Vietnam: One of the Most Promising Startup Hubs in Southeast Asia

With 3,800 startups registered and an important amount of support from the government, Vietnam has become a promising startup hub in Southeast Asia

Thanks to comprehensive government support, a young and newly educated population, and widespread penetration of mobile phones and the internet Vietnam is becoming a hub for startups in Southeast Asia. Incubators and VCs are flocking to Vietnam, as Vietnam rises as one of the world’s most promising emerging economies. At the moment Vietnam Is host to about 3,800 startups, according to the Ministry of Finance, and 3 unicorns. This article will summarize regulations, incentives, and promising investment sectors for startups.

Find Out More about Cekindo’s Company Registration Services for Foreigners in Vietnam.

Startup Regulations Investors Should Pay Attention To

Effective from January 2018, the Vietnam Law on Supporting Small and Medium-sized Companies supports startups in their training, technology transfer, training, trade promo, financial investments, preferential loans, and capital funds incentives.

Following the law mentioned above is the Decree 38/ND-CP that came into force in March 2018. This Decree focuses on investments in innovative startups. Therefore, in Vietnam, startup investment activities are recognized legally as businesses, and thus innovative startups and funds will have their legal status. The State can also invest in a startup company by law, capped at 30% of the total investments.

The Law on Technology Transfer also permits funds in Science and Technology Development, enabling tax exemptions for investing in startups.

Government Support

The government of Vietnam has made technology a huge priority for its education system and in terms of attracting foreign investment. According to a recent report from Sunbytes, Vietnam is host to 430,000 software developers and a whopping 1,030,000 people working in the ICT industry, providing massive investment opportunities as well as a fantastic environment to grow tech startups.

In terms of incentives, the government offers huge tax breaks to technology companies that establish themselves in Vietnam including a 4 year tax holiday. This has resulted in a huge skills upgrade for the general Vietnamese population, which in turn is driving tech-driven innovation and fueling a new generation of tech founders.

Most Promising Sectors for Establishing a Startup in Vietnam

Let’s take a look at the fastest-growing industries in Vietnam to determine where the most opportunities may exist for startups:

1. Fintech

The tech field sits on top of Vietnam’s startup ecosystem, with an especially noticeable growth of the fintech industry. The investment funds in technology startups have climbed eight times higher since 2016, hitting US$ 861 million in 2019. This growth is more profound in Ho Chi Minh City and Hanoi, with the full tech and startup ecosystems.

In 2020, there were at least 123 fintech startups in Vietnam. Compared with 2017, there were just 44 of them. In this startup list, it includes one of Vietnam’s unicorns, Momo

Top fintech startups in Vietnam: Momo & VNpay

Size of the Fintech industry: 11 Billion USD

2. Blockchain

Thanks initially to the popularity of crypto, blockchain technology is growing at an impressive rate in Vietnam. According to a recent study, the blockchain industry is projected to grow at a double-digit rate, particularly in the period 2022-2027. As the popularity of crypto diminishes, the use of blockchain has pivoted and is expected to be integrated completely into the fintech sector, pushed by the private and public sectors.

3. Textile and Garment Manufacturing Industry

Vietnam is known as the top exporter of textiles, fabrics, and garments in the world. The industry has contributed to USD290.4 billion of the country’s GDP.

This industry comprises three sub-sectors: fiber manufacturing in the upstream sector, textile production and dyeing in the midstream field, and garment production in the downstream area.

In 2019, export income from the textile and garment sector increased to US$ 39 billion – a significant increase of 8.3% compared to 2018. The major export destinations of Vietnam’s textile and garment products are the United States, Japan, Europe, and South Korea.

4. Automobile Industry

Vietnam’s automobile is one of the fastest-expanding sectors in the country, even though it has a relatively smaller market size. Three subsectors in automobile manufacturing in Vietnam are Complete Knocked Down (CKD), Semi Knocked Down (SKD), and Complete Built-Up (CBU).

In 2019, the sector added 3% of GDP, and the significant contribution comes from the export vehicle components. More than 288,000 vehicles were sold in Vietnam in 2019 as well.

The most notable news from Vietnam’s automobile industry of course is the arrival of Vietnam’s very own homegrown car company, Vinfast. This company is backed by German engineering and the largest conglomerate in the country, Vingroup. They are manufacturing a wide range of vehicles and are planning to enter the US and European markets this year (2021).

To aid local businesses to recuperate from the COVID-19 effect, Vietnam’s government took out half of the vehicle registration cost, which was available on December 31, 2020. Furthermore, thanks to the establishment of EVFTA, the EU’s exported vehicles and vehicle parts have zero import tax.

RELATED: Incorporating a Fintech Company in Vietnam? What You Need to Know

5. F&B

With a contribution to Vietnam’s GDP which stands at 15.8%, backed by an overall value of the industry standing at USD42 Million and a quickly rising middle-class the F&B industry in Vietnam is one of the most promising and yet still underdeveloped. The average Vietnamese consumer is driven by experience-based dining as well as new cuisine, making them a fantastic target consumer base.

Related: Top F&B Startups in Vietnam Shaking up the Industry

Establish Your Startup in Vietnam Hassle-free with Cekindo

Many firms will certainly claim to be experts at establishing startups in Vietnam, yet only a few of them have the experience Cekindo does. As assisting big companies and colossal name brand names in the Vietnamese market, Cekindo supports hundreds of smaller companies to have a share of their demand in Vietnam.

The reason entrepreneurs pick Cekindo to help them launch their startup in Vietnam is straightforward. Our experience, our understanding of their service designs, growth demands, and our service offerings are worthwhile to their company. As you can see, Cekindo is everything about building your startups and aiding your business to do well in the Vietnamese market.

Get in touch to know precisely how we can support your business expansion in Vietnam. Fill in the form below.

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As of October 2022 there were 3,800 startups registered, according to the ministry of finance.

Tomas Svoboda - Cekindo - Vietnam Country Manager

Verified by:​

Ing. Tomas Svoboda

Tomas is the co-founder & Chief Business Development Officer responsible for Vietnam. His role is to define the key potential of the Vietnamese market and to ensure that Incorp's branch in Vietnam provides its clients with smooth and hassle-free market entry solutions.