Most Place Group

Vietnam is located at the center of Southeast Asia facing the Pacific Ocean and shares its borders with China in the North, Laos and Cambodia in the West. The country is naturally divided into three regions with different geographical and climatic conditions – the north, the central, and the south. Mountains and tropical forests cover most of the land, but flatlands along the coast belt are fertile and two big river deltas Red River in the north and Mekong River in the south make up the two “Rice Bowls” of Vietnam.

With humid and warm weather year round, Vietnam has two climates; four seasons with a distinct winter in the North, and tropical climate with a dry and a rainy season in the South and the Central Regions. Average rainfall is 2300 mm. Vietnam has a population of approx 79 to 80 million (est 2002) of which over half is under 25 years of age and over 80 percent is under 40 years of age. The literacy rate is approximately 92%. The labor source is considered as one of the most attractive aspects of the country’s investment environment.

Vietnam has significant potential in energy resources (oil, gas, coal, and hydroelectric power) and is very rich in other minerals such as bauxite, iron ore, copper, precious stones, tin, and building materials (granite marble clay silica sand and graphite). This mineral wealth together with significant marine resources tropical forests and agricultural products gives Vietnam high potential prospects for future economic development.

Government policy

The National Assembly is the Supreme State Authority and the single legislative body, which selects the country ‘s President and Prime Minister. The State Government consists of 17 ministries and 12 ministerial agencies. The whole country is divided into 61 administrative provinces and cities under direct control of the State Government. Provinces are divided into provincial capital; towns and districts that are further divided into ward and villages. The local population elects local People’s Councils who have the duty to maintain respect for the laws and decide local economic and social development plans and budgets. Local People’s Committees are the executive bodies of local People’s Councils and act as local administrative bodies whose members (including chairman and vice- chairman) are selected by the People’s Councils at the same level.


Since 1986 the Vietnamese Government has committed itself to a new Economic Policy (named as “Doi Moi”). The core of this policy was to create a stable and growing economy with a strategic policy towards all economic sectors (State-owned business entities as well as non State business entities). Before 1986, all Economic sectors were under the state control.

In order to implement this new policy, Vietnam has opened its door to overseas investors and has successfully achieved significant development. The government now pays attention to the business expansion of all form of Enterprises (Private Enterprises, Foreign Invested Enterprises and State Enterprises) instead of only the State Enterprises as before.

At present Vietnam has diplomatic relations with 160 countries, and has economic and trading relations with about 140 countries and territories. Vietnam has also established relationships with international organizations and institutions such as World Bank, International Monetary Fund, and Asian Development Bank. It is also a member of ASEAN and APEC and has been participating in the ASEAN Free Trade Area (AFTA). It is working on joining the World Trade Organization (WTO) in near future.

The New Economic policy has brought encouraging achievements to its economy. From 1991 to 1997, Vietnam had an average annual GDP growth of 8.5%. Even during the Asian Financial Crisis in 1998 and 1999, Vietnam had an annual GDP growth of 4.4% and 4.9% respectively. The Economy started to grow faster afterward with annual GDP growth of 6.7% in the year 2000 and 7.1% in 2001. Vietnam’s Export turn over had also increased dramatically from around 2 billion USD in 1991 to over 15 billion USD in 2001.

The major economic sectors are agriculture (rice, coffee, tea), industry (garment, footwear, oil, gas, mining), services, construction and tourism.

Foreign Investment

The amended Law on Foreign Investment in Vietnam is considered one of the most favorable and open investment laws in the region. The Foreign Direct Investment (FDI) policy is guaranteed by the Vietnamese Government to be implemented on a stable and long-term basis; and any amendment of and addition to it shall be made on the principle of creating more favorable conditions for investors.

Foreign investors may invest in Vietnam in many economic sectors of the economy in the following forms:

Business co-operation contract;
Joint venture enterprise;
Enterprise with one hundred percent (100%) foreign owned capital.

The Government guarantees fair and equitable treatment and provides favorable conditions and formulates simple and prompt procedures for foreign investors investing in Vietnam. Capital and other assets of the investors shall not be expropriated or confiscated by administrative measures. Business with foreign invested capital would not be nationalized.

To encourage more Foreign Investments, the government provides Investment Incentives:

• In priority projects, tax incentives include:

– Exemption and reduction of corporate income tax

– Exemption and reduction of import and export duties

– Exemption of withholding tax

• In case of projects requiring special investment encouragement, incentives include:

– Profit tax reduction to 10%

– Tax holidays of upto to 4 years, and 50% tax reduction for another 4 years

• Foreigners are allowed to repatriate income abroad, subject to tax payments and foreign exchange regulations.