Overview of Vietnam’s provinces and municipalities

Overview of Ho Chi Minh City

As more and more people pay attention to the Vietnamese market, Yuanzhe
Consulting has also received a large number of inquiries related to the
Vietnamese market. These questions involve many fields, such as:

-Are there big differences in salary levels in different regions in Vietnam?

-How do foreigners set up a company in Vietnam?

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-What kind of preferential policies do foreign-invested enterprises enjoy in
Vietnam?

-How do foreign-funded enterprises rent offices in Vietnam and hire

Vietnamese employees?

-Is it better for textile and clothing manufacturers to set up factories in

southern Vietnam or northern Vietnam?

-How to sell the auto parts you produce to Vietnam?

-How to purchase natural rubber from Vietnam?

-How will Vietnam’s cement market demand grow in the next few years?

-What is the price of industrial electricity in Vietnam?

-Has the impact of COVID-19 on Vietnam been eliminated?

- Various other issues.

Yuanzhe Consulting will answer the questions of high concern related to

Vietnam one by one. We will launch a series of topics related to Vietnam’s
macroeconomics, investment policies, industry research, and regional
economic research to help everyone better understand the Vietnamese
market.

We will introduce you to basic information about various regions in Vietnam to

help you better understand the Vietnamese market and discover your own
investment opportunities.

Administratively, Vietnam is divided into 58 provinces and five municipalities

directly under the central government (Can Tho, Da Nang, Haiphong, Hanoi,
and Ho Chi Minh City). Provinces and cities vary in size. The largest province
in Vietnam is Nghe An Province, with an area of about 6,368 square
kilometers. The smallest province is Bac Ninh Province, with only 822.71
square kilometers; the most populous province is Ho Chi Minh City. Data
shows that in 2021 Ho Chi Minh City has a population of 9.166 million, and
the province with the smallest population is Bac Kan Province, with only
323,700.

At the same time, Vietnam usually groups the country's many provinces into
eight major regions: Northwest, Northeast, Red River Delta, North-Central,
South-Central, Central Plains, Southeast and Mekong Delta. These eight
regions are not official administrative divisions of Vietnam, but are only divided
according to geographical location.

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According to Yuanzhe Consulting's analysis, regions such as Ho Chi Minh
City and Hanoi City in Vietnam have relatively developed economies, large
populations, and high per capita monthly wages. The overall economic level
of these cities is relatively developed and suitable for the development of
industries with higher added value, such as finance and service industries.

Yuanzhe Consulting will bring you an overview of the five municipalities and
some important provinces in Vietnam.

Specifically, enterprises related to finance, commerce, import and export

trade, technological innovation, Internet and telecommunications industries
can obtain more development opportunities in these areas; at the same time,
there are many provinces and cities in Vietnam with large populations and low
per capita wages, which are The three or four categories of areas with
minimum wages in Vietnam, such as Thanh Hoa, Nghe An, Dak Lak, and Thai
Binh provinces, are labor-intensive and cheap, and are more suitable for the

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development of processing manufacturing, planting, and breeding industries
with low added value.

Relatively speaking, Vietnam's five municipalities, namely Ho Chi Minh City,

Hanoi, Da Nang, Haiphong and Can Tho, play a more important role in
Vietnam's economy. We will introduce these regions one by one.

1. Ho Chi Minh City overview

Administrative divisions of HCMC's urban districts and municipal city

1–12. Districts 1 to 12 excludes District 2 and District 9 (Part of city of Thu

Duc).

2. City of Thu Duc

13. Binh Thanh

14. Binh Tan

15. Go Vap

16. Phu Nhuan

17. Tan Binh

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18. Tan Phu

Ho Chi Minh City (Vietnamese: Hồ Chí Minh) is the largest city in Vietnam and
one of its five central municipalities. It is the largest city and the most
economically developed city in Vietnam. Ho Chi Minh City is located in
southeastern Vietnam, covering an area of 2,095 square kilometers.
According to data from the 2021 census, the total population of Ho Chi Minh
City is approximately 9.166 million, with a population density of 4,375
people/square kilometer.

1.1. Strategic Location

Image of Ho Chi Minh City strategic location (Source: https://www.vict-

vn.com/)

Ho Chi Minh City, formerly Saigon, is a shining example of a strategically

advantageous location in Southeast Asia. Its unique position and dynamic
environment contribute to its thriving economy, vibrant culture, and ever-
increasing popularity. Here's a closer look at what makes Ho Chi Minh City's
location so strategic:

Crossroads of Southeast Asia

Imagine Ho Chi Minh City as a bustling hub at the heart of Southeast Asia. Its
proximity to neighboring countries like Cambodia, Thailand, and Laos makes

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it a natural gateway for regional trade and connectivity. Businesses here have
easy access to a vast market of over 650 million people across the region,
opening doors to immense growth potential.

