The outstanding successes from the political and economic reforms introduced by the Vietnamese government over the past 30 years have certainly propelled Vietnam’s economy forward.
Once known as one of the poorest nations on earth, Vietnam was unified in 1975 and has subsequently punched above its weight and risen through the ranks to be one of Southeast Asia’s fastest-growing economies.
More recently, the country’s GDP has been growing at a steady rate, with a record high of 223.86 billion USD of investments gained in 2017. The following chart illustrates Vietnam’s economic growth over a 9-year period.
The successful economic growth can be attributed to many positive reforms, as well as Vietnam’s diplomatic handling of its relations with the two trade giants – the US and China. The US’s withdrawal from the Trans-Pacific Partnership trade pact earlier this year, together with the nation’s worst drought in 90 years and high mining costs had led to speculation that Vietnam might miss its set targets.
Remarkably, the country is currently predicted by the Asia Development Bank and the World Bank Group to reach higher growth than 2017. This is due mainly to their focus on Foreign Direct Investments (FDIs), who are attracted by the nation’s low costs and labour, as well as the significant changes brought about in recent years that simplified the process of doing business in Vietnam.
In its 2018 report on the ease of doing business, the World Bank Group (WBG) places Vietnam at the 68th spot out of 190 countries, the fifth country in ASEAN just behind Singapore (2), Malaysia (24), Thailand (26) and Brunei (56).
Some recent significant changes include the following:
- Enhanced electronic filing system for taxes
- Improved their judicial efficiency by implementing a new Code of Civil Procedures
- Enhanced legal rights for borrowers and lenders – a wider range of movable assets that can be used as collateral
- Easier to trade across the border through straightforward customs administration and electronic documents processing
- Easier to enforce contracts through an expanded alternative dispute resolution framework, where new regulations regarding commercial mediation were introduced.
Apart from their main focus on developing the economy further, there is also a strong emphasis on economic sustainability. Vietnam recognised the need to introduce education and vocational training to improve its workforce, so as to be ready for current and future demands.
Booming Industries in Vietnam
Once known for its agricultural and manufacturing industries, Vietnam has developed into one of the prime markets in the region, attracting the attention of global investors who seek to gain from the opportunities that the country provides.
The well-established service industry in the retail and wholesale market has allowed the services sector to grow by 6.9 percent, with trade surplus valued at 2.71 billion USD. The sector is not without its problems, primary with a lack of skilled labour. What is clear, however, is the government’s enthusiasm and willingness to transit from a largely non-skilled labour to an industry-ready skilled workforce.
The chart above shows a comparison between Vietnam’s top export commodities within the first two months of 2017 and 2018.
The sudden spike in revenue in the number of mobile phones exported in 2018 as compared to the previous year is largely attributed to the rising number of companies shifting their mobile phone production to the country.
More significant to the sustainability of the industry is an announcement by the largest home-grown property developer, Vingroup, on its intention to produce low-priced smartphones in 2018, while home electronics maker Asanzo looks set to produce 600,000 smartphones in the same year. This could potentially create a more competitive market and propel the economy further.
Vietnam has become of the largest players in the textile industry due to its competitive low-cost manufacturing production and abundant labour, catering to known fashion brands such as Calvin Klein and Perry Ellis. Many companies are gravitating towards this lucrative sector, expanding and/or shifting their production operations to Vietnam.
The booming industries and abundant opportunities have attracted many entrepreneurs and investors to Vietnam’s doorstep, which led to many important changes before companies can begin their operations in the country. What does it take to open a corporate bank account from certified banks in Vietnam?
Vietnam Corporate Bank Account Requirements
While it is mandatory for some businesses to have individual corporate bank accounts, there are other businesses who do not need to fulfil such requirements. Whatever your business may be, it is certainly beneficial for the company in the long term. The general documents required are listed as follow:
- Company Certificate or Licence
- Tax ID
- Valid Passport of the Representative
- A Fulfilled Account Opening Form
- Identification of Any Delegation
- Certificate of Company Stamp
Additional documentation will be required from investors and foreign-owned enterprises who prefer to open foreign currency accounts. [Vietnam Briefing]. These would include (but not limited to):
- Investment Licence
- Joint Venture Contract
- Company Charter
- BOM (or board of directors) resolution on the account opening and authorised signatories to the account.
- Registration of BOM members with the MPI
- IDs of the appointed General Director and authorised signatories
- Account opening and authority forms signed and stamped by the General Director
- Tax Code Registration
This seemingly uncomplicated task of bank account opening is marred by the fact that banking institutions may have different requirements to safeguard the bank’s interests. Differences in corporate structure, no matter how small, may affect the type of bank account needed. Unfamiliarity with Vietnam’s corporate laws might drag a straightforward documentation submission into weeks, wasting both time and resources.
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Doing Business 2018 – A World Bank Group Flagship Report doingbusiness.org
U.S. – China Trade Tussle Is Creating Winners in Southeast Asia, bloomberg.com
Vietnam’s Economy Sees Strong Growth in the First Half of 2018, vietnam-briefing.com
Vietnam’s Economic Growth Will Accelerate In 2018 As Investors Flood The Country forbes.com
Services Sector Development: A key to Viet Nam’s Sustainable Growth (PDF), undp.org
The Competitive Advantages of Manufacturing in Vietnam, china-briefing.com
Vietnam’s Top 10 Textile Manufacturers, bizvibe.com