Government Regulations and Investment Law
Government regulations have been favorable for Vietnam and their businesses. For example, Vietnam is better balancing national security with investment attraction by making more favorable conditions for certain industries like energy, IT, and high-tech manufacturing. They have also revised their corporate income tax law (effective October 1, 2025) to lower rates for smaller revenue businesses, and they created lower tax rates (10-17%) for certain industries such as clean energy, software, infrastructure, environmental protection, and high technology.
Incentives and Economic Zones
Vietnam has more than 300 industrial parks and 18 coastal economic zones, which are areas that the government develops for factories, manufacturing plants, and other industrial businesses. These areas also have ready infrastructure which make setting up operations easy and quick for investors. Businesses in these areas also get benefits like certain tax breaks and land rent exemptions, which reduce startup costs and encourage investment.
Labor Force and Wage Considerations
Vietnam has a large portion of their population under 40 years old, at around 70%, which ensures a long-term supply of workers. Additionally, Vietnam has been investing in technical and vocational education, producing a workforce skilled in IT, electronics, and manufacturing. Furthermore, wages in Vietnam are low compared to neighboring countries like China, Japan, and South Korea and their productivity is improving. Finally, the government has been making it easier to hire workers and has been improving labor standards.
Infrastructure and Supply Chain Connectivity
Vietnam sits directly on key shipping routes in the South China Sea, making it ideal for trade to China, and broader Asia-Pacific markets. They are also members of free trade agreements, like (e.g. CPTPP, RCEP, EVFTA), meaning tariffs drop significantly when exporting abroad, especially to Europe and Japan. Vietnam is investing billions into port capacity and inland logistics parks located next to ports, which improves efficiency. Finally, the Vietnamese government has explicitly stated that logistics infrastructure is a national strategic priority.
Legal/Political Risks
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Laws are evolving rapidly, making it difficult for investors to keep up with the changes
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State-owned enterprises dominate sectors like energy, telecoms, transport, banking, and these State-owned enterprises may receive preferential treatment, making competition difficult for foreign firms
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Vietnam is a one-party socialist republic, so while it is extremely stable, it has low transparency in political decision-making
Business Risks
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Foreigners cannot own land outright, only long-term land-use rights, which creates renewal and valuation risk
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Weak IP enforcement
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Slow, paperwork-heavy approval processes for permits, customs, environmental licenses
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Some corruption, as local-level facilitation payments are still commonly expected
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Infrastructure outside major hubs can be underdeveloped
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Logistical bottlenecks during peak export seasons
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Labor cost is rising
Currency Risks
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The Vietnamese Dong (VND) tends to gradually depreciate against the USD over time
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Vietnam’s central bank maintains a managed float, not a fully free-floating currency
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Many large contracts in Vietnam, like raw material imports or export contracts, are priced in USD, not VND