Gateway to Southern Vietnam

Ho Chi Minh City acts as the gateway to the Mekong Delta, Vietnam's fertile
agricultural powerhouse. This rich land provides not only resources but also a
potential market for various industries. From agriculture and food processing
to tourism and logistics, the Mekong Delta presents countless opportunities
for businesses based in Ho Chi Minh City.

Riverfront Advantage

The Saigon River, snaking through the heart of the city, is more than just a
scenic waterway. It's a vital transportation artery, facilitating the movement of
goods and people. The riverfront also boasts prime real estate, attracting
businesses and residents alike, further boosting the city's economic vibrancy.

Major Port and Aviation Hub

Ho Chi Minh City wouldn't be a strategic gem without its world-class

infrastructure. The city's port, the largest in Vietnam, connects it to global
shipping routes, making it a key player in international trade. Tan Son Nhat
International Airport, meanwhile, keeps Ho Chi Minh City well-connected to
the world, fostering tourism, business travel, and cargo transportation.

Industrial and Financial Powerhouse:

Ho Chi Minh City is Vietnam's economic engine. It houses numerous industrial

zones like Saigon Hi-Tech Park and Tan Thuan Export Processing Zone,
attracting foreign investment and fueling manufacturing and technological
advancements. The city is also Vietnam's financial center, with a
concentration of banks, insurance companies, and investment firms, making it
a magnet for financial activities and business headquarters.

Skilled Workforce and Evolving Cityscape

Ho Chi Minh City boasts a large and skilled workforce, thanks to its numerous
universities and a steady influx of talent from across the country. This readily
available pool of skilled labor caters to diverse industries, further solidifying
the city's position as a prime business destination.

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The city is constantly evolving, with ongoing urban development projects like
metro lines and modern skyscrapers transforming its landscape. This
continuous progress not only attracts talent and businesses but also positions
Ho Chi Minh City as a dynamic and forward-thinking metropolis, ready to
embrace the future.

1.2. Economy overview

Cu Chi District, Hoc Mon District, Binh Chanh District, and Nha Be District in
Ho Chi Minh City; belong to Region I in Vietnam, and the monthly minimum
wage for workers is 4.68 million VND (approximately US$200); Can Tho
County, which belongs to Ho Chi Minh City As Region II, the monthly
minimum wage for workers is VND 4.16 million (approximately US$178).
According to data released by the Vietnam Statistics Bureau, in 2020, Ho Chi
Minh City's GDP growth rate was 1.36%, and per capita GDP was
approximately US$6,352.

Performance and Growth:

 GDP: Ho Chi Minh City contributes around 23% of Vietnam's GDP,

making it the country's largest economic contributor.
 Growth: The city's economy is projected to grow by 5.5% in 2024 and
6.0% in 2025, indicating continued resilience and expansion.
 Foreign direct investment (FDI): Ho Chi Minh City attracts significant
FDI, exceeding US$3.94 billion in 2022. This influx of foreign capital
fuels infrastructure development, technology transfer, and job creation.

As the most economically developed city in Vietnam, Ho Chi Minh City gives
priority to attracting projects in key areas such as microelectronics-information
technology-telecommunications; precision machinery-automation;
biotechnology applied to pharmaceuticals and the environment; new energy-
new materials-nanotechnology, among which , the industrial production index
of Ho Chi Minh City's electronics-information technology industry has
consistently reached double digits in 2022, accounting for 14.91% of the
entire industrial industry in Ho Chi Minh City.

1.3. Labor market overview

1.3.1. Labor demand

According to FALMI, in the second half of 2023, the human resources demand
in the trade and service sector will account for 64.57 per cent of the total, that
in the construction industry 34.62 per cent, and the agriculture-forestry-fishery
sector for 0.81 per cent. Human resources demand in four key industries
accounts for 21.97 per cent of the total, with that in the mechanical industry
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accounting for 6.11 per cent, electronics - information technology at 7.2 per
cent, food processing at 4.02 per cent, and pharmaceutical chemicals - rubber
at 4.64 per cent.

The demand for trained workers accounts for 86.13 per cent of the total
human resources demand.

In the first half of this 2023, more than 163,000 labourers in the city found
jobs, up 0.21 per cent year on year, while more than 79,900 new jobs were
created, a rise of 0.25 per cent, according to the municipal labour department.

