Growing demand for UK goods and services
Total trade in goods and services (exports plus imports) between the UK and Vietnam was £6.4 billion, in current prices, in the four quarters to the end of Q3 2022, an increase of 20.5% or £1.1 billion from the four quarters to the end of Q3 2021. Major UK exports to Vietnam include pharmaceuticals, machinery and equipment.
Increasing openness to trade
Vietnam’s trade has almost quadrupled over the last decade. The country's import-export revenue last year was reported at $732 billion, despite numerous difficulties and setbacks, largely caused by international geo-political uncertainties. This has put Viet Nam among some of the most robust economies in the Southeast Asia.
Vietnam has established an extensive network of trade agreements with 15 signed FTAs including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the European Union–Vietnam free trade agreement (EVFTA), the Regional Comprehensive Economic Partnership (RCEP) and the UK-Viet Nam free trade agreement which came into effect in January 2021.
Relevance of UK technology and innovation
Vietnam made ambitious commitments at COP26, pledging to reach net zero by 2050, phase out coal power from the energy mix, and ensure sustainable food security for a rapidly growing population. A young and increasingly tech-literate population are driving innovation across all sectors. This context positions UK expertise in areas including clean growth, tech, and digitalisation as particularly relevant to Vietnam’s growth ambitions.
Top five UK goods exported to Vietnam, in the four quarters to the end of Q1 2023
| Goods | Value (£million) |
|---|---|
| Pulp & waste paper | |
| Beverages | |
| Medicinal & pharmaceutical products | |
| Plastics in non-primary forms | |
| Clothing |
Source:
ONS Trade in goods: country-by-commodity exports
Last updated: July 2023
Download the latest trade and investment factsheet for Vietnam.
Total import value (into the UK from Vietnam) and export value (from the UK into Vietnam) over time
| Year | Imports (£billion) | Exports (£billion) | Total trade (£billion) |
|---|---|---|---|
| 2016 | 4.1 | 0.7 | 4.8 |
| 2017 | 4.5 | 0.8 | 5.3 |
| 2018 | 4.7 | 1.0 | 5.7 |
| 2019 | 4.9 | 1.0 | 5.8 |
| 2020 | 4.1 | 0.9 | 5.0 |
| 2021 | 4.5 | 0.8 | 5.4 |
| 2022 | 5.9 | 1.0 | 6.9 |
Source:
ONS UK total trade: all countries, seasonally adjusted
Last updated: July 2023
Total trade is the sum of all exports and imports over the same time period.
Download the latest trade and investment factsheet for Vietnam.
Vietnam: at a glance
Economic growth
8.0%
Actual figure (IMF, 2022)
The UK is 4.0% (IMF, 2022, actual figure)
GDP per capita
$3,549
Actual figure (IMF, 2020)
The UK is $40,347 (IMF, 2020, actual figure)
Currency
Dong
Business language
Vietnamese
You are likely to need a translator
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.
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Education is a national priority for Vietnam. Its young population are keen to access the benefits of education and this has opened up opportunities for UK companies with expertise in this sector. Reform and modernisation is supported by investment from the government, international donors and the private sector.
Growing demand for English language training
There is growing demand in Vietnam to learn English in order to access higher-paid jobs, and a growing ability to afford training due to continued economic growth. There is strong political will to upskill the labour force to support the country’s development ambitions, and the sector is receiving substantial investment.
Growing demand for higher education and teacher training
There is growing demand for quality higher education and Vietnam is open to international education, joint degree programmes, and transnational education partnerships. Due to a shortage of teachers and the Vietnamese government’s reform of the education system and curriculum, there are ongoing opportunities for UK companies delivering high-quality teacher training.
Growing demand for technical training and professional qualifications
Technical and vocational training is central to Vietnam’s development plans, and to meet the needs of an evolving labour market, particularly in areas such as IT and STEM subjects.
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Vietnam’s energy market is currently dominated by coal and hydroelectricity, but is transitioning towards renewable energy. Vietnam committed to a 2050 net zero target at the COP26 summit. This is creating potential opportunities for UK businesses specialising in renewable energy.
Ambitious energy transition strategy
Vietnam has pledged to phase out coal power and achieve net zero emissions by 2050. With electricity demand projected to continue to rise rapidly, there is increasing need in Vietnam for policy and regulation support, technology, equipment and capacity-building to build a viable renewable energy sector. This is creating significant opportunities for UK investors and suppliers.
Considerable natural resources for renewable energy
Vietnam’s significant geographical advantages include high wind speeds off the south coast, and high solar irradiance. The solar sector is one of the fastest-growing in the region, and offshore wind is similarly set to grow rapidly, offering exciting opportunities for UK firms with relevant expertise.
