Sectors

Agriculture

With a share of 20% of national GDP, agriculture is an important sector for Vietnam. It is one of the top exporters of coffee, tea and rubber. With a growing and westernizing middle class, demand for high quality products has seen an increase in Vietnam. To keep up with this demand, Vietnam needs to modernize its agricultural sector.

There lie many challenges in productivity, excessive use of pesticides and fertilizers, climate change and water quality and availability. To overcome this, many opportunities lie for companies with the skill and know how to tackle these issues.

Automotive

The Vietnamese Automotive industry is a rapidly expanding sector over the past years. With its fast-growing middle sector consisting of 22 million people and expecting to double by 2026, the growth rate of car ownership is estimated to boom over the next decade. One of the main challenges is the stiff competition between ASEAN countries. Business opportunities for Dutch companies lie in the recent free trade agreements with Europe (EVFTA) and increasing demand for motor vehicles and components.

Education

Due to a growing middle class in Vietnam, there is an increasing demand for education and therefore a growing amount of money is spent on this. Since Vietnam is becoming wealthier, there is an increasing need for higher quality of education. Vietnam’s current educational system faces major skill gaps, and local qualifications in many fields are not well acknowledged. As investment in children’s education is given increased priority, the demand for an international learning environment is on the rise, making the market more attractive to step into for international education providers. International qualifications are seen as a valuable advantage, and in some fields they are almost essential. The government is also extremely committed to educational development, which has driven the improvement and continuous expansion of the education system.

Vietnam’s increasing wealth combined with government encouragement and consumer desire for high quality education are setting the table for increased foreign investment in Vietnam’s higher education sector, creating opportunities for Dutch companies. Besides this, there also lie possibilities for E-learning in the Vietnamese market. E-learning is an upcoming way of learning and COVID-19 has given a boost to this development.

Energy

Vietnam’s power system is at an inflection point. Over the past five years, load has increased at an average of about 10 percent a year, a staggering pace. Keeping up with the rapidly growing demand for power will require bringing a significant amount of additional capacity online. By Electricity of Vietnam’s (EVN’s) estimates, this upgrade to the power system will require Vietnam to attract more than $150 billion in new capital investment into the country.

 

Vietnam is considered to have the best wind resources in Southeast Asia. Located in the monsoon climate zone, and shaped by its over 3,000 km long coastline, Vietnam´s potential to develop and generate wind power is large. Furthermore, Biomass is an important source of energy in Vietnam, and being an agricultural country, Vietnam has a high level of biomass energy potential. Having one of the highest number of hours of sunshine annually in the world – approximately 2,000 to 2,500 on average – Vietnam’s potential for solar energy production is high. From this, one can conclude that the Vietnam’s natural endowments offer endless possibilities for renewables.

 

The innovative Dutch business climate, combined with its expertise in the renewable energy market, promises business opportunities to lay ahead. Sectors with explicit potential are; generated distribution, solar power innovations, the service industry for wind generation, energy storage through water management, and electric public transport and smart charging solutions.

Healthcare & Life Sciences

Vietnam has a fast-growing middle class and aging population. The middle class has more money to spend and expects higher quality of care. Together with this development, the government is making efforts to improve the quality of healthcare throughout Vietnam. There remain challenges regarding health access; many hospitals are outdated and overcrowded and are in need new medical equipment and more staff.

These developments have created several opportunities for Dutch companies. Vietnam’s growing middle class and rapid economic development has boosted the demand for higher quality and specialized healthcare services. Besides this, the country has entered the ‘aging phase’ which leads to a demand for medical technology which targets more frequent lifestyle and age-related conditions. The Vietnamese hospital system also needs an upgrade in its facilities, equipment, and services. Next to this, government encouragement for the import of medical equipment creates a strong market for foreign investors.

Industry

A diversified trade structure, rising wages and domestic consumption are the backbone of the Vietnamese economic growth. Nonetheless, labour costs remain competitive, which help attract foreign investments to the country. Industry contributed 34.5% of GDP and employed 28% of the total workforce in 2020. The energy sector has boomed in recent years (coal, hydrocarbons, electricity, cement, steel industry). Despite being a ‘newcomer’ in the oil industry, Vietnam has become the third largest Southeast Asian producer.

