Note: This article looks broadly at the business environment in Bac Giang. For specific details on setting up a company in Vietnam see: How to Start a Business in Vietnam.
Bac Giang province has rapidly transformed into a thriving industrial hub in Vietnam. Its strategic location, coupled with a business-friendly environment and a skilled workforce, has attracted significant foreign and domestic investment. The province offers a compelling proposition for businesses looking to tap into the Vietnamese market and leverage the country’s growing economic potential.
With a focus on manufacturing, electronics, and supporting industries, Bac Giang has developed a robust industrial ecosystem. The government has implemented various policies and incentives to support businesses, including tax breaks, infrastructure development, and streamlined administrative procedures. Additionally, the province’s proximity to Hanoi, Vietnam’s capital, provides access to a large consumer market and a wealth of supporting services.
Doing business in Bac Giang presents both opportunities and challenges. While the province offers a favourable investment climate, understanding the local business culture, navigating regulatory requirements, and building strong relationships with local stakeholders are crucial for success.
Key economic sectors in Bac Giang
Bac Giang’s economy is characterized by a dynamic mix of sectors that have contributed to its rapid development.
Industry
Manufacturing has been the primary driver of Bac Giang’s economic growth. The province has successfully attracted significant foreign and domestic investment, particularly in electronics, machinery, and supporting industries. This sector has been instrumental in creating jobs and boosting exports.
Agriculture
While the industrial sector dominates, agriculture remains a vital component of Bac Giang’s economy. The province is known for its lychee production and other agricultural products, contributing to food security and rural development.
Services
The service sector has expanded in line with the province’s industrialization and urbanization. Supporting industries such as logistics, transportation, and retail have grown to meet the increasing demands of the local economy.
These sectors collectively contribute to Bac Giang’s economic dynamism and its position as a key player in Vietnam’s development trajectory.
Public Administration Performance Index
The Public Administration Performance Index (PAPI) measures the efficiency and quality of public administration services provided by a government. In the context of Bac Giang, the PAPI provides insights into the city’s governance effectiveness.
PAPI, Bac Giang, 2019 to 2023
| 2023 | 2022 | 2021 | 2020 | 2019 | |
| Participation | 5.58 | 0.00 | 0.00 | 5.48 | 5.58 |
| Transparency of Local Decision-making | 5.69 | 0.00 | 0.00 | 5.51 | 5.64 |
| Vertical Accountability | 4.39 | 4.40 | 0.00 | 5.15 | 4.98 |
| Control of Corruption in the Public Sector | 7.15 | 0.00 | 0.00 | 6.98 | 7.01 |
| Public Administrative Procedures | 7.30 | 0.00 | 0.00 | 7.61 | 7.53 |
| Public Service Delivery | 7.43 | 8.08 | 0.00 | 7.13 | 7.54 |
| Environmental Governance | 3.30 | 4.20 | 0.00 | 3.27 | 3.87 |
| E-Governance | 3.48 | 3.43 | 0.00 | 3.19 | 3.89 |
| Unweighted PAPI Score | 44.32 | 20.12 | 0.00 | 44.32 | 46.04 |
Source: The Viet Nam Provincial Governance and Public Administration Performance Index
Provincial Competitiveness Index
The Provincial Competitiveness Index (PCI) is a key tool for evaluating the business environment in Vietnam’s provinces. Bac Giang, as Vietnam’s economic hub, is always a focal point in PCI reports.
PCI, Bac Giang, 2019 to 2023
| 2023 | 2022 | 2021 | 2020 | 2019 | |
| Entry Costs | 7.05 | 6.65 | 6.76 | 6.99 | 6.78 |
| Access to land | 6.86 | 7.29 | 7.09 | 6.3 | 6.84 |
| Transparency | 6 | 6.3 | 6.27 | 5.39 | 6.85 |
| Time Costs | 7.71 | 7.38 | 6.99 | 8.68 | 6.52 |
| Informal Charges | 7.38 | 8.02 | 7.74 | 6.47 | 6.06 |
| Policy Bias | 6.39 | 7.31 | 5.98 | 7.89 | 5.45 |
| Proactivity | 7.1 | 7.62 | 5.66 | 6.75 | 6.98 |
| Business Support Policy | 7.24 | 6.1 | 6.04 | 5.82 | 5.43 |
| Labor Policy | 5.64 | 6.8 | 6.33 | 6.82 | 7.19 |
| Law & Order | 7.9 | 8.6 | 6.99 | 6.28 | 6.38 |
| PCI Scores | 69.75 | 72.8 | 64.74 | 63.98 | 64.47 |
| Ranking | 4 | 2 | 31 | 27 | 40 |
Source: Provincial Competitiveness Index 2023
Foreign direct investment in Bac Giang
Bac Giang has emerged as a dynamic and attractive destination for foreign direct investment (FDI) in Vietnam. The province’s strategic location, coupled with a favourable investment climate, a skilled workforce, and robust infrastructure, has positioned it as a key investment hub.
Its proximity to Hanoi, the nation’s capital, and major transportation networks provides access to both domestic and international markets. Bac Giang’s competitive advantages, including lower labour costs compared to other industrial provinces, have made it particularly appealing to foreign investors seeking to optimise their production and supply chain operations
Of note, in the first seven months of 2024, Bac Giang added 45 new foreign invested projects to its tally and new registered capital from foreign firms of US$910.3 million. Though significant, this was still a decline of 46.7 percent compared to the first seven months of last year, during which the province recorded US$1.4 billion in newly registered capital.
Entertainment and recreation in Bac Giang
Foreign business persons looking to travel to the city for work can expect to enjoy their down time in a broad range of ways. While Bac Giang is primarily known for its industrial development, the province offers a growing range of entertainment and recreational options for both residents and visitors.
Entertainment
- Cultural events: Bac Giang hosts various cultural events and festivals throughout the year, showcasing the province’s rich heritage. These events often feature traditional music, dance, and local cuisine.
- Karaoke: A popular form of entertainment in Vietnam, karaoke is widely available in Bac Giang, offering a fun and social experience.
Recreation
- Natural attractions: Bac Giang boasts beautiful natural landscapes, including mountains, rivers, and forests. Outdoor activities such as hiking, camping, and fishing are becoming increasingly popular.
- Parks and green spaces: The province has invested in developing public parks and green spaces, providing opportunities for relaxation and recreation.
- Sports and fitness: There is a growing interest in sports and fitness in Bac Giang, with the emergence of gyms, sports centres, and outdoor sports activities.
While Bac Giang’s entertainment and recreation scene may not be as developed as larger cities, it is steadily improving to cater to the growing needs of its residents and visitors.
What’s next?
Bac Giang has emerged as a dynamic and attractive location for businesses seeking to invest in Vietnam. Its strategic location, coupled with a favourable investment climate, a skilled workforce, and a focus on industrial development, has positioned the province as a key player in the country’s economic growth. While challenges such as infrastructure development and competition from other provinces exist, Bac Giang’s strong growth potential and supportive government policies offer significant opportunities for businesses.
As Vietnam continues its economic ascent, Bac Giang is well-positioned to capitalise on the expanding market. By leveraging its strengths in manufacturing, agriculture, and services, the province is poised to become an even more important investment destination in the years to come.
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