Top 7 Reasons to Establish ICT Start-Up in Vietnam

Top 7 Reasons to Establish ICT Start-Up in Vietnam

Every time I will hear Vietnam in the news, I am always fascinated by how they turn around from a weak agricultural economy to a future economic powerhouse. The continuous effort of the government to improve its business environment, particularly in the international market, is attracting more Foreign Direct Investments in Vietnam. 

“Vietnam’s total revenue from information and communications technology (ICT) in 2018 reached almost US100 billion according to data released by the Ministry of Information and Communications.” 

If that figure didn’t convince you enough to choose Vietnam to establish your ICT startup, this list should probably will:

1. Easy Visa Processing.

An increased number of flights to and out of the country and affordable domestic flights have seen a more optimistic impact on the economy of Vietnam. More importantly, the ease of e- visa and visa on arrival application are attracting more investors to put up a startup here. To check under which visa you qualified to visit Vietnam Immigration.

2. Low Public Holidays.

Among the South East Asian countries, Vietnam has the least number of public holidays, that’s right. Only 12 days. The most extended number of public holidays Vietnamese would celebrate for 2020 are seven days, and they fall during the Lunar New Year, now that would save any investor lots of time and money when it comes to daily operations.

3. Government Incentives.

Vietnam offers investment incentives for projects that engage in business lines that are highly encouraged by the government. High-tech industries, such as information technology, electronics, mechanics, are qualified under one category.

Corporate Income Tax or CIT is at a rate of 20 percent; however, under the incentive scheme, the following tax exemption applies:

  • Ten percent Corporate Income Tax for 15 years*
  • Four years of CIT exemption**
  • Nine years of 50 percent reduction on payable CIT
  • *From the first year of operating income generation.
  • **From the first year of profit
  • Source: Vietnam Briefing

4. World-class telecommunication infrastructure.

When traveling in Vietnam, you will never have to worry about staying connected. Major players operating in the telecom infrastructure market in Vietnam, such as Viettel, MobiFone, Vinafone, Vietnamobile, and GTel are continuously extending their network coverage and offering more efficient and cost-effective services.

Developing high technologies such as mobile apps, e-commerce, cryptocurrency, to name a few, are estimated to boost the Vietnam telecom infrastructure market in years to come significantly.

5. Growing tech workforce.

The population of Vietnam is about 95 million, more than 52% of the population is in working age. Nearly 250 universities are training 50,000 students per year and more than 1,900 vocational training centers across the country. That figures will meet the demands of technical training and unlimited resource of the tech workforce.

According to the Ministry of Information and Communications, The country’s ICT sector has around 900,000 employees, with an annual growth rate of 7-10%.

6. Competitive Cost.

Compared to other Southeast Asian BPO players such as the Philippines, Vietnam still has the lowest labor costs in the region. Operations costs are relatively less than in India. Due to the recent conflict between the US and China and its intention to end preferential trade treatment with India, Vietnam has become an attractive alternative destination for ICT BPO.

7. Integration into Global Economy.

Active international inclusion and Vietnam’s participation in strategic trade agreements demonstrates the commitments of Vietnam towards trade openness with other countries. Here are some lists of Vietnam partnerships and trade deals worldwide.

  • World Bank, International Monetary Fund in 1993
  • Association of Southeast Asian Nations (ASEAN) in 1995.
  • World Trade Organization (WTO) in 2007.
  • Vietnam and Japan for an Economic Partnership (VJEPA), in 2008
  • EU – Vietnam Free Trade Agreement (EVFTA) and the Investment Protection Agreement (EVIPA) in 2019

Here’s what you need to know about setting up a company in Vietnam

Under Vietnam’s enterprise law, you can set up the following types of business entities:

  • Limited Liability Company
  • Joint Stock Company
  • Representative Office
  • Branch Office
  • Business corporation contract
  • Public-Private partnerships such as BOT, BIT, etc.

The following are the pre-requisites for the company registration in Vietnam.

1) Shareholders – A requirement of a minimum one limited liability company shareholder/ investor for almost 95% of the business lines.

2) Legal address – A local Vietnam address is a must to register a company. This address becomes the registered address of the company post-incorporation.

3) Paid-up Capital – There is no set minimum paid-up capital in Vietnam. The government, however, assesses each project capital concerning the intended business lines before issuing a business registration certificate.

As soon as you are ready to open a startup in Vietnam, There’s a lot of agency that offers a range of services to help you set up from registration to business implementations. Some even offer a free consultation.  Scout the market and create a checklist of the pros and cons of starting ICT startups in Vietnam.