The country offers an exceptional environment for the automotive industry—let’s look at a few of the reasons why.
1. An investment-friendly tax policy — Vietnam has always welcomed foreign direct investment (FDI) and encourages it by continually renewing regulations and providing incentives. That resulted in USD 24 billion FDI in 2015, a 17% increase on 2014.
In addition, the corporate tax rate in Economic Zones is the lowest in Southeast Asia, over four times lower than that of the majority of Vietnam’s neighbouring countries.
2. Vietnam enjoys a demographic golden age — Vietnam has the third-largest population among ASEAN countries, nearly 92 million people with a forecast annual growth rate of 1.3%.
• Of that population, 70% are under 35-years-old — a future-proof labour market — and 60% are of working age.
• About one million people enter the workforce each year.
• In comparison with other Southeast Asian countries, the cost of living in Vietnam remains low.
3. Hardworking people — productivity has risen dramatically.
• In the five years between 2010 and 2015, it rose by 23.6%.
• An emphasis on education is producing an increasingly skilled workforce; there are around 45,000 graduates annually.
• The Labour Code (effective since May 2013) has created a legal framework setting out both employers’ and employees’ rights and obligations with respect to working hours, labour agreements, social insurance, overtime, strikes, and employment termination. Vietnam does not seek to exploit its workforce and the Code provides for an eight-hour working day/48-hour working week. Employer and employee, however, can agree on overtime, up to 300 hours annually under special circumstances.
• In turn, Vietnam has become one of the most competitive countries in Asia when you factor in production and raw material costs.