Illustrative photo.

According to Vu Quoc Huy, Director of the National Innovation Centre (NIC), Vietnam saw a robust development of start-up firms last year and was on track to become the next growth driver of Southeast Asia and play a vital role in the region’s start-up golden triangle.

He cited statistics that investment into start-ups hit a record high of 1.4 billion USD in 2021 despite the impacts of the COVID-19 with strict social distancing measures in place, breaking the previous record of 874 million USD in 2019.

The number of new businesses set up in the first four months of this year increased by 12.3 percent over the same period last year, which, together with positive growth momentum in foreign investment inflow, demonstrated the country’s large potential for the development of the start-up ecosystem, he said.

He expects that investment in start-ups will double in the next three years.

With a crowd of young consumers and a workforce that has a high demand for digital technology in the post-pandemic period, the start-up market of Vietnam was predicted to take off in the next few years. About 70 percent of the population was below 35, and the literacy rate of 95.4 percent is among the highest in Asia.

Domestic consumption was forecast to grow at an annual rate of 20 percent, which would make Vietnam a vital driver of Asia’s consumer market over the next decade. The middle-class population was also growing at the fastest pace in Southeast Asia, accounting for about 40 percent of the people today, up from just 10 percent in 2020. By 2030, the middle-class population was expected to make up 75 percent.

There was also an increase in digital consumers, with more than 8 million added from the beginning of the pandemic to the first half of 2021, with 55 percent from non-urban areas.

Vietnam’s Internet economy was estimated at 21 billion USD in 2021, up by 31 percent, driven by the e-commerce market, which expanded by 53 percent. The Internet economy was forecast to reach 57 billion USD with a compound annual growth rate of 29 percent.

Kim Ngoc Thanh Nga, Head of the NIC’s Ecosystem Development Department, said that Vietnam would develop at an unprecedented rate in the next decade, fuelled by high Internet penetration, a huge domestic market, and innovative ideas, which could be expanded abroad together with the presence of funds to promote start-up development.

Significantly, during the past decade, the Government has invested in significant pillars from education to infrastructure and ecosystem development, which was creating an essential foundation for Vietnam to attract investment into start-ups.

Huynh Huu Trung, the founder of Mio, a platform for fresh food, said that Vietnam, Singapore and Indonesia were creating a start-up golden triangle in Southeast Asia.

Trung said that start-ups needed to understand what business models would work well in these markets to create the best products and expand in the region.

On May 30, venture fund Golden Gate Ventures (GGV) and NIC signed a cooperation agreement to strengthen the long-term relationship between the two sides and provide support to the development of the start-up community and innovation ecosystem in Vietnam.

Accordingly, GGV will increase investment in Vietnam, promote exchange and encourage new ideas and innovations, and act as a catalyst to promote the position of Vietnamese start-ups in the region.

GGV has announced the opening of two new offices in Hanoi and Ho Chi Minh City, besides Singapore and Indonesia, affirming that these three countries were forming a Southeast Asia start-up golden triangle.

Golden Gate Ventures is a venture capital firm investing across Southeast Asia. Since 2011, the firm has launched funds and invested in more than 60 firms, such as Carousell, CodaPay, Appota, Loship, Mio, Carro, Bui and Xendit./.