Introduction

Vietnam has become one of Asia’s fastest-growing offshore destinations for companies seeking cost efficiency, skilled talent, and strategic positioning in Southeast Asia. Its combination of competitive labor costs, young workforce, and improving infrastructure makes it ideal for operations like software development, back-office support, manufacturing services, and market research coordination. Vietnam attracted over $38.23 billion in FDI in 2024, with manufacturing and tech sectors leading inflows.

In this article, we explore why Vietnam stands out as an offshore hub, such as competitive labor costs and growing talent pool, its geopolitical position, and the rapid infrastructure development and government incentives. For clarity, an “offshore location” refers to a country used for business functions like R&D support, shared services, or operations outside the home market to leverage cost, talent, or proximity advantages.

Competitive labor costs and growing talent pool

Vietnam has one of the lowest average salaries in the region, where Singapore ranges around $4,410 USD/month, Vietnam only ranges around $502/month.  In the IT sector, a freshly graduated IT engineer would have an average compensation around $400-$950/month.

Vietnam’s growing talent pool is also a significant advantage. The country produces 550,000-60,000 IT graduates annually, supported by strong STEM education and a median workforce age of 33.4 years. This talent boom is evident in tech hubs like Ho Chi Minh City, home to 55% of Vietnam’s IT workforce and top global developer rankings. For quality, Vietnam is also on its way to push for more qualified talents, and has succeeded in increasing the proportion of trained workers from 64,5% (2020) to 70% (2025).

For businesses, Vietnam provides a significant competitive edge through labor costs that are far below regional peers, supported by a young, dynamic workforce with a rapid increase in trained workers. Thus, making it a suitable location for global businesses to set up their offshore operations.

Geopolitical position

One reason that is unique to Vietnam is its geopolitical position. Vietnam possesses a central location in Southeast Asia, which allows it to leverage the dynamic economic growth of the broader region. On another note, due to the China Plus One strategy (a global supply chain trend where businesses seek to diversify their manufacturing and sourcing operations beyond China), Vietnam is also considered a great alternative for labor sourcing as it is right next to this superpower. Vietnam’s geographical closeness to China allows for efficient logistics and integration into existing Asian supply chains.

Furthermore, Vietnam is connected to the East Sea, which acts as a bridge between the Pacific and Indian Oceans and serves as the primary link for trade flowing between Asia, Europe, and the Middle East. With its long coastline and deep-water ports for large ships, Vietnam is an ideal location for international shipping and trade.

Consequently, this strategic positioning, reinforced by a vast network of free trade agreements, secures Vietnam’s role as a critical and highly accessible hub for international supply chain diversification.

Rapid infrastructure development and government incentives

Vietnam is becoming a preferred offshore location because it combines expanding industrial capacity, improving logistics, and targeted investment incentives that help global firms scale quickly and cost-effectively.

In 2025, Vietnam has a total of 620 industrial zones, in which Dong Nai is the biggest hub with 32 zones. Many new industrial parks projects were established, including some of the large zones such as: Prodezi EIP with a total area of 400 hectares, and Trang Due 3 IZ with total investment approximately $304 millions USD. This signifies that Vietnam is still on its way to accommodate more businesses, especially those with FDI.

The government’s incentive also plays an important part. Vietnam has a framework for special investment incentives for a limited number of highly prioritised projects. Normal CIT rate incentive is 10% for 15 years, but for eligible prioritised projects, this CIT rate would lower to 5% for 37 years, which is a very large advantage. Vietnam also offers customs duty exemptions, some exempted categories examples include low-value goods, export manufacturing, agriculture inputs, etc. In the IT section, digital tech companies can apply for special incentives including a complete corporate income tax holiday for the initial two years, a 50% tax reduction for the subsequent four years, and a three‑year exemption from land rental fees.

Vietnam’s aggressive expansion of industrial infrastructure and logistical capacity, bolstered by exceptionally competitive tax incentives and high-priority project frameworks, provides a significant speed and cost advantage for global investors. This combination of physical readiness and decisive government support allows businesses to operationalize faster and more cost-effectively than in regional rival markets.

How it’s comparing internationally

As a whole, Vietnam ranks 44th in the 2025 Global Innovation Index, and ranked the 3rd in the ASEAN sphere. Vietnam also hits a new milestone by leading overall for exporting creative goods, as well as importing and exporting high-tech products. In addition, it is ranked amongst the top 15 countries worldwide in attracting FDI with notable progress in recent years. For example, in 2024, realized FDI reached $25.35 billion, the highest level ever recorded in Vietnam. This momentum accelerated in 2025, with disbursement climbing even higher to $27.62 billion, setting another new all-time high.

It is important to note that FDI in Vietnam is shifting to more concentrated in high-value sectors like semiconductors and AI, with a 11,5% increase in the semiconductor sector’s revenue in just one year. Many notable FDI projects that prove the country’s stand as an attractive investment location include Samsung’s new OLED manufacturing plant with investment of USD 1.8 Billion, NVIDIA’s USD 200 Million AI factory project, or the USD 10 billion LNG power centre proposal by a consortium of investors from the US, the Republic of Korea and Singapore.

In conclusion, Vietnam is solidifying its status as a preeminent global manufacturing and innovation hub, effectively transitioning from a low-cost production center to a destination for high-value technology.

How GLOBAL ANGLE can help

At GLOBAL ANGLE, our presence in not only Vietnam, but Singapore, Japan, and the United Kingdom allows us to support organisations navigating offshore set up, regional expansion, and cross-border operations. We are able to conduct global expansion services including market research and strategy, business execution and operations, as well as digital marketing. View our previous work in Vietnam here.

Contact us today to get started.