For many businesses, the Southeast Asia region continues to be an appealing location for ventures and economic expansions. Overall, the Southeast Asia region is projected to have a 5.2% growth in 2019-23, according to the OECD.
Looking at the current and forecasted GDP growth rates across the Southeast Asian regions, the Vietnam market in particular is showing strong signs of steady growth with it’s GDP for the past two years at a reported rate of 6.7- 6.9%.
When compared to other locations in Asia such as China and Singapore, Vietnam as an opportunity is still relatively under the radar. However, businesses are quickly catching on to this valuable opportunity as major contenders look to venture into the market.
International corporations are quickly seizing the business opportunities in Vietnam by setting up a presence in the area. Businesses are seeing the opportunity that is present in the Southeast Asia area and are in particular interested in the Vietnamese market. French coffee company, Malongo for example is eyeing to open in Vietnam following the successful opening of two outlets last year in Philippines.
Just last month, soy milk retailer Mr Bean also opened 5 stores in Vietnam and announced plans to open 200 Mr Bean stores in Vietnam within the next 10 years. Finding major success in Singapore with around 70 stores, Low Jwee Poh, found and chief executive of Super Bean International finds the projection of 200 stores in Vietnam to be a modest estimate seeing how Vietnam experiencing a strong gross domestic product growth with a population of above 95 million in 2018, according to the World Bank’s estimates.
As the Vietnam economy quickly gains traction, more and more businesses are swooping in to take a bite out of the market. With the market gaining more international attention, businesses will want to beat their competitors in establishing themselves in the area.
Ins & Outs of Running a Business in Vietnam
Enticing as it may be to set up a business in Vietnam there are its risks. Ventures into a new location is never easy, especially when there is limited visibility due to language and resource constraints.
There are many parts that contributes to a successful business venture into Vietnam, from strategising, entity set up, payrolling, to business management, and more, a lot is required for in building a smooth sailing enterprise.
We previously published an article on the 3 Most Common Payroll Risks in Vietnam. There we look at common areas of payroll non-compliance that may occur. From having dual sets of employment agreements, to an unlawful breakdown of salaries, and misinformation when it comes to mandatory contributions, there are many ways non-compliance can occur.
Outside of pure non-compliance, businesses venturing into Vietnam also need to be careful when dealing with payroll and other business processes as Vietnam is constantly updating their legislation as part of their progressive measure.
Just last July, Vietnam increased their common minimum wage as well as the regional minimum salary. This year again, Vietnam’s National Wage Council announced an increase in their common minimum wage from 1,390,000 VND /month to 1,490,000 VND /month , starting 1st July 2019. The regional minimum salary also increased in January, 2019 as follows:
Previously in 2018
Starting January 2019
Region I: VND 3,980,000/month;
Region I: VND 4,180,000/month;
Region II: VND 3,530,000/month
Region II: VND 3,710,000/month
Region III: VND 3,090,000/month
Region III: VND 3,250,000/month
Region IV: VND 2,760,000/month
Region IV: VND 2,920,000/month
For more information on the different regions, please visit our Vietnam Legislation page.
We previously hosted a similar workshop for Japan legislation, providing business leaders and HR professionals with information on key legislation and updates. Many have come back to us with positive feedback so this May, Links HR Outsourcing will be hosting a workshop in both Singapore and Hong Kong on Vietnam Payroll, Labour Law & Updates. The workshop is aimed to provide business leaders with a better understanding of the market so they can better manage their business.
For this workshop we’ll be flying in Tu Nguyen, Business Development Manager for Links’ Vietnam and Thailand branch. Tu has been working in the HR industry for more than 11+ years. She has a wide span of HR/Payroll related experience, beginning her career as an in-house HR business partner to overseeing our payroll services and various HR outsourcing offerings including work visa application, and secondment/ EOR in Vietnam.
Spaces are limited, sign up to our Vietnam Payroll, Labour Law & Compliance Workshop now to secure your spot, a confirmation email will be sent to you once your spot it confirmed. Want to learn more about how you can set up your business across Asia Pacific in general? Send us an email or drop us a call today!
Learn the market movements
The Asia Pacific region as a whole is rapidly growing. To properly take hold of the opportunity, it is important that business leaders properly examine the culture and strategise a plan. The Asia Pacific region being so rich and diverse in culture, a business that finds success in one area may not necessarily find the same audience and consumer adoption in another.
Also with the growing attention that the Asia Pacific and in particular the Southeast Asian region is getting from international corporations, speed is key. Not only do businesses need to plan well but they also need to be quick on the feet in order to properly seize the opportunity which can be achieved through smart working and outsourcing laborious tasks and focusing on delivering results.
Know the risks involved
As exciting as it may be, as it a leader, it is your role to not only see the opportunity but also have an understanding of the risks that may be involved. When venturing out and looking to operate in a foreign market, there are many areas of concern. Make sure to properly examine the possible risks involved when evaluating the opportunity.
Be informed of the key legislation
Staying informed is a great way for leaders to prevent unwanted outcomes when it comes to business expansion. By knowing about the key regulations involved in setting up and running a business overseas, you’re able to make more informed decisions and examine the validity of each opportunity and whether it is worth pursuing a business expansion in Vietnam or any given area. Want to learn more about this? Why not talk to one of our representatives to see how we can help build your business today.
- Your Ultimate International Business Expansion Framework
- How to expand your business into Vietnam: Use PEO Employment!
- How to employ and payroll staff in Vietnam
- What Level of Payroll Risk do you have in Vietnam?
Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcing, visa application, Employer of Record (EOR), recruitment and more! Contact us for more information on how we can help leverage your HR function.