The country has also invested in high value-added industries such as cars, electronic and computer technologies. Manufacturing rose by 10.9% year-on-year in 2019, contributing a record industrial trade surplus of over USD 10 billion. With their growing middle class and high quality manufacturing Vietnam is considered to be the growing nation.

Information Technology

Vietnam’s information and communication technology (ICT) industry posted average annual growth of 26.1% in the 2015-2019 period, dominated by multinational businesses, the electronics industry has significantly boosted Vietnam’s trade volume and contributed to its GDP in the past decade. With emerging opportunities due to trade liberalization, corporate tax reduction, labor quality improvement, and government reforms, Vietnam has become a favorable option for foreign investors looking to relocate their EI investment in Asia.

 

Vietnam’s rising e-commerce industry is expected reach close to US$9 billion by 2025 representing significant opportunities for investors. This constitutes to nearly a tenth of the country’s overall goods and services sales. Electronics, fashion, toys, and furniture represent some of the fastest-growing sub-sectors in the e-commerce industry in Vietnam. Challenges include higher operational costs due to the cash- based economy, heavy traffic in cities such as Hanoi and Ho Chi Minh as well as underdeveloped infrastructure resulting in challenging last-mile delivery to rural areas.

Manufacturing

Vietnam is a major regional trading hub in Asia due to its geographical position (as gateway to South China and ASEAN markets), its long coast line (3260km along all major inter-Asia shipping routes from China to South-East Asia) and its abundant inland waterways. The Vietnamese ports are well placed along the inter-Asian shipping routes to take advantage of growing intra-Asia trade volumes.

With its long coastline, strategic location and skilled low-cost labour force, Vietnam is an interesting location for the Dutch maritime companies producing for third markets and equipment suppliers. Several major Dutch companies are already active in Vietnam’s main centres for shipbuilding: Hai Phong, Da Nang and Ho Chi Minh City. Vietnam also has an extensive port infrastructure with over 120 ports, of which 37 ports can accommodate ocean cargo vessels. With an average annual export growth of 12% the port infrastructure is in continuous development to facilitate this trend.

Tourism

The tourism sector is an important vehicle for economic growth, job creation, and shared prosperity in Vietnam. Unfortunately, Vietnam is not exempted from the negative influences of the COVID-19 pandemic on global tourism. Even though COVID-19 has created several challenges, it also created awareness amongst the Vietnamese about some important improvements that need to be made.

Opportunities for Dutch companies lie in the restructuring of the tourism market. For example, restructuring it in a sustainable and effective manner towards a market with high-quality and high-spending tourists, and creating proper products that can meet the diverse demands of international visitors. Besides this, there should be more focus on domestic tourism since Covid-19 will likely impact the international tourist markets for the next few years. Dutch companies can furthermore assist the Vietnamese with overcoming the infrastructure capacity strains, lack of skills of employees and the digital transformation of tourism promotion.

Transport & Logistics

Vietnam is set to see strong growth in trade over the coming years. This will support ongoing development and expansion of its logistics and transport. This sector is one of the fastest growing industries in Vietnam. The infrastructure sector is a key investment in Vietnam, because it will result in spill-over effects to other sectors. The continuously improving vast network of highways, metro’s, maritime ports, airports, and railroads provide the perfect platform for exports.

The innovative Dutch business climate, combined with its expertise in the Transport and Logistics market, promises business opportunities to lay ahead. Dutch companies can either set up their operations through a Vietnamese entity to provide logistics services in Vietnam or participate in parts of the supply chain of services, such as; warehousing & distribution centres, climate controlled logistics, and IT services.

Water

Vietnam with over 26% of land below sea level is similar to the Netherlands, as we have always had to protect ourselves from the risk of floods as well. To survive, the Dutch had to be inventive and develop a highly sophisticated means of water management. In fact, the high population density combined with an economy largely related to transport, navigation and ports, results in pressure on space and environment that has to be managed carefully. By involving relevant stakeholders and designing sustainable engineering and ‘smart’ infrastructure for complex settings, standards of Dutch water management are very high.

In this context, the Dutch water sector can provide knowledge, expertise and technology in water management to help tackle the water challenges that Vietnam is facing and contribute to the country’s sustainable development.