Vietnam
Market Access Plan 2015-2017

CapitalPopulationTotal AreaCurrency
Hanoi90.6 million329,560 km²Vietnamese Dong (VND)

Why Vietnam Matters

Vietnam is:

  • a priority emerging market under Canada's Global Markets Action Plan;
  • one of the rapidly emerging economies in Southeast Asia, with a gross domestic product (GDP) growth of 6.0 percent in 2014 and a target GDP growth for 2015 of 6.2 percent;
  • one of Canada’s most important trading partners in Southeast Asia, with bilateral trade reaching $3.3 billion in 2014;
  • re-orienting toward a market economy, with a rapidly growing middle class; and
  • increasingly dependent on exports as a key component of growth.

Canada and Vietnam’s bilateral relations have developed and strengthened for over 42 years. The two countries enjoy a strong and multifaceted relationship, grounded in a number of important institutions and mechanisms. These include common membership in hemispheric and international organizations such as the Association of Southeast Asian Nations (ASEAN) Regional Forum, APEC, the World Trade Organization (WTO), la Francophonie, the United Nations (UN) and the Trans-Pacific Partnership (TPP).

Vietnam’s economy is increasingly dependent on exports. Extensive reforms (“Doi Moi” or Renewal) have led to sustained economic growth and an increasingly integrated market. This bodes well for pragmatic reforms required to improve the business environment and attract foreign direct investment.

From a commercial perspective, Canada enjoys a positive reputation in Vietnam. Furthermore, the large diaspora of Canadians of Vietnamese origin (more than 220,000) is contributing to the development of additional commercial links.

Vietnam has a visibly rapidly growing middle class and its consumption power is reinforcing the country’s policy reorientation toward a market economy. A growing middle class bodes well for the sustained growth of Canadian exports to Vietnam, particularly food and consumer products. Vietnam’s middle and high-income earners are creating a demand for better quality and safer food products, a trend that has stimulated demand for imports. The growing middle class in Vietnam will also put additional pressure on demand for high-quality education, which is expected to be met increasingly through international education.

Vietnam’s efforts to access new markets and to deepen its international integration are resulting in free trade agreements being signed with trading partners in Asia. This may create additional opportunities for Canadian companies which have already invested in Vietnam or which are exploring opportunities in either Vietnam or throughout the region.

Domestic Economic Environment

Vietnam has posted a relatively low inflation rate of 4.1 percent in 2014; the lowest since the 3 percent recorded in 2003, and is further projected to average 1.7 percent in 2015 (EIU).

The State Bank of Vietnam devalued the currency by 1 percent in May 2015 (the second time in 2015) with the intention of maintaining export competitiveness, a key factor in maintaining a positive trade balance.

Vietnam is quickly reaching its legislated public debt limit of 65 percent of GDP. The debt currently stands at $120.5 billion, about 58.7 percent of GDP, and it is forecasted that Vietnam will hit its debt ceiling by 2017 (IMF).

Key Figures – Vietnam (2014)
GDP$205.2 billion
GDP per capita$2,264
GDP growth6.0%
Inflation4.1%
Unemployment2.5%
Canada’s merchandise exports$477.7 million
Canada’s merchandise imports$2,832.9 million
Canada’s service exports (2013)$85 million
Canada’s service imports (2013)$75 million
Foreign direct investment from Vietnam into Canadaconfidential
Canadian direct investment in Vietnamconfidential
Potential long-term annual export growth6.7%

Canadian Commercial Interests in Vietnam

Overview

Canada-Vietnam bilateral trade reached an all-time high of $3.3 billion in 2014, an increase of 28.8 percent over the previous year and one of the highest rates of growth in ASEAN. Canadian exports increased by 11.8 percent to $477 million in 2014, consisting of mainly fish and seafood, fertilizers, oilseeds, machinery and preserved food. In the first five months of 2015, Canadian exports to Vietnam doubled and exports grew by 46.6 percent, on a year-over-year basis. Canadian imports from Vietnam increased by 32.2 percent from 2013 to $2.83 billion in 2014, with key imports consisting of apparel, machinery, footwear and furniture.

Canadian firms are attracted to Vietnam because of its relative stability, quality labour pool, gradually opening and more transparent market, natural resources, geostrategic position in the region, and the presence of multinational companies involved in global supply chains.

Business opportunities in Vietnam are primarily in the manufacturing sectors where foreign competition is dominated by Asian nations, notably Japan, South Korea, Taiwan and Singapore. According to Vietnam’s Ministry of Planning and Investment, newly registered and added foreign direct investment totalled US$20.23 billion in 2014, an equivalent of only 93.5 percent to the same period 2013.

