Here’s why Vietnam has emerged as a strategic “base” for many foreign businesses

Surpassing Singapore to become the third-largest economy in Southeast Asia, Vietnam has emerged as a strategic “base” for many foreign businesses.

A UOB report reveals that Vietnam’s GDP, based on purchasing power parity, is an impressive 1,438 billion USD, outpacing Malaysia, the Philippines, and even Singapore.

“Vietnam holds a pivotal position on the world map, making it a crucial market in the Asia-Pacific region,” shared Mr. Nguyen Dinh Khoa, Viessmann Vietnam business director. He highlighted the influx of foreign direct investment (FDI) and a growing interest from foreign investors in the Vietnamese market.

One of Vietnam’s key strengths lies in its substantial population of 100 million people, predominantly comprised of young individuals (60-70% under 35 years old). This demographic, coupled with increased purchasing power post-pandemic, has positioned Vietnam as a country with positive economic growth.

Despite global economic challenges, a recent UOB ASEAN Consumer Psychology Survey (ACSS) for 2023 indicates that Vietnamese consumers maintain an optimistic outlook compared to counterparts in Singapore, Malaysia, Thailand, and Indonesia.

The UOB report underscores Vietnam’s economic prominence, citing the nation’s role as a key factor in the regional and global economy. Notable corporations, including Masan, VNG, VinGroup, Viettel, and Sovico Group, contribute to Vietnam’s economic stability through mergers and acquisitions activities.

Digitalization has played a pivotal role in Vietnam’s economic boom, particularly in the e-commerce sector. In 2022, Southeast Asia’s total e-commerce is projected to reach 130 billion USD, with Vietnam accounting for 14 billion USD. Live streaming shopping in Vietnam has notably surpassed the region’s growth rate, reaching an impressive 61%.

Major e-commerce players, such as Alibaba.com, are recognizing Vietnam’s potential. Alibaba.com’s Trade Assurance for Vietnamese small and medium enterprises aims to address business challenges and stimulate a significant increase in exports. Early results show a 28% increase in search visibility, a 26% rise in click-through rate, and a remarkable 244% increase in active buyers within a month of implementing the Trade Assurance service.

Looking ahead, a survey indicates that over three-quarters of respondents in Vietnam expect an improved financial situation by June next year, despite concerns about inflation and rising living costs. The Director of Personal Financial Services Division at UOB Vietnam Bank, Mr. Paul Kim, attributes this optimism to Vietnam’s robust economic growth, emphasizing the country’s embrace of digitalization.

As Vietnamese consumers become more digitally savvy, the use of mobile banking applications has surged by 54% over the year. Over half of the surveyed individuals prefer online channels for international money transfers and checking reward points.

Photo: Diem Amelinda/ Ha Noi Xin!

In the payment landscape, Vietnamese consumers demonstrate a keen awareness of the latest technologies, with e-wallets, card payments on mobile wallet apps, and e-commerce payment platforms being the preferred methods for 67%, 58%, and 55% of respondents, respectively.

The UOB survey also reveals that four out of five consumers in Vietnam use e-wallets at least once a week and are likely to recommend them to others. Among e-wallet providers, Momo ranks as the most popular, followed by ZaloPay and VNPay.

Over the past two decades, Vietnam has consistently asserted itself as a significant destination on the world map. This long-term appeal is evident in Viessmann’s decision to choose Vietnam as the first country to establish a factory in Southeast Asia. After four years of market research and team establishment, Viessmann officially announced the investment in a factory in Long Thanh district, Dong Nai province, covering a total area of 2,286 square meters.

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Source: Vietnam Insider