Hanoi is Vietnam’s vibrant Capital city, strategically located on the banks of the red river and very close to Asean’s most important trading ally, China. Most ASEAN capital cities are reachable within a 3-hour flight, making cooperation and trade easily manageable. Furthermore, Hanoi is the focus of the government infrastructure upgrades, including building new metros and connecting roads, improving mobility. The low cost of living and some of the lowest operational costs in Asia are further benefits attracting large inflows of foreign direct investment into the capital city.
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Hanoi Economic Overview
Hanoi’s economy has demonstrated great potential in the first half of 2022 as the GDP grew by 7.79% compared to the same period in 2021. Moreover, the services sector expanded by 9.05% and contributed 5.91% points to the GDP growth.
Here is a summary of the city’s economic growth (sector-wise)
|Sector||Increase (YoY 2021-22)|
|Agriculture, Fishery and Forestry||2.39%|
|Non-metallic Mineral Products||18.5%|
|Prefabricated Metal Products||16.1%|
|Wood Processing and Production||15.5%|
Expansion of Middle-class Population
According to a recent McKinsey report, Vietnam’s middle-class population will expand by 10 million over the next decade. As a result, the country will be host to 36 million middle-class people by 2030. Moreover, the percentage of people living in urban areas will constitute 44% of the population, driving consumption and income growth.
Currently, the majority of Vietnam’s middle-class population resides in HCMC and Hanoi, with each city housing more than 10 million. However, over the next decade, urbanization is going to reach smaller cities like Can Tho, Da Nang, Hai Phong.
Government Support & Outline for Hanoi
Hanoi plans to bolster its economy and reform its growth model by leveraging “Industrial Revolution 4.0” and promoting global integration. As per the plan, the government is primarily focussing on restructuring the administrative system, enhancing business conditions, and promoting economic development in accordance with the Organization for Economic Cooperation and Development (OECD) standards.
Moreover, the action plan focuses on achieving rapid development in a sustainable manner. In order to realize this goal, it is imperative to promote social welfare activities, enforce measures to raise the standards of living, and eventually reduce the income gap between rural and urban areas.
Requirements for Opening a Company in Hanoi
We made the most detailed step-by-step guide to setting up a business in Vietnam for investors, now available as an interactive checklist:
First and foremost, you need to choose a legal entity for your business that fits your business goals in the long run:
Available Legal Entities in Hanoi
There are four main types of legal entities you can consider when starting a business in Vietnam:
- Joint-stock Company: A more complex structure, suitable for medium and large companies that eventually want to be listed on the stock exchange.
- Limited Liability Company: Simple structure, suitable for small & medium entities
- Representative Office: This entity is allowed to hire, pay, and research only. No revenue is allowed to be accrued under this structure.
- Branch Office: this is an extension of your original company in the country of origin. You are essentially copying the structure of your original company and applying it in Vietnam
In addition to the four most common types of legal entities in Hanoi, you can also opt for the following options:
- Shelf company: A shelf company is an entity that has already been established and is currently inactive and available for purchase. Once due diligence has been completed you can use legal services to change the name on the business registration certificate, registered taxes, and more. The benefit of this option is that it’s much faster than starting a company from scratch. A shelf company can be purchased and transferred to you in 7 days’ time, in comparison to incorporating a company that takes 40-60 days on average.
Once you’ve selected your perfect legal entity, here’s the process you have to follow to ensure a successful company setup in Hanoi:
- Register your company name.
- Get a registration certificate
- Apply for a tax registration certificate
- Obtain a stamp of your company.
- Register the company stamp with the local police in Hanoi.
- Open a bank account
- Apply to receive E-invoices
- Proceed with registration at the Vietnamese Labor Federation.
- Upon the publication of your registration notice on the National Business Registration website, pay for the tax of your business license.
- Register with the local Vietnamese office.
- Proceed with the registration of a social insurance fund for your employees (if any).
Conclusion and Growth Predictions
By 2045, Hanoi is expected to become a regional economic hotspot accompanied by high standards of living. Moreover, the Politburo’s Resolution No.15 has set the stage for the city to develop strategies for the future.
As a significant economic region of northern Vietnam, Hanoi plans to be an integral part of regional and international competition by 2030. During 2026-2030, the Gross Regional Domestic Product (GRDP) is predicted to register 8.5% growth, demonstrating an estimated value of 13,000 USD. By 2045, it is expected to reach 36,000 USD, according to Vietnamplus.
Moreover, tasks like planning infrastructure construction, urban development, and resource management must be accomplished.
As a city prioritizing education, training, science, technology, and healthcare, the local government has made it imperative to develop its culture and encourage polite and civilized Hanoians. In addition, citizens must be assured of social security, welfare, and improvement in their living standards.
Furthermore, natural resources must be effectively utilized and the environment must be protected.
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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