Vietnam has become a center for startup companies since 2017, almost taking on Indonesia and also Singapore. The country has a massive head start for startups in many ways because of an incredibly supportive government, a tech-savvy and even relatively young population, diverse demographics, and the capability to attract top talent.
Despite the impact of COVID-19, startups in Vietnam have continued to grow since the last two quarters of 2020.
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. Technology Sector
The tech field sits on top of Vietnam’s startup ecosystem. 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.
2. Textile and Garment Manufacturing Industry
Vietnam is known as the top exporters of textile, fabrics, and garments in the world. The industry has contributed to 16% 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.
3. 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 arrival on 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.
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.
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.