Vietnam’s economy can reach a compound annual growth rate (CAGR) of 9% until 2030, reaching $2,027 billion in purchasing power parity by 2030, according to a new report of Deloitte.
The “Doing Business in Vietnam 2022-2023” report, a collaboration between Deloitte and Vietnam’s Ministry of Foreign Affairs, emphasized the county's economic potential and incentives for foreign investors. It noted the nation's GDP grew to $901 billion last year and that it could increase to $1,033 billion this year.
Such pace is one of the highest in Asia, the report said, showing the equivalent in China, India, and Indonesia could reach 7-8% in 2021-2030.
The report affirmed Vietnam’s private consumption would remain between 69.9% and 66.5% of GDP in 2022-2030. The growth is backed by improvement in the labor market and the golden population structure until 2035. Besides, as urbanization is fundamental to Vietnam's economic expansion strategy, the rate can go up to 44% by 2030 from 40.4% in 2022.
“Vietnam has developed as a significant foreign investment destination. The country's economic environment for investors has improved as a result of social-political stability, a young population, a cost-competitive labor force, and a government commitment to change the regulatory structure,” the report said.
In addition, significant energy projects will be given priority in provinces like Long An and Bac Lieu in order to make the most of available land and resources like wind and solar energy, it indicated.
Besides, Deloitte noted tax incentives in Vietnam. While the standard Corporate Income Tax (CIT) is 20%, the country generally provides lower CIT for the first years of revenue generation and tax exemption for the first years of profit generation.
In particular, a low CIT of 10% for 15 years, tax exemption for four years, and tax reduction of 50% for the next nine years are applicable to projects with especially difficult socioeconomic conditions, in economic zones, and high-tech zones.
Similarly, projects with difficult socioeconomic conditions are subject to a low CIT of 17% for 10 years, two years of tax exemption, and the next four years of 50% reduction in CIT.
Regarding sectors, tax exemption and reduction are available for activities of high technology, environmental protection, investment in infrastructure, software production, supporting industries, and others, according to the report.