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Eight – Advantages for Hong Kong-Funded Companies in Vietnam
As of October 2022, Hong Kong is the 5th largest investment partner of Vietnam, following South Korea, Singapore, Japan, and Taiwan, with nearly 2,200 investment projects and a total capital of approximately 30 billion USD. The key industries attracting significant investment from Hong Kong include manufacturing, real estate, services, and hospitality. Today, Siglaw Firm will list some advantages of investing in Vietnam for Hong Kong-invested companies.
As of October 2022, Hong Kong is the 5th largest investment partner of Vietnam, following South Korea, Singapore, Japan, and Taiwan, with nearly 2,200 investment projects and a total capital of approximately 30 billion USD. The key industries attracting significant investment from Hong Kong include manufacturing, real estate, services, and hospitality. Today, Siglaw Law Firm will list some advantages of investing in Vietnam for Hong Kong-invested companies.
Favorable Geographical Location
Vietnam offers highly advantageous geographical conditions, serving as a central hub connecting various regions with abundant and diverse natural resources. The country’s total land area covers 331,212 km², while its maritime zone—under sovereignty, sovereign rights, and jurisdiction—extends across approximately 1,000,000 km² in the East Sea (South China Sea). Due to its S-shaped territorial layout, Vietnam shares land borders with four countries and faces the East Sea. Specifically, its land borders stretch 4,639 km, bordering China to the north, Laos and Cambodia to the west, and the Gulf of Thailand to the southwest. The East Sea, with its prime location, holds strategic significance for countries in the Asia-Pacific region and impacts both the Americas and other nations worldwide. This advantageous geographical position supports the development of industries such as tourism and logistics, offering Hong Kong investors a variety of sectors to explore and diversify their business activities.
Legal System
Vietnam’s legal system has gradually been built and refined, playing an important role in the formation and development of a socialist-oriented market economy and the gradual perfection of the political system, thereby creating a legal environment for international integration. The Vietnamese government has introduced numerous reforms to simplify business conditions and administrative management, providing a transparent, simple, and efficient legal framework. This offers favorable conditions for Hong Kong-invested companies to invest in Vietnam.
Preferential Legal Policies and Investment Incentives for Hong Kong-Invested Companies in Vietnam
Hong Kong-invested companies in Vietnam benefit from various trade agreements. Notably, the ASEAN-Hong Kong Free Trade Agreement, effective from 2019, demonstrates the strengthening relationship between the two economies. To enhance cooperation with ASEAN countries, including Vietnam, Hong Kong has proposed joining the Regional Comprehensive Economic Partnership (RCEP), of which Vietnam is also a member. This indicates that bilateral relations will further strengthen.A recent example is the Hong Kong – Ho Chi Minh City Investment Promotion Conference held on January 12, 2023, organized by the Chinese General Chamber of Commerce (CGCC), the Guangdong-Hong Kong-Macao Bay Area Entrepreneurs Union, the Hong Kong-Vietnam Chamber of Commerce (HKVCC), and the Trade and Investment Promotion Center of Ho Chi Minh City. This event opens significant opportunities for Hong Kong-invested companies to expand their investments in Vietnam. Furthermore, Vietnam’s economy and new policies continue to attract foreign investment, including capital from Hong Kong. These incentives include: Corporate income tax exemptions and reductions,Exemption from import duties, Exemption or reduction of land use fees, land rental, and land use tax, Accelerated depreciation, Increased deductible expenses when calculating taxable income.
Political Situation in Vietnam
Vietnam has a stable political system and a steadily developing socio-economic landscape, with an increasing position in both regional and international arenas. The country also demonstrates strong capabilities in managing epidemics and mitigating the impacts of climate change. Moreover, Vietnam experiences minimal cultural divisions or ethnic conflicts, ensuring a secure and stable environment. These factors contribute to a favorable business environment for Hong Kong-invested companies operating in Vietnam.
Infrastructure and Technical Facilities
Authorities in Vietnam are increasingly prioritizing the improvement of the business environment for foreign investors by accelerating the construction of infrastructure facilities. This includes the development of highways connecting border gates, international airport projects, infrastructure related to power systems, and the establishment of more high-tech industrial zones and new economic zones.
Infrastructure
Vietnam is making significant investments to develop and modernize its infrastructure, including transportation and communication systems. Currently, several projects have been planned, particularly in the energy and transportation sectors. Additionally, the Vietnamese government supports the promotion of microeconomic growth through stimulus policies, which include proposals for spending in the infrastructure sector. Furthermore, Vietnam continues to accelerate the construction of infrastructure projects, such as highways connecting border gates, international airport projects, power system facilities, and the establishment of more high-tech industrial zones and new economic zones, aiming to attract investors from around the world, including those from Hong Kong.
Highly Skilled Workforce
Vietnam is recognized as one of the countries with a young labor force, characterized by a strong work ethic, flexibility, and high adaptability. Compared to other countries in the region and around the world, Vietnam boasts an abundant workforce. In 2021, the total population of the country was 98.51 million, making it the second most populous nation in Southeast Asia. The population growth in Vietnam has led to a significant increase in the available labor force. This indicates that the Vietnamese workforce is always capable of meeting the labor supply needs of both domestic and foreign businesses.
Large Potential Customer Base
Customers are the buyers or users of a company’s products or services. For any business, customers are the source of profit and value for the organization. Without customers, no business can survive. Vietnam, being the second most populous country in Southeast Asia, has a significant demand for food, household goods, services, and more. As a result, companies with Hong Kong investment in Vietnam will benefit from a stable customer base, which is key to expanding the company’s market share.
If you have any questions regarding the advantages of investing in Vietnam for companies with Hong Kong capital, please contact Siglaw Firm for detailed answers!
Phone: (+84) 961 366 238
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Headquarters: No.44/A32-NV13, Gleximco A, Le Trong Tan street, An Khanh, Hoai Duc, Ha Noi, Vietnam.
Southern branch: A9.05 BLOCK A, SkyCenter Building, 5B Pho Quang Street, Ward 2, Tan Binh District, Ho Chi Minh City, Vietnam.
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