Vietnam has enjoyed incredibly fast progress as the center for entrepreneurship and startup activities. Topics Founder Institute (TFI) released a report and according to the report, investments in startups of Vietnam have tripled from US$291 to US$889 million in 2018. In just a short period of two years, Vietnam has raised itself from 5th place to 3rd place in the most dynamic startup list of the six largest ASEAN economies, only after Indonesia and Singapore.
In addition, the amount of investment capital in Vietnam surged significantly, with a total amount of US$444 million in 2018, and US$800 million in 2019. A digital economy such as payment and retail contributes to approximately 60% of the total investment. Among all deals, most of them came from Singapore and Japan’s investors, as well as Korea’s.
As you can see, the significant development in Vietnam’s startup ecosystem explains why companies from Singapore consider Vietnam an ideal place to establish their startups. In this article, Cekindo will get into more detail.
Why Should Singapore Companies Consider Vietnam a Startup Destination?
In Southeast Asia, Vietnam has economic growth of 7.02% in 2019 with the third-largest population in Southeast Asia. It has a young consumers group with an average age of only 30.5 and will have a middle class of 26% of the total population by 2026. For this reason, it’s absolutely a tempting marketplace for Singapore companies to expand their businesses.
Among all sectors in Vietnam, fintech and e-commerce are key industries that startups focus on due to the high penetration of internet and mobile usage. Particularly in online shopping, consumers in Vietnam help boost the online shopping momentum. It is forecast that by 2020, more than 30% of consumers will shop online.
As for fintech, it is a highly favorable market for startups from Singapore because 72% of the Vietnamese population has access to smartphones and 41% are still unbanked. There is a great surge in mobile-based payments, particularly among young adults. Furthermore, the Vietnamese government also put in a lot of effort to move the country towards a cashless economy by 2020 through the cashless initiative. This is another great opportunity for Singapore startups to thrive by banking digitalization and e-wallet implementation.
The Latest Development of Vietnam Startups
One of the promising Vietnam startups is Ami. Ami is a startup dealing with the Internet of Things (IoT) and blockchain. It is established to digitalize Vietnam companies, buildings, homes, universities, hospitals, etc. With just after 6 months of establishment, US$9 million investment has been injected into the company for product development with the digital process.
Another startup Grab, a ride-hailing company, also prepares for major investment in Vietnam. Strong government support and increasing knowledge entrepreneurs in terms of technology are the two main reasons for its growth.
The government of Vietnam is also committed to developing the startup scene in the country by improving the policies and the country’s infrastructure. The government plans to augment the enterprise number to more than one million by 2020. Some of the government’s efforts include Saigon Innovation Hub by the Ho Chi Minh City Energy Conservation Centre and Saigon Silicon City Centre.
MRA Grant for Singaporean Firms to Expand to Vietnam
MRA (Market Readiness Assistance) is a government grant that helps SMEs (Small and Medium Enterprises) in Singapore expand their operations into new foreign markets. Its goal is to serve as a catalyst for SMEs to seize opportunities and get access to the global market.
To be eligible for the MRA Grant your business entity should be registered/incorporated in Singapore with at least 30% local shareholding, annual sales turnover of not more than S$100 million, and an employment size of not more than 200 workers is eligible to apply for the grant, as long as its overseas sales do not exceed S$100,000 in each of the previous three years.
Read More About Singapore’s MRA Grant – Market Expansion into Vietnam
Establish Your Startup Business in Vietnam with Cekindo
Vietnam is a great place for Singapore companies to physically operate their startup businesses. We can be of assistance to your business by offering helpful advice and solutions to investors.
Cekindo is one of the leading business consulting firms in Vietnam whose mission is to provide business consulting support of all aspects to our clients such as company registration and immigration services.
If you have already decided to start a startup in Vietnam outside Singapore, contact us anytime for a free consultation by our expert business consultant. Fill in the form below.