Investing in Vietnam,Approaching the world

VIETNAM HIGHLIGHTS 2017

Ho Chi Minh City

Country snapshot

The climate in Vietnam varies from North to South with three distinctive climatic zones: tropical in the South (rainy from April to September; dry season from October to March); monsoonal with hot and rainy season in the Centre and North (May to September); cold and damp in the highlands and the North (October to March). It is also blessed with plenty of sun throughout the year.

Climate and weather

330,967 sq. km 3,260 kmCoastline

Location

Land area

63

Southeast Asia, bordering with China, Laos, Cambodia, Pacific Ocean and Gulf of Thailand

Municipalities & provinces

Vietnam

Spratly Islands

Paracel IslandsVND

GDP (market exchange rate): USD 201.4 billionGDP (purchasing power parity): USD 595.5 billionGDP per capita: USD 2,215Source: General Statistics Office (GSO), Economist Intelligence Unit

Major cities

Language

North: Hanoi – the capitalCentre: Da NangSouth: Ho Chi Minh City

Approximately 92.7 million peopleRanked 14th in the list of most populated countries

Population

Economy

Vietnamese (official language); English (taught widely at school as a second language)

CurrencyVietnam Dong (VND)

Vietnam

Spratly Islands

Paracel Islands

Southeast Asia

countries

consumption market

Investment Climate

According to the World Bank’s Doing Business 2017 Report , Vietnam has climbed 9 notches to secure the 82nd place from last year’s 91st placeamong countries with the most favorable business environment, which reflects Vietnam’s improvements in implementing infrastructure and regulatory frameworks.

Vietnam recorded strong economic growth over the past decade

GDP growth (%)

(*) targeted data

The economy’s structure is gradually shifting towards industry and services sectors

GDP by sectors (2016)

8.5%

6.2%5.3%

6.8%

5.9%

5.0%

5.4%6.0%

6.7%

6.2%

6.7%

4.0%

6.0%

8.0%

10.0%

16%

33%41%

10% Agriculture, Forestry and Fishery

Industry and Construction

Services

Product taxes lesssubsidies on production

Dynamic country with young and increasingly urbanized population; and over 60% of the population are of working age

Vietnam’s competitive advantages

Why do business in Vietnam

Located at the centre of Southeast Asia with convenient access to commodity and culture exchange

Competitive production cost compared with neighboring

Stable political environment and social security

Strong economic performance and expanding domestic

Enabling investment environment with high incentives

By 2020, Vietnam expects to have free trade relations with 55 partners, 15 members of G20 (2/3 of the world’s population and 3/4 of the global GDP)

RCEP APEC

South Korrea

New Zeland Japan Australia

China Hongkong Taiwan Russia

Thailand Philipines Indonesia United States Papua New Guinea

Singapore

Brunei Malaysia

Vietnam

Canada

Mexico

Chile

Peru

India

Cambodia

Laos

Myanmar

TPP

ASEAN

RCEP: Regional Comprehensive Economic PartnershipAPEC: Asia-Pacific Economic CooperationASEAN: Association of Southeast Asian NationsTPP: The Trans-Pacific Partnership

Ha Long Bay

Source: GSO

Strong export performance has been a key driver for economic growth

Export value (billion USD)

Retail sales expand while Vietnam is increasingly attracting foreign retailers

Retail sales (billion USD)

Source: Vietnam Government Report 2016

The Vietnamese Government upholds its commitments to economic reform. The privatisation of state-owned enterprises (SOEs) in recent years is an example of the government’s efforts to improve the performance of SOEs and drive the economy forward.

Number of privatised SOEs period 2011-2016

0

50

100

150

200

1426

73

175

220

55

2011 2012 2013 2014 2015 2016

0

50

100

150

200

2011 2012 2013 2014 2015 2016

Bill

ion

USD

Bill

ion

USD

Foreign Investment Trends

Higher FDI disbursement throughout the years implies improved investors’ confidence in the economic outlook and their commitment to establish long-term investments in Vietnam.