According to Vietnam Youth Federation, Ho Chi Minh City has an

unemployment rate of 2.91%, down 0.78 percentage points compared to the
third quarter of 2023 (the urban unemployment rate is maintained below 4%
by the state - PV).

1.3.2. Labor demand trends

Labor demand is increasing in the fields of high technology and high

quality services

In the coming years, the trend of globalization and economic integration will
continue to promote the development of high-tech industries and high-quality
services in Ho Chi Minh City. These industries require human resources with
high professional qualifications, good skills, creativity and innovative thinking.

Specifically, labor demand in fields such as information technology, electronics

- telecommunications, healthcare, education, finance - banking, tourism -
hotel, real estate,... will increase. High.

The quality of labor resources is improved

To meet the needs of the labor market, vocational education and training
institutions in Ho Chi Minh City are promoting the training of high-quality
human resources. The number of universities, colleges, and vocational
schools is increasing rapidly, and training programs are updated according to
market needs.

In addition, many businesses also proactively organize training to improve

professional qualifications and skills for workers.

Free migratory workers are gradually decreasing, and workers with long-term
attachments to businesses are increasing

In recent years, the situation of freelance migrant workers in Ho Chi Minh City
has tended to decrease. Migrant workers tend to seek stable jobs and long-

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term commitment to businesses.

This is because businesses have many policies to attract and retain workers,
such as competitive salaries, good working environment, promotion
opportunities,...

2. Ho Chi Minh City Economy

2.1. Key economic sectors of Ho Chi Minh City

Economy-wise, HCMC shows immense growth potential in four key industries:

mechanical and automation; electronic and IT; chemical products; and food
processing.

Electronics and Information Technology (IT):

Ho Chi Minh City has established itself as a leading hub for electronics
manufacturing and IT in Vietnam. Major brands like Samsung, Intel, and
Nokia have set up production facilities here, attracting numerous supporting
industries like component suppliers and software development companies.
This sector boasts steady growth and high demand for skilled labor in
engineering, production, and IT professions.

Food Processing and Beverages:

Vietnam's agricultural bounty and strategic location make food processing a

natural advantage for Ho Chi Minh City. The city houses numerous factories
and processing plants specializing in seafood, fruits, vegetables, and
packaged food products. This industry enjoys strong international demand
and provides ample job opportunities across various skill levels, from
agricultural technicians to factory workers and packaging specialists.

Chemical and Pharmaceutical:

Ho Chi Minh City hosts a burgeoning chemical and pharmaceutical industry,

producing fertilizers, paints, plastics, and essential medicines. This sector
benefits from both domestic demand and export opportunities, fueled by
Vietnam's growing healthcare sector and increasing regional trade. Chemical
engineers, chemists, and pharmaceutical professionals find promising career
paths in this expanding industry.

Mechanical Engineering and Automation:

As manufacturers in Vietnam upgrade their operations, the demand for

machinery and automation solutions is soaring. Ho Chi Minh City is at the
forefront of this trend, with numerous companies specializing in the production
and maintenance of industrial machinery, robots, and automated systems.

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This industry offers exciting opportunities for mechanical engineers, industrial
designers, and robotics specialists.

These four key industries contribute significantly to Ho Chi Minh City's

economic success, shaping its employment landscape and attracting both
domestic and foreign investment. Each industry offers unique opportunities for
skilled and ambitious individuals seeking rewarding careers in a dynamic and
evolving environment.

In 2022, there are about 5,649 enterprises in Ho Chi Minh City engaged in the
electronics and information technology field, accounting for about 3% of the
total number of enterprises in the city, attracting more than 100,000 workers,
accounting for 3.3% of the total number of workers in the city's industrial
industries. In 2019, the average annual income of workers in the electronics
and information technology field in Ho Chi Minh City reached 175 million VND
(approximately US$7,478).

Among the electronic and information technology enterprises operating in Ho

Chi Minh City, private enterprises account for 89%; software production
enterprises account for more than 60%. The localization rate of the
electronics-new technology industry increased from 49.21% in 2014 to
52.84% in 2016 and 55.84% in 2019, exceeding the established goals of 51%
in 2020 and 54% in 2025.

2.1.1. Outstanding foreign-invested and local Vietnamese companies

Ho Chi Minh City boasts several industrial parks (IPs) buzzing with activity,
housing both well-established foreign-invested and local Vietnamese
companies contributing significantly to the city's economic landscape.