Key Elements for Exporters to Consider

Vietnam ranks 78 on the World Bank’s Ease of Doing Business index, behind Singapore, Malaysia and Thailand. Vietnam’s main challenges are related to the long and complex bureaucratic process of starting a business, energy access, and taxation.

Since Vietnam’s accession to the WTO in 2007, it has undertaken a series of reforms to improve the country’s business and investment environment, including the reform of the enterprise and investment laws, aimed at removing obstacles to doing business in Vietnam. Vietnam’s recent lifting of the foreign ownership limit in domestic listed companies, including in real estate, are further measures taken by Vietnam to attract investment.

Vietnam’s business environment, however, is still complex, with a burdensome legal and regulatory environment, which has occasionally affected market access for Canadian agriculture and agri-food products. The Government of Canada continues to discuss these issues with Vietnam, with a view to addressing them and mitigating the impact on Canadian exports.

Sector-specific Opportunities and Challenges

Agriculture and Processed Food

Agriculture and agri-food is an important aspect of Canada’s trade with Vietnam, representing approximately one-half of Canada’s total exports to the country.

Vietnam’s young population, growing middle class and high income earners are contributing to a shift in lifestyle, shopping and consumption patterns. There is increasing market demand for high-quality and certified/trusted seafood in light of numerous food quality scandals in Vietnam and China.

Canada is a well-known supplier of high-quality seafood in this market, and Canadian products are considered world-class by local consumers. Several Canadian specialties are well-known in Vietnam, including geoduck, oysters, lobster, cherries, ambrosia apples and confectionery products.

Opportunities also exist for Canadian farmers certified as organic producers, as consumer awareness and demand for organic products increase.

The government’s priority is to restructure the agriculture sector (including crop, livestock and aquatic subsectors) with a focus on productivity gains, added value, and sustainability. This trend is generating further opportunities for Canadian suppliers of breeding animals, genetics, and animal feed.

A number of new regulations affecting imported food and commodities have been introduced in recent years as a result of the increased focus on food safety and sanitary and phytosanitary matters. The regulations are often unnecessarily restrictive and the enforcement is inconsistent, making it difficult at times for Canadian suppliers to navigate through Vietnam’s complex regulatory framework.

Education

Vietnam is a priority market under Canada’s International Education Strategy and is the largest source country of international students to Canada from the ASEAN region. It is estimated that about 4,842 Vietnamese citizens studied in Canada in 2014 and spent roughly $154 million in 2014. With over 20 million Vietnamese citizens between the ages of 12 to 24, a rapidly growing middle class, and an education system struggling to meet the demand of its citizens in terms of quality and reputation, Vietnam is a market with high growth potential in terms of student recruitment at all education levels, institutional partnerships, and corporate training.

As demand grows, Canada is increasingly considered an education destination of choice. Canada is viewed as: having cost-competitive, high quality education; having attractive work and immigration opportunities; and a supportive, well-established community of Canadians of Vietnamese origin. Canada is also viewed as a great research destination, with excellent research capacity and facilities.

Information and Communications Technologies

Vietnam has the goal of developing its communications infrastructure to become one of the best in the region and around the world.  Vietnam's telecommunications sector is among the world's fastest growing telecom markets.  It has significant potential for growth, given that the bulk of consumers continue to use basic, low-value added services. The 3G sector is particularly attractive as consumers have yet to see associated benefits and services. According to the Ministry of Information and Communication of Vietnam, Vietnam had 131.6 million mobile phones and 4.8 million broadband internet users at the end of 2012. In 2015, the majority of Vietnamese people access the internet using smart phones.

Opportunities for Canadian firms are in areas such as 3G/4G, mobile applications, digital television/media, and Next Generation Networks. Canadian companies can also provide information technology (IT) solutions and services through the supply chains of multi-national corporations (MNCs) in life sciences, financial services, education and training, transportation, and logistics. Other opportunities exist in the broadband market, communications satellite technology, hardware, software, online services, and science and technology research partnerships.

Some of the biggest challenges to doing business in the sector include the dominance of state owned enterprises (SOEs), particularly in the telecom segment, the absence of a truly independent telecoms regulator, limited bandwidth and the existence of a national “firewall”, weak intellectual property protection and a limited pool of skilled IT workers struggling to keep up with demand.

Oil and Gas

Vietnam is ranked third in Southeast Asia behind Indonesia and Malaysia and 33rd in the world for crude oil and gas output. Oil exports are seen as important to Vietnam's trade balance, contributing 5.4 percent of the total export revenue, and representing nearly 30 percent of GDP. Vietnam is currently self-sufficient in gas.

Vietnam has an ambitious plan to boost investment in the sector in both upstream and downstream subsectors. The oil and gas sector in Vietnam is dominated and controlled by state-owned Petro Vietnam. Developing strong ties with this company, or one of its many subsidiaries, is crucial for Canadian companies interested in this market sector.

