself. We provide transparent legal consulting, setup, and advice based on local requirements to make your business perfectly fit into the market with healthy growth.

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Verified by:​

Thanh (Tim) Ta

Tim Ta is the Head of the Business Consulting Department of Incorp Vietnam. He is a seasoned professional with more than 6 years of consulting experience in Vietnam for market entry, incorporation, and real estate investment.

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