Name of Location Total land Focused type of Outstanding

Industrial size industry/ companies
park investment

Existing - Mechanical, An Phu Plastics

1. Tan Tao Binh Tan Industrial electrical, and Limited, Dong
Industrial District Park: 343.9 electronic Thai Garment
Park ha industries. Joint Stock
Company,
Expanded - Processing
Khang Phuc
Industrial industries for
Coffee
Park: agriculture,
Processing
182,55 ha aquaculture, and
Company, Tan
food.
Tao Paper Mill

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 - Processing Company...
industries for
cosmetics and
pharmaceuticals
.

2. Tan Phu Cu Chi 542.64 ha -Electricity - Kai Metal Asia

Trung District, Ho electronics, Co., Ltd.,
Industrial Chi Minh Information Yazaki Eds
Park City technology Vietnam Co.
Ltd, BINH VINH
-Mechanical SAIGON FOOD
engineering, CO.,LTD, VIET
Medical SON
equipment, MECHANICAL
CO., LTD...
-Pharmaceutical
chemistry,

-Food and
beverage

3. Tan Binh Binh Tan 352,5 ha -Processing of Samsung Vina

Industrial District, Ho agricultural and Electronics Co.
Park Chi Minh forestry Ltd., Shin Fu
City products, Electric
especially Vietnam Co.
rubber products, Ltd., Midea
Vietnam Co.,
-Manufacture of Ltd, Thuan Viet
furniture, Wood
especially from Processing Co.
rubber wood, Ltd., Dong Thap
Food
-Industries
Processing
serving
JSC, Tan Binh
agricultural
Packaging Co.
development,
Ltd....
mechanical
engineering,
farm machinery
and equipment,
fertilizers...

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 4. Hiep Nha Be 1,686 ha -Electronics and Nidec Vietnam,
Phuoc District, Ho Appliances OMRON
Industrial Chi Minh Electronics,
Park City -Chemical and Yazaki Vietnam,
Plastic Vinamit, Saigon
Beer Alcohol
-Food and
Beverage
Beverage
Corporation
-Logistics and (SABECO),
Warehousing Masan Group,
DHL Supply
Chain

5. Vinh Loc Binh 283 ha -Electronics and Samsung

Industrial Chanh Information HCMC
Park District, Ho Technology (IT) Electronics,
Chi Minh Sensata
City -Food and Technologies
Beverage Vietnam, NXP
Semiconductors
-Textiles and
Vietnam, Nestlé
Garments
Vietnam, Coca-
cola Vietnam,
Natsteel
Apparel
Vietnam...

2.2. Foreign direct investment

2.2.1. FDI figures and performance

Ho Chi Minh City, Vietnam's economic powerhouse, consistently shines as a

prime destination for foreign direct investment (FDI). Its strategic location,
diverse economy, and robust infrastructure entice businesses from around the
world to set up shop and tap into its vast potential. Here's a closer look at Ho
Chi Minh City's FDI performance:

Strong Track Record

 2023: According to a recent report by the General Statistics Office of
Vietnam (GSO), while overall FDI inflows to Vietnam were up by 32.1%

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 in 2023, Ho Chi Minh City saw a slight dip with 3.03 billion USD in
registered capital, down 12.9% year-on-year.
 2022: Ho Chi Minh City topped the charts, attracting 3.94 billion USD in
FDI, accounting for 14.2% of the total national inflows. (Vietnam
Investment Review)
 2018-2021: The city consistently remained the leader in FDI, attracting
over 83 billion USD during this period.
Factors Driving FDI
 Strategic Location: Situated at the heart of Southeast Asia, Ho Chi
Minh City boasts excellent connectivity to regional markets and major
shipping routes.
 Diverse Economy: From tech and manufacturing to finance and
tourism, the city's economic dynamism offers diverse opportunities for
foreign investors.
 Skilled Workforce: Ho Chi Minh City houses a large pool of skilled and
educated labor, readily catering to varied industry needs.
 Robust Infrastructure: The city boasts well-developed transportation
networks, ports, and airports, facilitating efficient business operations.
 Supportive Government Policies: The Vietnamese government offers
incentives and favorable regulations to attract FDI.
Investment Trends
 Shifting Focus: While manufacturing remains a significant sector, FDI is
increasingly flowing into high-tech industries like IT, electronics, and
telecommunications.
 Regional Diversification: Investors are venturing beyond traditional
sources like Japan and South Korea, with an increasing presence from
European and American companies.
 Sustainable Practices: Growing emphasis on environmental and social
responsibility is influencing investor decisions, leading to more
sustainable FDI projects.

