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Workers of FuHong Precision Component Company (Dinh Tram Industrial Park). (Source: Bac Giang Newspaper)

Commenting on the opportunities for Vietnam's electronics industry, the representative of the Vietnam Electronics Industries Association informed that from the beginning of 2023 until now, many big names in the electronics industry supply chain have moved from foreign markets to Vietnam, finding manufacturing factories and implementing supply chains.

Vietnam's electronics industry has had the highest export turnover among Vietnam's manufacturing and processing industries over the past 10 years. The total export turnover of the electronics industry in 2022 reached more than 114 billion USD, ranking first among the manufacturing and processing industries, and accounting for more than 30% of the country's export turnover. This figure shows that the electronics industry plays a great role in contributing to the foreign exchange balance and trade balance of the whole country. For example, in 2022, the country has a trade surplus of 11.2 billion USD, while the electronics industry has a trade surplus of 11.246 billion USD.

The top export markets are China, the US and South Korea. The main exported electronic items are mobile phones, TVs, cameras and electronic integrated circuits.

Vietnam's electronics industry is attractive to foreign companies, especially multinational companies. While the number of enterprises with foreign direct investment (FDI) is only one third of the total number of electronics enterprises, their export proportion accounted for just under 90% of total electronics exports in 2019. This number increased to 96.8% in 2020 and 97.8% in 2022.

Several major electronics firms have moved at least part of their supply chains to Vietnam in recent years. Notably, LG's smartphone production has moved entirely from Korea to Hai Phong. Apple moved part of the AirPods production line, Nintendo moved part of the production of the Switch Lite game console to Vietnam. Furthermore, earlier this year, Apple's main supplier, Foxconn was approved to invest in two new facilities in Vietnam with a total value of 246 million USD.

Investment Opportunities

Thanks to the implementation of free trade agreements, corporate tax cuts, improved labor quality and administrative reforms, Vietnam continuously attracts foreign investors who are eyeing Asia to move investment in the electronics industry.

First, about preferential trade agreements: Companies that are looking to invest in Vietnam can take advantage of the country's FTA network, with many agreements signed through its membership of the Association of Southeast Asian Nations (ASEAN).

Second, about tax incentives: Investors not only benefit from tax reductions, but the Vietnamese Government also provides corporate income tax incentives for companies in the high-tech field, as well as in high-tech zones, specific industrial zones and underdeveloped socio-economic areas.

Third, about incentives thanks to reforms: Electronic technology, information and telecommunications are among the top 10 priority industries approved by the Vietnamese Government for the Industrial Development Strategy for the 2025-2035 period. Foreign investors are also encouraged to operate in electronics industrial clusters and designated industrial parks, where they have been equipped with the necessary infrastructure and facilities. This activity is eligible for reduced corporate income tax.

Fourth, about favourable population structure: According to research by the United Nations Population Fund (UNFPA), Vietnam will be in the "golden population" age from 2010 to 2040, when the number of Vietnamese people of working age will be greater than the number of people of dependent age. In addition, the minimum monthly wage in Vietnam is from 140 USD to 202 USD depending on the region. This is relatively low compared to other production centers in the region.

Regarding labor quality, Vietnamese engineers working in the electronics field have quite high professional qualifications compared to their colleagues in the region. According to Samsung Vietnam, 10% of Samsung's software globally is developed by Vietnamese information technology engineers. Samsung has the two largest R&D Centers in Hanoi and Ho Chi Minh City.

With the rapid growth of electronics manufacturing, trade and investment in recent years, it has never been a better time to leverage Vietnam as a cost-effective hub for larger operations in Asia or as an official production center./.