Thua Thien - Hue, a long-established province at the heart of Vietnam, is a favorable investment attraction thanks to the growing tourism industry and attractive incentive policies. The province with a number of industrial zones, adequate infrastructure, and seaports underline its favorable location between the North and South as a gateway to the South China Sea. Investors looking for alternative locations can consider the province in the Central Region which will likely play a pivotal role in Vietnam’s trade and economy.
Vietnam’s Thua Thien - Hue is situated on the North Central Coast of Vietnam, with a natural area of 4,902 km2 and a coastline of up to 120 km. Hue is home to the long-established imperial citadel, Dai Noi, a tourist hotspot. The province has an estimated population of over 1.1 million (2020) and a labor force of around 620,000. The province is located north of Da Nang and Hoi An, which are important economic and tourist centers in Vietnam.
2021 was a challenging year for the world's economy, yet Hue still thrived in exports and investment. Export revenues for last year were reported to surpass the initial target, reaching US$158 million while the total invested capital witnessed an increase of 11 percent, to approximately US$266 billion.
By 2025, provincial authorities aim to have services account for 53-54 percent of the province’s economy, followed by industry and construction at 31 to 32 percent and agriculture at 7 to 9 percent.
In 2021, Thua Thien – Hue proudly topped the Provincial Governance and Public Administration Performance Index (PAPI), at 48,059 points, and ranked 8th in the Provincial Competitive Index (PCI) 2021 ranking. These top rankings underline Thua Thien Hue’s positive business environment for foreign investors.
Here, we will examine three key factors for future investment in Thua Thien Hue.
Favorable business-friendly policies
Thua Thien Hue has provided a favorable regulatory environment for foreign investors and businesses; particularly the Department of Planning and Investment of Thua Thien – Hue provides legal assistance in administrative formalities and transparent procedures for businesses wishing to enter the market.
Recently, the province signed a memorandum of understanding (MoU) on the development of a smart urban space with the Land and Housing Corporation in South Korea to adapt Hue City to a smart metropolitan model.
Dan Nguyen from Business Intelligence, Dezan Shira & Associates notes that Thua Thien Hue is competitive in terms of government incentives compared to other provinces. The Chan May Lang Co IP, for example, is particularly competitive, while the government has welcomed investment in infrastructure projects.
For example, as shown in the table above, projects in the Saigon Chan May economic zone enjoy a 10 percent CIT for 15 years compared to the normal rate of 20 percent, followed by a CIT exemption of four years and a 50 percent CIT reduction for the next nine years. In addition, an import tax exemption is available for fixed assets.
Further local authorities issued Resolution No. 01/2022/NQ-HDND on a number of policies to support investment. These include support for infrastructure projects in economic zones, industrial zones, high-tech parks, ICT zones, and social housing areas among others.
Besides, the incentive policy also includes an exemption from import duty for businesses investing in this zone, applicable to manufacturing materials, supply, components, and semi-finished products.
Thua Thien – Hue has also fostered partnerships with various regional and global organizations in the past few years.
Undoubtedly, the province is fully committed to providing investors and enterprises with efficient administrative procedures, a transparent and favorable investing environment, and attractive incentive policies according to the permitted legal framework. All this creates a desirable environment for new entrants to the local economy.
A thriving tourism industry
During the pandemic in 2021, surprisingly, Thua Thien Hue Hue welcomed a healthy flow of visitors at 633,315 as of September 2021, with the number of international tourists at 18,796 even while the world’s tourism industry was largely paralyzed. Hue is also renowned for traditional and cultural values well incorporated into the tourism experience as well as its untouched natural destinations drawing sizeable crowds.
Recently, provincial authorities announced that digital transformation will be utilized in the tourism sector to better promote the image of Hue. The government has indeed become more active on various platforms, including Zalo (a Vietnamese messenger app), Facebook, and the government portal.
In terms of the workforce in the hospitality industry, the Ministry of Culture, Sports, and Tourism of Vietnam in collaboration with the Ministry of Labor, War Invalids and Social Affairs (MoLISA) have decided to organize vocational training for the workforce in the hospitality sector, to boost tourism in the province. These programs will generate a promising future of a highly skilled and professional labor force for the tourism industry of the province.
Regarding the regulatory environment, the government actively prioritizes and calls for investments in the tourism industry of the province. It has facilitated the construction of a new road system into Gia Long mausoleum (a prominent tourist historical site). Besides, friendly tax policies on land use, the government favors tourism firms that aim to reach net-zero carbon emissions.
Thua Thien – Hue’s logistics sector: Opportunities for investment
Analysts regard Thua Thien – Hue, as having many competitive advantages in developing logistic services thanks to its geographical characteristics. The province is located on the North-South traffic axis in terms of road, railway, and air transport. It is also situated on the East-West economic corridor connecting Myanmar, Thailand, Laos, and Vietnam, which sets a solid foundation for shipping service potential.
Thua Thien – Hue has a deep–water port, Chan May, which is the key driver behind the logistics sector of the province since most of the manufacturing materials, inputs, and outputs to and from the province are transported by sea. Chan May is a gateway to the South China Sea; the port is also on the route connecting Singapore, the Philippines, and Hong Kong.
At present, Chan May port can receive cargo ships of 50,000 tons and is expected to increase its capacity to 70,000 tons once the port is upgraded.
However, there are challenges to developing the logistics and supply chain in the province as the infrastructure at Chan May and Thuan An ports are limited with an inadequate number of large-scale containers on the site.
Further, the information tracking system between warehouse businesses and customs authorities is not effectively synchronized. Yet, challenges are an underlying opportunity as this is where investors can step in. Investors and businesses should see the potential of supplying and managing large–scale containers with higher capacity at ports or large tonnage vehicles for both road transport and waterway. In addition, the government’s digital transformation strategy can further act as a push in modernizing tracking systems, between ports, warehouses, and customs authorities.
Takeaways
Although the national economy is still struggling to recover from the pandemic, Thua Thien Hue, with the right orientation bodes well to become the next economic center of Vietnam. Investors wishing to enter the Vietnam market can consider Thua Thien Hue for its business-friendly policies and investment incentives along with competitive labor rates and land rents.
For further advice on any aspect of investment in Thua Thien – Hue and how to actively manage your business in this booming province, investors can consult our experts for an in-depth discussion and make Thua Thien Hue the next destination of your investment.
