Posted 11.04. 2019 by Cekindo / Last update on 2.12. 2020
With a population of over 96 million (as recorded in 2017), Vietnam is undoubtedly a tempting market for foreigners to expand their business or to invest. 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.
By the end of 2018, imports to Vietnam have skyrocketed to its highest at US$22 billion in just one month. This figure has never been seen since 1990. 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 law in Vietnam including the country’s import license.
This article discusses the compelling reasons 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.
Vietnam has definitely 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:
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 trade agreements with many countries. This is the Vietnam today.
In addition, Vietnam is one of the members of Trans-Pacific Partnership (TPP) – giving this attractive country to be revolutionised 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 with their 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 are blessed with the country’s tax benefits. Also, most products imported to Vietnam will be duty free with free trade agreements. For example, the recent EVFTA (EU-Vietnam Free Trade Agreement) allows EU countries to import goods to Vietnam at 0% custom duties.
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 is going to be doubled by 2020, hitting 44 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 the 6th 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.
In 2017, Vietnam imported a total amount of US$233.3 billion worth of goods from all over the world. The growth of import increased by 33.3% in just a year from 2016 to 2017. With that huge amount of import, imports in Vietnam represented 1.5% of the total global imports – valued at $16.1 trillion in 2017. As a result, with Vietnam’s population of over 96 million, US$233.3 billion worth of the country’s import in 2017 can be interpreted as: for every person in Vietnam, US$2,400 were spent annually on imported products. In November 2020, Vietnam recorded a total import of $24.2 billion.
The people in Vietnam mostly spend their money on imported products such as electronic circuits, microassemblies, phone system 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 import products with the highest dollar amount, and the percentage in the bracket indicates the fraction of the total import value:
Statistics have also shown that fish and fishery product has the highest increase of import in Vietnam, attributing to 465% growth in a year from 2016 to 2017.
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. These restricted items include:
In order for companies to import their products to Vietnam, you are obliged to register and establish a legal entity in Vietnam. Then, you need to also secure a Vietnam import license. According to law, this company must be registered as a trading company to be able to begin all import activities.
It takes roughly three months to set up a trading company in Vietnam, given that you have gathered and submitted all mandatory documents, such as business registration certificate, investment license, and import license. Good news for investors, there is no required minimum capital for setting up a trading company in Vietnam, but the company has to comply with all revenues and expenses as required by the law.
The importer of record service, also known as the undername import service, is an alternative option preferred by many foreigners interested in importing products to Vietnam as it helps eliminate taxes and you can avoid the tedious process of establishing a trading company and the procedure of product registration. Therefore, it allows entrepreneurs to start their import activities in Vietnam almost immediately. Also, there is no need to secure an import license.
Cekindo will assist you during the whole process of importing goods to Vietnam, registering a company or providing undername import services. Talk to us now to discuss the most suitable solution for your import business.