With a population of over 99.2 million (2022 updated), Vietnam is undoubtedly a tempting market for foreigners to expand their business, or invest in. However, your focus should be on the coming trends in regard to middle-class growth, which has shown one of the most robust growths in the world. It is expected that Vietnam will add an additional 36 million citizens to the middle class by 2030. Vietnamese consumers are very interested in foreign or imported goods because the Vietnamese believe that the commodities imported from other countries are more desirable due to their higher quality and safety. These commodities include healthcare products, food, and beverages, children’s toys, etc.
Vietnam Import Data (Below)
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Import value to Vietnam reached a record high in March 2022 at USD 32.66 billion. The most recent data in August 2022 indicates imports to Vietnam have jumped to US$30.96 billion, a 13% increase over August 2021. As a result, it is absolute that many industries still rely significantly on imported items from other countries. Even though the import and trade industry presents a great opportunity for investors, before you jump right into this growing scene, it is important for you to have a solid understanding of the import laws in Vietnam including the country’s import license.
This article discusses the compelling reasons why you should import to Vietnam, how to import goods to Vietnam, the permitted import items, and how you can start your import business without having to establish a company and obtain an import license through different options in Vietnam.
Convincing Reasons to Invest in Vietnam
Vietnam has become one of the most progressive economies in Asia, offering unlimited business opportunities to importers. The country is filled with young, tech-savvy consumers and represents the fastest-growing middle-class population in the region. Here are the main reasons you should import to Vietnam:
Trade Agreements with Other Countries
Over the last three decades, Vietnam has opened up its door to foreign direct investments. It has constantly reformed and transformed itself to keep pace with the global market and economy. Vietnam has been a member of the World Trade Organisation (WTO) and has formed several international partnerships through free 14 trade agreements with blocs & countries.
Other than that, Vietnam is one of the members of the Trans-Pacific Partnership (TPP) – giving this attractive country to be revolutionized further. Undoubtedly, Vietnam will gain the most benefit out of the 12 TPP member countries by opening its market to global companies with the country’s commitment to reform state-owned enterprises, permit workers freedom of association and adopt stricter environmental standards.
Furthermore, Vietnam is extremely attractive to foreign investors because of its numerous tax incentives. For instance, investors who are involved in special-interest industries such as healthcare or high-tech, or contribute to specific geographical regions can enjoy the country’s tax benefits. Also, most products imported to Vietnam will be duty-free thanks to several free trade agreements, one of which is the current EVFTA (Vietnam-EU Free Trade Agreement) which allows EU countries to import into Vietnam with almost 50% tariff line exemption. Tariff lines are projected to be eliminated by 91.8% by 2025.
Thriving Middle Class
As mentioned, Vietnam’s middle class is on the rise at a very fast speed. In fact, it is predicted that Vietnam’s middle class has hit 56 million people. There were only 8 million middle-class consumers in 2012. The country’s consumer confidence is regarded among the highest in Asia, and 90% of residents in Ho Chi Minh City (HCMC) are part of the middle class. As such, it is unquestionable that Vietnam has one of the fastest-growing middle classes in the world.
These burgeoning middle-class consumers in Vietnam are said to be responsible for more than 50% of the country’s total consumption. Recently, Vietnam has climbed to 9th place in the Global Retail Development Index and it is not without reason. Stores of branded and luxurious goods have been seen in HCMC, indicating that there is enough purchasing power in the city that allows foreign brands to set their feet in this market.
Importing into Vietnam: What to Import
The people in Vietnam mostly spend their money on imported products such as electronic circuits, micro-assembly, phone systems,s and electronic devices including smartphones, electrical parts, refined petroleum oils, lobsters, or other crustacean seafood. The following list of products shows the country’s top 5 import products with the highest dollar amount, and the percentage in the bracket indicates the fraction of the total import value, as of 2019:
- Electrical equipment and machinery: US$96 billion (34.3%)
- Machinery and high-tech devices including computers: US$26.9 billion (9.6%)
- Plastics, including plastic articles: US$ 15.2 billion (5.4%)
- Mineral fuels including oil: US$10 billion (3.6%)
- Iron and steel: US$9.8 billion (3.5%)
For more information about the TOP 10 Vietnam’s highest-dollar imported commodities, click here.
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Prohibited Goods to be Imported to Vietnam
In accordance with Decree No.187/2013/ND-CP, certain goods are prohibited to be imported to Vietnam, whether they are commercial or non-commercial. The restricted items include:
- Weapons, explosives, military technical equipment, and ammunition
- Publications in the category prohibited from circulation and distribution in Vietnam
- Sky lights, assorted firecrackers, and devices or equipment that will interrupt the road speed measuring instruments
- Second-hand items such as automotive and electronics
- Tobacco and cigars
- Petroleum oils
- Radio equipment, equipment with radio waves that do not comply with the Law on Radio Frequencies
- Postal stamps in categories prohibited from display, exchange, propagation and business as defined by the Law on Post
- Cultural products in categories prohibited from distribution and circulation in Vietnam
- Waste and scrap, and refrigerating equipment that apply C.F.C (chlorofluorocarbon)
- Chemicals listed in Rotterdam Convention’s Appendix III
- Plant protection agents prohibited from use in Vietnam
- Raw materials and products containing asbestos in the amphibole category
Importing into Vietnam: How to
For companies to import their products to Vietnam, you are obliged to register and establish a legal entity here. In addition, you need to secure a Vietnam import license. According to the law, the company must be registered as a trading company to be able to begin all import activities.
1. Setting up a Trading Company in Vietnam
It takes one to three months to set up a trading company in Vietnam, given that you have gathered and submitted all mandatory documents, such as a business registration certificate, investment license, and import license. The good news for investors is that there is no required minimum capital for setting up a trading company in Vietnam. However, the company has to comply with all revenues and expenses as required by the law.
In addition, you will likely need to register your products for approval by relevant authorities in order to import any items into Vietnam.
2. Engaging an Importer of Record in Vietnam
The importer of record service, also known as the “under-name import service”, is an alternative option preferred by many foreigners interested in importing products into Vietnam. The “importer of record” is essentially an outsourcing company in the country you want to import to, that takes care of all regulatory paperwork, bureaucracy etc that legally allows you to start importing products to Vietnam. It not only helps reduce costs and taxes, but also avoids the tedious process of establishing a trading company and the bureaucratic procedure of product registration. By using the Undername import service, you do not need to obtain an import license and can start your import activities in Vietnam almost immediately.
This is the ideal way to start importing products to Vietnam as a trial without to simply test the market before opening your full operations.
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