What are the challenges of doing business in Vietnam?

Vietnam is increasingly seen as a dynamic and attractive destination for foreign investment. Its strategic location, robust GDP growth, and youthful labor force make it a promising market for a wide range of industries. However, like any emerging economy, doing business in Vietnam requires navigating certain structural and regulatory complexities.

Below are the primary considerations investors and corporate service providers should take into account:

1. Evolving Regulatory Environment

Vietnam’s legal and business framework is undergoing rapid development. While reforms are underway, investors may encounter:

• Shifting laws and regulations that require regular monitoring.
• Licensing and business registration procedures that can be time-consuming.
• A need to engage closely with local authorities and advisors to ensure compliance.
• Enforcement of intellectual property rights remains a concern, particularly in sectors like technology, fashion, and consumer goods.

This evolving landscape offers long-term potential but demands a proactive and flexible approach from businesses.

2. Foreign Investment Restrictions in Specific Sectors

Vietnam has made significant strides in opening its markets. However:

• Certain industries, such as media, telecoms, or defense-related services, still impose limits on foreign equity.
• Real estate ownership by foreigners is restricted to long-term leasing rights.

Proper legal structuring and local partnerships can help foreign firms navigate these restrictions efficiently.

3. Infrastructure Development in Progress

Vietnam continues to invest in infrastructure, but gaps remain:

• Logistics can be impacted by congestion in major cities and limited rail connectivity.
• Port and airport capacity is expanding but still faces growing demand.
• Power stability and internet speed are improving but may vary in rural or industrial zones.

4. Cultural and Language Differences

Cultural awareness is key to successful business relationships in Vietnam:

• English is spoken widely in major cities but less so in provincial areas.
• Decision-making tends to be hierarchical and relationship-driven.
• Building trust and long-term rapport is essential for local success.

Although there are indeed challenges in Vietnam related mainly to changing regulations, administrative processes and market maturity, the right strategy and local know-how help deal with localized issues. Partnering with experienced corporate service providers can help investors navigate Vietnam’s evolving landscape effectively.