Welcome back to a new episode of Fidinam's Unlocking Vietnam podcast, which aims to share the experiences of foreign companies and entrepreneurs doing business in Vietnam. In the first episode, we talked about Foreign Direct Investment (FDI) and the general investment opportunities that make Vietnam an attractive investment destination. The second episode was about the experience of a German-owned start-up company taking its first steps in Vietnam. In the third episode, we want to introduce you to Vietnam as a manufacturing hub, an industry that today accounts for more than 60% of total Foreign Direct Investment (FDI) in the country.
Episode 3: Vietnam as a Manufacturing Hub
In our third episode, we welcomed Jacobo Perez Polaino, General Manager of SIKA Vietnam, and Luat Nguyen, Managing Director of CICOR Vietnam. Both guests, representing different industries, shared their perspectives on the country's dynamic manufacturing sector.
The importance of the manufacturing sector is confirmed by the following facts:
- Of the total foreign direct investment (FDI) as of October 2023, more than 60% are manufacturing projects;
- Last year, Vietnam ranked 23rd among the world's leading merchandise exporters and was the top exporter in Southeast Asia;
- Over the past 5 years, Vietnam's manufacturing sector has grown steadily at a compound annual growth rate (CAGR) of 18%.
In addition, Vietnam's strategic location in Asia has contributed to its attractiveness as a manufacturing destination.
Competitive production costs also make the country an attractive option for businesses, along with the government's favorable economic policies and active participation in global agreements.
The latter enhances the country's integration into global supply chains, providing significant opportunities for global investors.
Both guests shared the key trends currently affecting their sectors and provided insights into the outlook for 2024 and beyond.
The podcast episode also highlights some of the key considerations when setting up a manufacturing facility. Free Trade Agreements (FTAs) play a crucial role in reducing trade barriers and facilitating access to new markets.
In this context, the Certificate of Origin has become a valuable asset for companies, especially in light of tensions between the US and China. In addition, industrial parks in Vietnam offer direct economic benefits, including tax incentives, import duty exemptions and favorable land lease policies.
Efficient infrastructure and an integrated ecosystem also make industrial parks strategically attractive to foreign investors.
In general, of course, when deciding where to locate a factory, it is important to analyze the overall situation, business model, customers and sourcing locations together with the FTAs to better define the best option.
If you have any questions, doubts or are simply curious about the Vietnamese business landscape, don't hesitate to contact us; we are always happy to connect and help. Stay tuned for more episodes as we continue to uncover Vietnam's vast potential.
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