Vietnam business environment 2013

According to Euromonitor in its 2013 International Countries’ briefing, Vietnam continues to attract foreign investors thanks to its various investment incentives, a growing labour force and a flexible labour market. The total economically active population stood at 45.6 million in 2011, 10.0% higher than in 2006 as a result of steady population growth. Foreign direct investment (FDI) inflows to Vietnam reached VND152 trillion (US$7.4 billion) in 2011, down by 13.8% in real terms compared to 2010 amid the country’s economic slowdown. The level of FDI intensity was 6.0% of total GDP in 2011, remaining higher than in some other regional economies including Thailand and Indonesia. Rising labour costs, poor infrastructure, skills shortages and red tape, however, continue to be factors which undermine business confidence in the country.

Given its sizable market (total population of 88.8 million as of 2011) and rising income levels, the consumer landscape in Vietnam is attractive to businesses. Per capita consumer expenditure rose to VND17.7 million (US$863) in 2011, representing a growth of 38.9% in real terms since 2006. As the middle class is expanding, consumer spending on discretionary items (everything except spending on food and non-alcoholic beverages and housing) is set to increase from 56.5% of total consumer expenditure in 2011 to 58.1% by 2020.