2.2.2. Oppoturnities for foreign investing

Ho Chi Minh City, Vietnam's economic dynamo, presents a plethora of

opportunities for foreign investors seeking access to a dynamic and rapidly
growing market. Here are some key areas ripe for investment:

High-Tech Industries:
 Electronics and IT: This sector is booming, with demand for
semiconductors, electronic components, and software solutions
soaring. Established tech giants like Samsung and Intel already have a
strong presence, creating a robust ecosystem for foreign investors.

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  Telecommunications and 5G: Vietnam is actively rolling out 5G
infrastructure, opening doors for investments in network equipment,
mobile applications, and related services.
Food and Beverage Processing:
 Value-added products: As consumer demand for processed and
packaged food rises, opportunities exist for investors in areas like
frozen foods, snacks, and ready-to-eat meals.
 Agriculture technology: Investments in precision agriculture, smart
farming solutions, and sustainable practices can benefit the growing
agri-business sector.
Manufacturing and Automation:
 Supporting industries: With established manufacturers like Samsung
and Panasonic setting up shop, there's demand for suppliers of
machinery, components, and supporting services.
 Industrial automation: As manufacturers seek to boost efficiency and
productivity, foreign investors can capitalize on opportunities in
robotics, automation systems, and industrial software.
Tourism and Hospitality:
 Luxury and eco-tourism: Vietnam's tourism sector is growing, with
tourists seeking high-end experiences and eco-friendly options.
Investing in luxury hotels, resorts, and sustainable tourism projects can
yield promising returns.
 MICE (Meetings, Incentives, Conferences, and Exhibitions): Ho Chi
Minh City's infrastructure and strategic location make it ideal for hosting
conferences and events. Investors can explore opportunities in
developing convention centers, event management services, and
hospitality infrastructure.
Other Promising Sectors:
 Renewable energy: Vietnam is pushing for clean energy solutions,
creating opportunities in solar power, wind farms, and energy storage
technologies.
 Healthcare: The healthcare sector is rapidly expanding, presenting
opportunities for investments in hospitals, medical equipment, and
pharmaceutical manufacturing.
 Fintech and E-commerce: Vietnam's digital economy is flourishing,
offering prospects for investments in online payment solutions, e-
commerce platforms, and logistics infrastructure.

2.2.3. Challenges for foreign investing

Infrastructure Bottlenecks:

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  Traffic congestion: Ho Chi Minh City suffers from severe traffic jams,
affecting transportation efficiency and logistics. This can impact
delivery times, increase operational costs, and disrupt business
operations.
 Overburdened utilities: Rapid urban development puts pressure on
existing infrastructure like power grids and water supply systems.
Investors may face delays in obtaining necessary permits or encounter
unreliable utilities.
 Limited public transportation: Relying solely on private transportation
can be cumbersome and expensive. Limited public transportation
options can pose challenges for employees and hinder mobility within
the city.

Regulatory Hurdles:

 Complex legal and bureaucratic procedures: Navigating Vietnam's

legal system and administrative processes can be time-consuming and
opaque for foreign investors. Obtaining permits, licenses, and
approvals can be complex and require expert guidance.
 Frequent changes in regulations: Policy changes and amendments to
regulatory frameworks can occur without much notice, leading to
uncertainty and potentially impacting existing investments.
 Corruption concerns: While efforts are being made to combat it,
corruption remains a concern in Vietnam. Investors need to be cautious
and implement effective anti-corruption measures.

Workforce Considerations:

 Skill gaps: While Ho Chi Minh City has a large workforce, certain
sectors face skill shortages, particularly in high-tech industries and
specialized professions. Finding qualified personnel can be challenging
and may require upskilling existing employees or recruiting talent from
abroad.
 Competitive labor market: Talent poaching and high employee turnover
are common in certain sectors. Retaining skilled employees requires
competitive salaries, benefits, and career development opportunities.
 Cultural differences: Understanding Vietnamese work culture and
adapting management styles can be crucial for building successful
teams and fostering effective communication.

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Economic Volatility:

 Global economic trends: Global economic downturns can impact

Vietnam's export-oriented economy and affect investor confidence.
Foreign businesses need to be prepared for potential market
fluctuations.
 Currency fluctuations: The Vietnamese dong can be volatile, exposing
foreign investors to currency exchange risks. Hedging strategies and
financial planning are essential to mitigate these risks.
 Dependence on specific industries: Ho Chi Minh City's economy relies
heavily on some key sectors like manufacturing and tourism. A
downturn in these sectors can have a significant impact on foreign
investments.
Despite these challenges, Ho Chi Minh City's overall FDI performance
remains impressive. Its strategic advantages, coupled with ongoing efforts to
address challenges and adapt to evolving trends, position the city for
continued success in attracting foreign investments and further bolstering its
economic prowess.

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