Vietnam is seeing strong consumer spending in line with its fast-growing middle class. In 2019, sales of retail goods and consumer services hit a record high of over US$214.8 billion, an 11.8% increase year on year1.
Going forward, Vietnam consumers are expected to shop more online, due to the rise of e-commerce that has been further boosted by COVID-19. A vibrant e-commerce landscape sees local platforms such as Tiki, Thegioididong and Sendo competing with regional players such as Shopee and Lazada.
In fact, Vietnam’s target is for the e-commerce industry to grow by 25% annually to hit US$35 billion by 2025. It also aims to have more than half of the population shopping online by then.
When it comes to food services, consumers are increasingly willing to spend on international cuisines and higher quality food options. Singapore companies, such as snack brand IRVINS and frozen products brand Chinatown Food, have expanded into the market to capitalise on the demand.
Consumers are also spending more on edutech. Even before COVID-19, the industry had been projected to grow to US$3 billion by 2023, at a CAGR of 20.2%2. Aculearn is one Singapore edutech company riding on this trend as it expands into Vietnam.
Finally, demand for quality healthcare is growing in Vietnam as the population grows more affluent. In 2019, some US$17 billion, or 6.6% of the country’s GDP, was spent on healthcare3.
In addition, the COVID-19 pandemic has further highlighted the need for adequate and quality healthcare, prompting the government to encourage investment into the healthcare sector and push for the sector’s digitalisation to improve healthcare access and the operational efficiency of public hospitals.
Digital health solution providers such as local contact tracing app Bluezone and Singapore telehealth platform Doctor Anywhere have thus seen their take-up rates in Vietnam grow over the past year.
1 “Vietnam’s Retail Sales, Service Revenues Rise 11.8% In 2019”, Xinhua, 8 Jan 2020
2 “Vietnam E-Learning Market Is Expected To Reach Around USD 3.0 Billion By The Year Ending 2023: According To A Market Research Report By Ken Research”, PR Newswire, 1 Oct 2019
3 “Why Investors Should Be Optimistic About Vietnam’s Healthcare Industry”, Vietnam Briefing, 12 Mar 2021
Vietnam’s startup scene, while nascent, has tremendous potential. Already, there are some 3,000 startups in sectors ranging from foodtech and e-commerce to fintech4. And in 2020, at the Vietnam Ventures Summit, 33 investment funds pledged to invest more than US$800 million through 2025 in Vietnam’s startup scene.
The Vietnamese government is also developing the necessary policies and infrastructure to support the growth of the sector, including the setup of National Startup Support Centres and National Innovation Centres in key cities.
Enterprise Singapore and the National Agency of Technology, Entrepreneurship and Commercialisation (NATEC), under Vietnam’s Ministry of Science and Technology have a memorandum of understanding to facilitate exchanges between our ecosystems through joint initiatives and activities.
Enterprise Singapore also expanded the Global Innovation Alliance network to HCMC in 2019, to create more opportunities for Singapore startups to gain overseas experience and connections, and collaborate with partners in Vietnam.
4 “Foreign investors deeply impressed with Vietnam startup scene”, VnExpress, 18 Mar 2019
Vietnam has long been an attractive location for global manufacturers due to skilled and cost-competitive labour and strong trade relations through its network of FTAs. Vietnam-Singapore Industrial Park (VSIP), a signature project between a Singaporean consortium led by Sembcorp Development and Vietnam’s Becamex IDC Corporation, operates seven industrial parks across Vietnam as of 2020 and has attracted US$15 billion in investments.
However, most manufacturing activities in Vietnam are still labour intensive and low in productivity, leading the government to take steps to help the country’s manufacturers move to higher value-added activities and build a more sustainable manufacturing sector.
This reflects an opportunity for Singapore Industry 4.0 solution providers to work with local manufacturers in Vietnam and offer their services in areas such as automation, robotics, additive manufacturing and industrial Internet of Things.
Singapore companies in supporting industries such as supply chain and logistics services will also see growing opportunities as Vietnam’s manufacturing sector transforms.
As Vietnam’s economy grows, more attention is being paid to infrastructure development to support the needs of industries and raise the standard of living. In key cities such as Hanoi, HCMC and Da Nang, various smart city projects have been announced as part of a national sustainable smart city development plan spanning 2018 to 2025.
This has caught interest from both domestic and foreign players including Singapore’s Keppel Group, which is developing Saigon Sports City, a smart township project in HCMC’s District 2. These projects and the general trend towards more smart and sustainable developments provide opportunities for Singapore companies offering solutions in areas ranging from smart building and smart energy, to smart security and urban mobility.
At the same time, Vietnam will have to develop alternative and more sustainable energy sources as its demand for energy grows. It has already committed to moving towards more renewable energy, such as wind and solar as well as LNG, and reducing reliance on traditional energy sources such as coal. Singapore companies such as Sunseap, The Blue Circle, Pavilion Energy and Sembcorp have been developing green energy projects in Vietnam.