Vietnam Market Watch: Mobile Gaming, Garment Industry, and S&P Growth Projections
App Downloads Record Strong Growth Due to Gaming Culture
The app market in Vietnam has shown strong growth every year purported by a strong gaming culture. In a recent industry report, gaming app downloads contributed to half of the growth on the Google Play Store. Local users have a strong interest in local game publishers with ZingPlay in the list of top ten downloads. Three of the top 10 game downloads on the Google Play and iOS App Store were from local publishers.
At least 20 million gamers have been recorded in the country, and more than 10,000 mobile games are available on Vietnamese app stores. By 2017, the market is expected to be worth U.S. $161.6 million. While the high growth of smartphones and e-commerce make Vietnam attractive to app developers and publishers, setting unique regional preferences is key to growing the market. In addition, while the gaming culture has experienced significant growth, a large part of the population does not have access to high-speed Internet service. Nevertheless, investors should make key inroads into the industry as it’s not a market that can be ignored. Foreign investors should acclimatize and gain on the ground information if considering the industry.
Garment Industry Wants Long Term Plan
The garment and textile industry plans to revise a development plan to 2020 with a vision for 2030. The current plan, which was approved in April 2014, stated that garment exports would reach U.S. $25 billion by 2020. However, the garment industry has already earned an export turnover of U.S. $27.5 billion in 2015. Given this, the Vietnam Textile and Apparel Association (VITAS) demanded another long term plan until 2040 in line with the country’s economic development. VITAS has set the current growth of the sector to be between U.S. $40 and U.S. $50 billion by 2020 rather than the targets mooted by the current plan. Foreign direct investment (FDI) brought in U.S. $2 billion into the garment sector in 2015.
Despite the growth in the industry, VITAS has raised concerns about several challenges that have caused many companies to close down. It wants government support to initiate policies and make the sector attractive to investments. Some of these measures include designated industrial parks and key economic zones, infrastructure development, incentives for investors as well as quality waste water treatment plants.
Stable Outlook for Vietnam by Rating Agency
Rating agency Standard & Poor’s (S&P) on 29 April gave Vietnam a stable outlook, unchanged from March 2015. The rating reflects strong economic growth, while macro-economic factors have been recognized showing the improved outlook by the agency and investors. Factors that have contributed include the relatively diverse and flexible economy, per capita income reaching around U.S. $2,200 in 2016 and macroeconomic stability, which has made a positive impact on exports and foreign direct investment.
All these factors along with a comparative labor cost compared to other countries have helped the competitiveness of the country. S&P stated that the country should now pay attention to controlling its budget deficit as well as the increasing rate of public debt and bad debt in the banking sector. The government plans to control and bring the budget deficit to below 4 percent of the GDP, while controlling the public debt growth rate within the upper limit of 65 percent of the GDP.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
In this issue of Vietnam Briefing, we address pressing changes to audit procedures in 2016, and provide guidance on how to ensure that compliance tasks are completed in an efficient and effective manner. We highlight the continued convergence of VAS with IFRS, discuss the emergence of e-filing, and provide step-by-step instructions on audit and compliance procedures for Foreign Owned Enterprises (FOEs) as well as Representative Offices (ROs).
Navigating the Vietnam Supply Chain
In this edition of Vietnam Briefing, we discuss the advantages of the Vietnamese market over its regional competition and highlight where and how to implement successful investment projects. We examine tariff reduction schedules within the ACFTA and TPP, highlight considerations with regard to rules of origin, and outline the benefits of investing in Vietnam’s growing economic zones. Finally, we provide expert insight into the issues surrounding the creation of 100 percent Foreign Owned Enterprise in Vietnam.
Tax, Accounting and Audit in Vietnam 2016 (2nd Edition)
This edition of Tax, Accounting, and Audit in Vietnam, updated for 2016, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate Vietnam’s complex tax and accounting landscape in order to effectively manage and strategically plan their Vietnam operations.
- Previous Article The Guide to Drafting PPP Proposals and Feasibility Studies in Vietnam
- Next Article Vietnamese Growth Slows to 5.46% in Q1 2016