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Vietnam has an ambitious programme of infrastructure development, which includes new urban railways and an international airport. Vietnam currently spends 6 percent of its GDP on infrastructure while other countries in the region spend an average 2.3 percent, making Vietnam the leading country in ASEAN for infrastructure investment (Asian Development Bank, 2021).
An expanding public transport network
Plans to develop metro systems in Hanoi and Ho Chi Minh City are in the early stages. Initial steps have been taken towards building a high-speed North-South railway. This is creating opportunities for UK businesses who have products and services in the railway supply chain.
Opportunities to participate in regional partnerships
Many infrastructure projects in Vietnam are supported by development assistance funding from other countries or the Asian Development Bank. There are opportunities for UK businesses to participate and play a role in the supply chain for these large projects via partnerships with third countries.
Expansion of opportunities in aviation
Vietnam’s expansion of existing airlines and the entry of new operators offers possibilities for UK companies to provide equipment, training and other aviation services. Hanoi-HCMC remains one of the busiest domestic routes worldwide.
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With an increasing population, resilient GDP growth and a demand for improved healthcare quality, Vietnam is a promising market for UK businesses in the healthcare sector.
Expansion and diversification of the healthcare sector
Vietnam’s healthcare spending continues to grow as the country aims to increase the skills of its healthcare workforce and improve its capability to deliver quality healthcare. Opportunities for UK companies are growing in health education and training, clinical services and digital health.
Demand for imported pharmaceutical products
Vietnam imports 60% of its pharmaceutical end products and 90% of its active pharmaceutical ingredients, creating significant opportunities for UK exporters. UK exports of chemical and related products increased 34.6% year on year in the 4 quarters to the end of Q3 2022. This included an increase in medicinal and pharmaceutical products specifically of +53% year on year. This was partly thanks to tariff reduction under the UK-Vietnam free trade agreement, and made this the largest UK’s exports category to Vietnam.
Major developments in healthcare infrastructure
Vietnam is investing in healthcare infrastructure projects, including the construction of more hospitals. The percentage of private hospitals is projected to increase rapidly in the coming years as domestic corporations develop hospital groups and clinic chains across the country. Vietnam’s healthcare system will continue to adapt and respond to a rapidly aging population.
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Vietnam offers considerable opportunities for UK tech companies as one of the fastest-growing digital economies in South East Asia.
Growing market for Artificial Intelligence (AI), cyber security and fin-tech
The government considers AI a key technology for development, with potential to add hundreds of billion USD to Vietnam GDP. The cyber security market is growing, following the expansion of the retail market and of digital transactions, which pose increasing cyber threats. With a booming finance sector, banks are increasing spending on technology.
Demand for IoT, Industry 4.0 and smart cities technologies
Vietnam’s growing middle class offers opportunities for UK companies in connectivity technology and smart electronic devices. Smart manufacturing is another sector promising exciting growth as the country’s manufacturing base shifts towards higher tech solutions.
Potential for modernisation of agriculture
With a significant proportion of the population in Vietnam still engaged in agriculture, there are opportunities for UK companies to offer expertise in agri-tech and modernisation of agricultural practices.
Check for trade barriers
Trade barriers, such as tariffs or taxes, can raise costs, cause delays, or even stop you from exporting. Check for any issues that may impact your business when exporting.
Check duties and customs
Find information on how to export goods from the UK. View the duties, rules, restrictions, and the documents you need for your products.
Doing business in Vietnam
Preparing to export
Tax system
Most companies in Vietnam are subject to six 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 categories of products (including cigarettes, alcohol, and most vehicles) and six types of services (including casinos, gambling, lotteries, and golf clubs), which are considered luxurious or non-essential.
Custom duties
The UK-Vietnam free trade agreement came into effect from 1 January 2021. 65% of the tariff lines of UK exports to Vietnam have been eliminated, increasing to 99% after six 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.
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.
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 (NOIP) is the authority responsible for the registration of intellectual property.
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
Conducting business in Vietnam
In late 2014, the National Assembly passed the Law on Investment (LOI) and Law on Enterprises (LOE), both of which came into effect on 1 July 2015. These laws govern the establishment and operation of companies in Viet Nam.
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 2022 Corruption Perceptions Index was 77th out of 180 countries and territories. Vietnamese government has shown remarkable effort to deal with corruption recently, although corruption is still a considerable issue particularly in infrastructure projects, customs procedures and land rights.
Although Vietnam has moved up the Transparency Index, anyone engaged in business in Vietnam may encounter the challenges of corruption in one form or another. Practices such as facilitation payments and giving and receiving expensive gifts in order to develop business relationships were common and persist in some areas. There is also little judicial independence in Vietnam and corruption remains a problem in the court system.
Next steps
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