Exporting guide to Vietnam

Vietnam offers many exciting opportunities for businesses. There is a large, young population and an expanding middle class. The economy is growing quickly. Vietnam achieved 2.8% growth in 2020, following 7% in 2019 (World Bank, 2021) and is on track to bounce back strongly in 2021. Proactive government reform is helping to open the market to international business.

Growing demand for UK goods and services

There is growing appetite for UK goods and services. Total trade between the UK and Vietnam tripled in value from 2010 to 2019, standing at £4.8 billion for 2020 (ONS, 2021). Major UK exports to Vietnam include pharmaceuticals, machinery and equipment. Emerging sectors, including renewable energy and technology, present opportunities to UK businesses.

Increasing openness to trade

Vietnam’s trade has almost quadrupled over the last decade. The country has an extensive network of trade agreements with 15 signed Free Trade Agreements (FTAs), including the UK-Vietnam FTA which came into effect in January 2021.

Vietnam market

Ease of doing business

70th

out of 190 countries (World Bank, 2019)

Currency

Dong

Business language

Vietnamese

You are likely to need a translator

GDP per capita

$2,551

UK is $42,558 (IMF, 2018)

Economic growth

7.0%

(IMF, 2019)

Time zone

GMT +7

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Opportunities for exporters

There are growing opportunities for UK companies in Vietnam, across a range of sectors. Our trade advisers in Vietnam have identified particular opportunities in the sectors listed below.

Doing business in Vietnam

Preparing to export

Tax system

Most companies in Vietnam are subject to 6 major taxes:

  • Business license tax
  • Corporate income tax
  • Value-added tax
  • Special sales tax
  • Foreign contractor tax
  • Custom duties

Corporate income tax

The UK and Vietnam have signed a double taxation agreement, meaning the same income is not taxed twice.

Value-added tax (VAT)

If you are registered for UK VAT, it may be possible to zero-rate the goods you export to Vietnam, provided certain conditions are met.

VAT applies on the value of imported goods, and importers pay it at the same time as they pay import duties. Different rates of VAT are applied to different goods and services, but generally the rate is up to 10%.

A Special Sales Tax (SST) applies to the production and import of 11 products considered as luxurious or non-essential.

Custom duties

The UK-Vietnam Free Trade Agreement came into effect from 1st January 2020. 65% of the tariff lines of UK exports to Vietnam have been eliminated, increasing to 99% after 6 years.

Regulations

You will need to make sure you get the technical licenses you need for your products before you export. The licensing process can take some time.

The Information Centre of the Directorate for Standards and Quality (ISMQ) is responsible for Vietnam’s standards system.

Intellectual property

As a first step, we advise you to speak to an intellectual property (IP) lawyer if you think you need patent protection when exporting. With the implementation of the UKVFTA provisions regarding IPR, Vietnam has made a commitment to protecting intellectual property.

The National Office of Intellectual Property of Vietnam (NoIP) is the authority responsible for the registration of intellectual property.

Payment terms

Vietnamese companies can prohibit the use of letters of credit because of the cost and collateral requirements from banks.

Payment terms of 60, 90 or 120 days are common.

Trade barriers

Check for any reported barriers to trading with Vietnam.

Report any trade barriers that are affecting your business so we can help fix them.

Operating in Vietnam

Business culture

It’s important to develop personal relationships to do business in Vietnam. You should have a local representative for direct exports.

There are also some cultural differences to be aware of. For example, smiles and nods do not mean ‘yes’ to your proposal. You should also present business cards with both hands and use the correct form of address for people. For example, ‘Mr Nguyen Nam Thuy’ would be ‘Mr Thuy.’

Challenges

The State Bank of Vietnam (SBV) imposes strict controls on foreign exchange transactions.

You must get foreign currency convertibility rights from SBV as early as possible. As these are normally part of the investment licence, they are only given to companies operating in specific industries. Convertibility rights do not guarantee the availability of foreign exchange.

Corruption

Vietnam’s score in Transparency International’s 2020 Corruption Perceptions Index was 104th out of 180 countries and territories. Corruption is particularly prevalent in infrastructure projects, customs procedures and land rights.

Anyone engaged in business in Vietnam may encounter, and at the very least should prepare for, the challenges of corruption in one form or another. Practices such as facilitation payments, bribes and giving and receiving expensive gifts in order to develop business relationships are still common. There is also very little judicial independence in Vietnam and corruption remains a problem in the court system.

Next steps

DIT can advise you on doing business abroad, and help put you in touch with other people who can help such as lawyers and distributors.