When we picture Vietnam, relentless streams of motorbikes loaded with entire families and miscellaneous possessions spring to mind. Images of French colonial architecture set the scene for food vendors and hawkers; straw hats bobble in between the suffocating chaos of traffic. Gridlock seems to be the norm in the bigger cities, and a cluster of honking horns and roaring engines create the soundscape for every street.
The idea of this disorganised country rising to the status of the world’s most dynamic market initially conveys the impression of insanity. However, this may be the result of misconception. After all, Vietnam isn’t a big fish throughout mainstream western media, so the average person is probably armed with nothing more than the hearsay of previous decades. In truth, Vietnam is at the centre of a wealth of positive speculation at the moment, with many experts believing that it will rise as the world’s most dynamic market by 2030, with the country’s urban consumer market projected to grow to $169 billion, influenced by 46 million consumers.
Vietnam’s startups and SMEs are on track to make it big this year
The only way is up
Glancing around the capital city of Hanoi, it’s hard to imagine that just three decades ago, Vietnam was one of the most impoverished countries in the world. Fashionable districts like Tay Ho and Hoan Kiem are abundant with modern architecture; streets have gotten much wider, and top-end department stores have set up their perches too. Embellished with slow-driving, executive Range Rovers and gentlemen of stature who stroll in perfectly pressed Armani, the growing wealth of this city blossoms splendidly. As for the country as a whole, even the national football team has been making waves in the sports world over the last couple of years.
Vietnam is now a champion in the league of emerging markets, as it has embraced trade liberalisation with heaps of enthusiasm, which has got the ball rolling for their potential rise as the world’s most dynamic market by 2030. After joining the ASEAN free trade area in 1995, Vietnam entered into a free-trade agreement with the United States just five years later. This developing nation became a fully fledged member of the World Trade Organization in 2007 and has since closed deals with numerous other ASEAN countries such as Japan and China.
Since 1986, domestic reforms have included legislation which allows foreign investors to get behind the growth of Vietnam. According to law firm Baker & McKenzie, the law has been revised several times to account for a more pro-investor approach creating a smoother transition of investments into Vietnam while simultaneously keeping administrative bureaucracy to a minimum. In the decade or so from 2006 to 2017, Vietnam hopped up the score chart from 77th to 55th in the World Economic Forum’s Global Competitiveness Report. The World Bank additionally reported that Vietnam shot from 104th to the 68th position between 2007 and 2017, in their Ease of Doing Business rankings. Trading across borders has become significantly easier, and this emerging country has also made progress in terms of enforcing contracts and paying taxes.
Infrastructure and human capital have been given a free kick too, thanks to Vietnam’s rapidly growing population. Increasing by over 30 million people since the mid-eighties, the government has taken the initiative and invested a generous proportion of its revenue into the academic sector. Primary education has taken the lion’s share, but students now entering into higher education are now at the 35% range. Although this may seem small compared to some western nations, the entrance exams are supposedly much more demanding than those of other countries. Ensuring that students have access to information, the government has made internet access easier than ever before. The fourth industrial revolution is lurking on the Southeast Asian horizon, and funding information technology initiatives are at the forefront of the government’s growth plans.
We explore Vietnam as a startup location in Southeast Asia
The bottom line
Thanks to a rapidly developing internet infrastructure and government-sponsored initiatives online businesses are also starting to base their headquarters in Vietnam. This country has become a utopia for sectors like technology and manufacturing; it is the second largest electronics exporter in the region, after Singapore. Korean and Japanese electronics moguls like Samsung and Pioneer have firmly established themselves here, not to mention a host of European clothing brands. Vietnam’s gross domestic product (GDP) growth has skyrocketed at rates of at least 5% per year since 2010 and peaked at 6.8% in 2017. The most shocking statistic, found in the Heritage Foundation 2019 Index of Economic Freedom Report, is that the GDP per capita has shot up from $230 in the ‘80s to more than $6,913 today.
One particular fly in the ointment worth noticing is that Vietnam’s strength primarily lies on the shoulders of its import and export market, which account for a 200.3% proportion of its GDP. Being an emerging market, this could cause a landslide if the dollar experiences a spontaneous boost in value and strength. On the plus side, Vietnam’s now-thriving middle class offer a lifeline should times become tight. Currently almost entirely dependent on foreign trade, the resilience of the Vietnamese people has shown plenty of integrity through the ages. Perhaps it’s time for the people of this emerging nation to take its growth to the next level by themselves.