Vietnam continues to encourage foreign investments in the sector in order to help it locate and tap new oil and gas reserves. Global firms such as Exxon Mobil, Chevron, Repsol/Talisman, Petronas, Conono-Phillips, Nippon Oil and many other MNCs have set up operations in Vietnam for long-term exploration and production activities.

Over the past few years, Vietnam has showed a strong demand for sophisticated equipment and technologies to optimize output of offshore crude oil and gas exploration/production and petrochemical production.

The demand for upstream equipment and services include, but are not limited to: control valves, drilling equipment, underwater tools, towing and rescue vessels, as well as oil spill control. For midstream and downstream, pipes, valves, supporting equipment, maintenance services for gas power plants, fertilizer plants and oil refinery plants are high on the demand list. In 2013 the equipment and service market was estimated at US$3.4 billion. In the downstream segment, significant investments in oil refineries and petrochemical plants have been paving the way for investors and suppliers.

Major Negotiations and Agreements

Trans-Pacific Partnership (TPP)

The TPP agreement is the most comprehensive and ambitious regional trade agreement in the Asia Pacific and will deepen Canada’s trade ties in this dynamic and fast growing region. The TPP currently comprises 12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam), representing a combined market of nearly 800 million people and a GDP of $28.5 trillion.

Double Taxation Agreement

On November 14, 1997, Canada and Vietnam signed an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

Letter of intent on bilateral cooperation

During the visit of Vietnam’s Deputy Prime Minister and Foreign Minister to Canada in September 2014, a letter of intent was signed regarding bilateral cooperation in a number of areas. With this letter of intent, Canada and Vietnam welcomed growing commercial ties and confirmed the importance of economic cooperation as a foundation for the bilateral relationship. Both sides committed to further growing merchandise trade, services trade, investment and commercial partnerships. The letter of intent is also designed to create a favourable environment to expand education and research collaboration in areas of mutual interest.

Development Perspectives in Vietnam

Vietnam is a priority country for Canada’s development assistance in Southeast Asia, with an annual bilateral aid budget of $20 million. Since 1990, Foreign Affairs, International Trade and Development Canada (and before 2012 under the Canadian International Development Agency) has disbursed over $886 million in development assistance to Vietnam. Canada’s current development program in Vietnam responds to the Government of Vietnam's development and poverty reduction priorities as set out in Vietnam’s Socio-Economic Development Plan. It targets building the economic foundations for growth with a focus on improving the accountability and capacity of public institutions, including enhancing Vietnam’s system of banking regulation and supervision, improving the legislative development process, and supporting macroeconomic reform efforts.

In the agriculture sector, Canada is working to improve food quality and safety, develop cooperatives and expand agricultural competitiveness, especially among the rural poor and women. Canada also contributes to expanding economic opportunities by engaging the private sector and expanding access to credit to increase competitiveness.

In the education area, Canada is supporting Vietnam’s technical and vocational education system by enhancing the capacity of training institutions to offer a curriculum that responds to the needs of the private sector, and by improving the effectiveness of technical education delivery.

The Canada-Asia Trade and Investment for Growth mechanism funds regional projects accessible to Vietnam, including equity financing for small and medium-enterprises and capacity development for Public-Private Partnerships. As an ASEAN member, Vietnam benefits from Canada’s support to Grow Asia, a program that aims to engage the private sector and identify opportunities for collaboration to increase food security and agricultural growth in the ASEAN region.

Selected Trade Initiatives – Seize the Opportunity!

  • Agriculture and Processed Food
    • Canada’s Annual Food Festival, November 2015
    • Vietstock 2016, October 2016
  • Education
    • Canada’s Annual Education Fairs, October 2015
  • Oil and Gas
    • 4th Oil & Gas Delegation to Vietnam, November 2015 (Government of Alberta)

Support Services

Where not otherwise indicated, the information is provided by the Embassy of Canada to Vietnam. This document is not intended to provide specific advice and should not be relied on as such. It is intended as an overview only. No action or decision should be taken without detailed independent research and professional advice concerning the specific subject matter of such action or decision. While Foreign Affairs, Trade and Development Canada (DFATD) has made reasonable efforts to ensure that the information contained in this document is accurate, DFATD does not represent or warrant the accurateness, timeliness or completeness of the information contained herein. This document or any part of it may become obsolete at any time. It is the user’s responsibility to verify any information contained herein before relying on such information. DFATD is not liable in any manner whatsoever for any loss or damage caused by or resulting from any inaccuracies, errors or omissions in the information contained in this document. This document is not intended to and does not constitute investment, legal or tax advice. For investment, legal or tax advice, please consult a qualified professional.