FDI disbursement

Registered and Disbursed Capital, period 2006-2016

Source: Foreign Investment Agency (FIA)

Ha Giang

Cumulative FDI Inflows by Sector

Cumulative FDI Inflows by Country

Source: FIA, cumulative FDI as of March 20th, 2017

59% 18%

4%

4%

4% 11%

Manufacturing

Real Estate

Production and distribution of electricitygas, water, and air conditioners Accomodation & Food Services

Construction

Others

18%

14%

13% 11%

7% 6%

31%

South Korea

Japan

Singapore

Taiwan-China

British Virgin Islands

Hong Kong-China

Others

-

500

1,000

1,500

2,000

2,500

3,000

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Registered FDI (million USD) Disbursed FDI (million USD)

Number of newly-registered projects

Investor incentives

Land Rental Fee

Corp

orat

e In

com

e

Tax

Import Duty Incentives by

Locations Incentives by

Business Sectors

Corporate Income Tax Incentives Standard rate: 20%

Preferential tax rate: could be 17%, 15% or 10%

Tax holiday: up to 4 years of tax exemptionTax reduction: 50% up to 9 years

Di fficult • fficult/ Specially disocio-economic areas

• Economic Zones

• High-tech Zones

• Certain Industrial Zones

Land Rental Fee

Corp

orat

e In

com

e

Tax

Import Duty Incentives by

Locations Incentives by

Business Sectors

• Socialization projects

• Infrastructure development

• Environmental protection

• High-tech enterprises, supporting industries

Import Duty IncentivesExemption of import duty for import fixed assets for certain projects;05 years of exemption of import duty for goods, which cannot be produced locally, imported for a manufacturing project in encouraged fields and specially difficult socio-economic areas.

Land Rental IncentivesFree land tax and exempted land rental fee for 03 years, 07 years, 11 years or 15 years or for the whole rental period; 50% reduced land tax and exempted land rental fee for 03 years, 07 years or 11 years in agricultural fields.

Projects having capital of at least VND6,000 billion disbursed within 03 years with annual revenue of

VND10,000 billion or regularly employing more than 3,000 labors by the 4th year of operation.

Projects having capital of at least VND12,000 billiondisbursed within 05 years and using hi-technology.

A foreign investor setting up a company or an investment project in Vietnam shall be granted incentives under the regulated incentive schemes, which in summary include Corporate Income Tax (“CIT”) incentives, import duty incentives and land rental fee incentives. These incentives schemes are applied for the businesses set up in the locations and/or sectors which are encouraged for investment in accordance with development policies of the Vietnamese Government.

Incentives by Business Scale

Ha Long Bay

Setting up an investment in VietnamProcedures for new company set-up

Procedures for Branch, Representative Office set-up

Note

The timeline for setting-up projects prioritized by national or provincial government shall be shortened.

IRC: Investment Registration CertificateERC: Enterprise Registration Certificate

Step 1 Step 2 Step 3

15 days 03 days 05-07 days

Step 3 Loca on Selec on

IRC Applica on

ERC Applica on Public No on

123…

Step 1 Step 2 Step 3 Step 4

07 days 05-07 days 05-07 days

Step 3 Step

Location Selection

RO/ Branch License Application

PublicNotification

123…

Seal/ Tax IDRegistration

Relevant licensing authorities

Certificate IRC ERC

Hanoi

Limited-liability CompanyJoint-stock CompanyPartnership

Hanoi

Branches Representative offices Business Cooperation Contracts Public and Private Partnership ContractsMergers and Acquisitions (M&A)

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Purchase of bonds and other types of stock on the securities marketsCapital contribution, transfer of contributed capital in securities investment funds and fund management enterprisesPurchase of other valuable papers in Vietnam dong permitted to be issued within Vietnam’s territory

Principal forms of doing business

Direct Investment

Indirect investment

Ho Chi Minh City

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