Business Consulting Manager at InCorp Vietnam
Ian is a sales and marketing professional who has worked over 15 years in key accounts management.
Vietnam has transformed itself from one of the least developed regions in the world into one of Southeast Asia’s most prosperous economies over the past three decades. Ho Chi Minh City (HCMC), a fast-growing, young, and vibrant city in southern Vietnam, wholly represents the country’s dynamic business landscape. Jones Lang LaSalle (JLL), a real estate services and investment management firm, ranked Ho Chi Minh City third among the world’s most dynamic cities in its recent City Momentum Index.
As far as startup culture is concerned, Ho Chi Minh City’s Department of Science and Technology recently announced that the city’s startups attracted venture capital funds worth US$1.1 billion in 2021.
The government has bolstered local technology and innovation, and the emergence of a young, talented generation has attracted foreign and local investors. Doing business in Ho Chi Minh City comes with many valuable benefits, as you’ll find below.
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1. Strategic Location as Vietnam’s Financial Hub
In the vibrant core of Southeast Asia, Ho Chi Minh City stands as a bustling hub with access to a market of over 600 million individuals. Together with Dong Nai, Ba Ria-Vung Tau, and Binh Duong, Ho Chi Minh City forms the Southern Key Economic Zone, a powerhouse contributing to half of Vietnam’s economic prowess.
Distance of HCMC from significant cities
|Phnom Penh, Cambodia
Nestled within reach of major Asia-Pacific markets like China, India, and the ASEAN nations, Ho Chi Minh City stands as a financial nucleus, home to the nation’s largest stock exchange. It’s the chosen ground for numerous corporations and investment firms setting up management and investment hubs to tap into the wealth of opportunities. Here, they engage in mergers, acquisitions, and a spectrum of business ventures, capitalizing on the country’s impressive annual growth rate of over 6%.
2. Impressive Economic Indicators
As of 2021, Ho Chi Minh City proudly stands atop the list of provinces and cities in Vietnam, boasting the highest Gross Regional Domestic Product (GRDP) at an astounding VND 1.3 quadrillion (~US$55 million). Demonstrating remarkable economic resilience, the city’s gross domestic product witnessed an uptick of 1.88% year-on-year at the close of Q1 2022, signaling robust growth and reinforcing its status as a pivotal economic stronghold in the region.
Particularly noteworthy in Ho Chi Minh City’s economic performance, the trade and services sector generated close to US$4.3 billion in revenue in June 2022 alone. The first half of the year saw an impressive accumulation of nearly US$22 billion in this sector, marking a significant year-on-year increase of 41.1% and 6.2%, respectively. This robust growth underscores the city’s thriving commercial landscape and its vital role in driving the nation’s economic expansion.
The latest report from Ho Chi Minh City’s Statistics Department reveals a promising economic trajectory for 2023. The city is set to achieve a total GRDP of VND 1,621,191 billion, marking a robust 5.81% growth from the previous year.
This economic upsurge is led by a 6.79% increase in the commercial and service sector, followed by the industrial and construction sectors, which collectively rose by 4.42%, with the industrial sector alone growing by 4.41%. Additionally, product tax showed a healthy increase of 3.57%, and the agricultural, forestry and fishery sector experienced a growth of 1.53%. These figures underscore Ho Chi Minh City’s dynamic economic environment and its diverse sectors contributing to the overall growth and stability of the region.”
Read Related: Why Do Foreign Investors Choose This Destination?
3. Travel Hotspot
In the first half of 2022, Ho Chi Minh City welcomed a remarkable 478,000 tourists, achieving 13.7% of its annual tourism goal, as reported by the municipal tourism department. During the same period, the city saw its tourism revenues soar to US$2.1 billion, marking a 29.9% increase and surpassing the set target by a substantial 73.5%. Notably, since the onset of June 2022, the city has experienced a significant influx of international visitors, with nearly 216,000 arrivals recorded, doubling the figure from the previous year.
In the first nine months of 2023, Ho Chi Minh City saw a significant influx of tourists, with nearly 27 million domestic visitors, marking a 24.9% increase from the previous year. Additionally, the city attracted around 3.6 million international visitors, a substantial 69% rise year-on-year. This uptick in tourism highlights Ho Chi Minh City’s growing appeal as a vibrant and sought-after destination on the global travel map.
4. Infrastructure & Industrial Parks
Plans for Infrastructure Construction
As a result of land and geographical disputes, a series of transport infrastructure works across the city were temporarily suspended. However, the construction is scheduled to resume in early 2023, as stated by the Ho Chi Minh City Transportation Works Construction Investment Project Management Authority.
