Vietnam is a long, narrow country in Southeast Asia, bordered by China to the north, Laos and Cambodia to the west and the South China Sea to the east and south. Despite its relatively small size, the country features a diverse landscape, with lush deltas, mountains and coastlines. The Mekong and Red Rivers, two of Vietnam’s major waterways, both flow into the South China Sea, creating fertile land that supports the country’s strong agricultural sector. Vietnam is rich in natural resources. The country’s natural resources include minerals, coal, oil, natural gas and an abundance of marine life such as fish and shrimp.
Vietnam’s strategic location at the heart of Southeast Asia makes it an important gateway to regional markets, especially with its proximity to China. The country has a population of 98.9 million. Vietnam’s startup ecosystem ranks 5th in Southeast Asia and 56th globally. It stands in 44th position in the global innovation index of 2024. This ranking reflects the country’s significant role in both the regional and global economy.
Overview of Vietnam’s Startup Ecosystem
Vietnam’s startup ecosystem has seen significant growth in recent years. The country is a rising hub for innovation in Southeast Asia. Vietnam is home to more than 3,800 startups. The country has four unicorns like VNG, VNLife, MoMo and Sky Mavis.
The most prominent sector in Vietnam’s startup scene is Information and Communication Technology (ICT), which represents over 20% of the country’s startups. The list is followed by strong growth in fintech, e-commerce and edtech.
Vietnam’s startup ecosystem has also been growing, with four unicorns—VNG, VNLife, MoMo and Sky Mavis—showcasing the country’s thriving tech and fintech sectors. While the government has supported startups through various initiatives, there is a need to further strengthen the ecosystem to attract more investors and sustain long-term growth.
Government initiative to support Vietnam’s Startup Ecosystem
Vietnam’s startup ecosystem’s growth is the combination of several key factors. The Vietnamese government has played a crucial role in supporting innovation and entrepreneurship in the Vietnam. Vietnam’s government is continuosouly working to create a favourable environment for startups by providing funding, mentorship and networking opportunities through initiatives like the National Innovation Center (NIC) and Project 844. These initiatives and programs are designed to encourage technological advancements and drive economic growth in Vietnam.
The Government of Vietnam has also passed a Law in 2018 to support Small and Medium-Sized Enterprises. This law showcases the government’s commitment to supporting startups of Vietnam. The government is also offering tax incentives to attract foreign investors and companies to increase the growth rate of the startup ecosystem. The Ministry of Science and Technology (MOST) has launched the Vietnam Silicon Valley project (VSV). This project provides seed funding, training and mentorship for startups.
The government of Vietnam is providing support to startups through other initiatives like Build for Startups, which recognizes the role of local startups in promoting innovation and developing solutions. The Google for Startups Accelerator program launched by the government supports Vietnamese AI startups by connecting them with Google’s AI experts and advanced technology. Additionally incubators and accelerators like 2080, 5Desire and Hatch.vn, Zone Startups Vietnam and other ventures in Vietnam are contributing to nurture and support the growth of startups in the country.
Factors Contributing to the Growth of Vietnam’s Startup Ecosystem
Vietnam benefits from a highly skilled and growing tech talent pool in addition to government efforts of supporting the startups. Vietnam strongly emphasis on STEM (Science, Technology, Engineering and Mathematics) education. This focus on education ensures a steady supply of talented individuals ready to fuel the country’s innovation-driven economy.
Moreover, the rapidly expanding economy of Vietnam offers generous opportunities for startups, mainly in high-demand sectors like e-commerce, fintech and technology. The increasing availability of co-working spaces and incubators has also provided budding entrepreneurs with affordable office space and is fostering collaboration and networking within the startup community.
Government support, a skilled workforce, a booming economy and a growing infrastructure for startups are collectively contributing to the flourishing startup ecosystem of Vietnam.
Vietnam ranks 56th globally and 5th in Southeast Asia for its startup ecosystem, with key cities like Ho Chi Minh City and Hanoi becoming notable hubs for blockchain and fintech innovation. The country also showed notable rise in foreign direct investment with $36.61 billion in fiscal year 2023.
Landscape for Foreign Direct Investment in Vietnam
Vietnam’s foreign direct investment (FDI) has shown strong growth in 2024. It has reached $14.15 billion in the first eight months which is an 8% increase from the previous year and the highest level in five years. The manufacturing and processing sector of Vietnam is continuing to attract the majority of FDI, accounting for nearly 80% of the total, followed by real estate. FDI pledges, indicating future investment, also increased by 7%, with a forecast of $40 billion in total FDI for 2024.
Singapore is the top investor in Vietnam. It is bringing in significant new projects. The list of top investors is followed by other key investors like Japan, Hong Kong, Mainland China and South Korea. This increase in investment is driven by Vietnam’s attractive business environment, supportive government policies, and a strong and dynamic workforce.
Vietnam is becoming a key player in the global economy despite ongoing global uncertainties. In 2023, the country attracted $36.61 billion in foreign direct investment (FDI) marking a 32.1% increase from the previous year. Vietnam’s Ho Chi Minh City and Hanoi are recognized as top global hubs for blockchain startups.
The country is a hotbed for investment in sectors like e-commerce, fintech, food tech and IT services.
Conclusion
Vietnam’s entrepreneurial culture is strongly supported by universities, government initiatives and a growing digital economy. The rise of youth-led startups and initiatives like UpYouth is providing mentorship and resources for young entrepreneurs and further fueling this growth.
Vietnam’s startup ecosystem is poised for continued growth. The country is continuously working towards sector expansion and strong investment inflows. The country’s thriving talent pool, expanding middle class and increasing digitization are further contributing to its positive outlook.
However, challenges such as regulatory hurdles, talent gaps and a lack of major exits still pose obstacles to further growth. It is important for Vietnam to implement policy reforms that ease business regulation, encourage innovation, protect intellectual property and provide more support for incubators and accelerators.
Despite these challenges, Vietnam’s startup scene continues to thrive. It is benefiting from both local and international support and is poised to play an increasingly important role in the global economy.
