More Vietnamese startups choose other countries to set up headquarters
Repeated warnings have been given in the last two years about the growing tendency of Vietnamese registering businesses in other countries such as Singapore and Thailand, though their production and sale activities are mostly carried out in Vietnam.
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There are no official statistics about the number of Vietnamese startups headquartered overseas. Analysts believe the number is very small compared with the number of businesses registered in Vietnam.
According to regional investment funds, most Vietnamese register businesses in Singapore because it is easier to raise funds there. Singapore is a market with transparent information and prestigious brokerage institutions, an ideal place for investors and startups to meet.
Many global companies such as Facebook, Google and Apple have set up branches to oversee the companies’ South East Asian markets.
Hoang Duc Trung, director of DFJ managed by VinaCapital, confirmed that most of the startups the fund has invested in have registered their business in Singapore.
“It is easier to register intellectual property protection in Singapore. It is also easier to approach investment funds in Singapore. And the startups set up in Singapore have higher valuations than startups in Vietnam,” Trung explained.
Ho Trong Lai from the US-based Waterstone Partners, a consultancy firm, commented that Singapore is a mature market, where startups find it easy to join different business fields.
Singapore has many technology and service startups, but Thailand and Cambodia have more startups in the fields of agriculture and farm produce processing.
Enterprises in the Mekong Delta lease land and hire farmers in Cambodia to cultivate rice. After harvesting and processing, the rice is carried to Vietnam for sale.
This is not only because the soil and climate in some areas in Cambodia are favorable for rice cultivation, but also because Cambodian farmers strictly follow the cultivation process.
Le Ngoc Thao said she had bought tens of hectares of land in a rural area not far from Bangkok to grow organic dragon fruit and pepper.
“Vietnam-sourced exports these days face many technical barriers, while products with Thailand labels can go for better prices,” Thao said, explaining why she doesn’t continue to farm in Tien Giang province.
The growing tendency of startups going overseas has raised concerns about the lack of qualified businesspeople for coming generations.
A report from the Ministry of Information and Communication (MIC) released in 2016 showed that about 1,000 startups are registered every year in Vietnam. However, only 10% of them now exist.