Some of the infrastructure projects include:
- Tang Long Bridge
- Luong Dinh Cua Road (Thu Duc City)
- Vam Sat 2 Bridge (Can Gio District)
- Ten Lua Road
- Ong Nhieu Bridge
- Nam Ly Bridge
- Ong Bon Bridge
- Tan Ky-Tan Quy Road (Binh Tan District),
- Hoang Hoa Tham and Cong Hoa Road (Tan Binh District)
Currently, there are 19 Industrial Zones in Ho Chi Minh City, covering over 4000 hectares of land. Businesses in these Industrial Zones are fetching great investment, especially the ones involved in manufacturing and processing.
Moreover, Industrial Zones have bolstered the pace of industrialization and have created employment opportunities for locals.
Following is a list of Industrial Zones in HCMC:
- Dong Nam Industrial Zone
- Linh Trung 1 Industrial Zone
- Hiep Phuoc Industrial Zone
- Tan Thuan Export Processing Zone
- Vinh Loc Industrial Zone
- Tay Bac Cu Chi Industrial Zone
- Ho Chi Minh City Hi-Tech Zone
- Le Minh Xuan Industrial Zone
- Phong Phu Industrial Zone
- Tan Binh Industrial Zone
- Tan Phu Trung Industrial Zone
- Tan Tao Industrial Zone
- Tan Thai Hiep Industrial Zone
- Linh Trung 2 Industrial Zone
- Cat Lai 2 Industrial Zone
- Binh Chieu Industrial Zone
- Quang Trung Software Park
- An Ha Industrial Zone
- Le Minh Xuan 3 Industrial Zone
5. Low Operating Costs
A TMX report shows that Vietnam has the second cheapest operating costs compared to other Asian countries. A report from VnExpress states that Vietnamese manufacturers spend a minimum of US$79,280 per month on manufacturing.
While Singapore and Thailand incur a minimum of US$366,561 and US$142,344 operating costs, respectively, compared with neighboring commercially viable countries. Due to factors such as low wages, and favorable investment policies, Vietnam is attracting foreign investors to set up companies.
6. Young, Talented, and Dynamic Workforce
Ho Chi Minh City Metropolitan area hosts a population of over 20 million, out of which 16 million reside in urban areas. Ho Chi Minh City itself lies at the center of the metropolitan area and has a population of 8.4 million.
Vietnam’s General Statistics Office (GSO) reports that 51.2 million workers aged 15 and older were employed in the first quarter of 2022, an increase of 200,000 over the same period last year. The service sector makes up 38.7% of all jobs, followed by industry and construction (33.5%) and agroforestry-fishery (27.8%).
7. Exceptional Startup Portfolio & Network
Currently ranked 111 globally, the Startup Ecosystem in Ho Chi Minh City has increased by 68 places since 2021. The city ranks sixth in South East Asia and first in Vietnam. As per the StartupBlink Map, the city is already home to 17 E-commerce & Retail startups.
8. Prominent Startups in Ho Chi Minh City
As mentioned in the introduction, Vietnam’s business landscape is one of the most dynamic in Southeast Asia, with much of its startup activities centered around Ho Chi Minh City. Here are some of the most successful ideas that took off in the city.
- Axie Infinity: Started in 2019, this blockchain and video game startup company has almost 50 employees and is worth US$9 million. The game Axie Infinity involves acquiring, raising, and battling monsters known as Axies.
- Momo: Users can make digital payments and money transfers using Momo, an e-wallet and payments app. Founded in 2007 by Diep Nguyen and Tuong Nguyen, Momo is a name to reckon with in the FinTech industry worth US$2.33 million.
- Tiki Corporation: It is expected that Tiki.vn will become Vietnam’s largest retailer soon. It was established in 2010 with funding worth US$1.92 million.
- Propzy: The Propzy platform aims to make renting, selling, and buying a home as safe as possible. Founded in 2014 by John Le, the company provides real estate solutions on social media.
- MASAN Group: MASAN Group ranks among Vietnam’s top private companies, specializing in consumer products and resources industries. The company was founded in 1996 by Nguyen Dang Quang and is worth US$2.5 million.
- Pharmacity: Pharmacity operates as a retail drug company that sells a broad range of pharmaceutical products. Founded in 2011, this pharmaceutical company is worth more than US$31 million.
- Jio Health: Jio Health collects patients’ vital signs, administers prescriptions, and maintains contact with physicians and caregivers. Founded in 2016 by Raghu Rai, this healthcare company is worth more than US$7 million.
9. Diverse Span of Industries
Some of the most prominent industries in HCMC are:
- Electronics – IT
- Food Processing
- Plastics & Rubber
To promote economic activities and the development of key industrial products, the municipal authorities are introducing various trade programs. It involves enhancing trade promotion and market development activities at a global level. Moreover, funds will be provided to local industrial enterprises to do market surveys and participate in trade fairs.
As part of this effort, local authorities will also prioritize arranging rubber and plastic project sites in industrial parks. A center for research, development, and manufacturing will be established to meet both domestic and export demand for molds. Moreover, a “Made in Vietnam” program will be implemented to support mechanical and automation businesses.
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