Doing Business in Bac Giang: Vietnam’s Emerging Industrial Powerhouse

Bac Giang has rapidly evolved into one of Vietnam’s fastest-growing industrial provinces.

Located near Hanoi, it offers a compelling combination of competitive labour costs, strong infrastructure, and government-backed incentives.

With rising foreign direct investment and strengths in manufacturing, electronics, and agri-processing, Bac Giang is increasingly on the radar of global investors — particularly those looking for alternatives to traditional industrial hubs like Bac Ninh or Binh Duong.

Why invest in Bac Giang?

Bac Giang is fast becoming one of Vietnam’s most competitive industrial provinces. Located just northeast of Hanoi, it combines strategic geographic access with cost advantages, modern infrastructure, and investor-focused policies. For foreign businesses seeking a foothold in northern Vietnam’s industrial belt, Bac Giang presents a compelling value proposition.

Strategic location near Hanoi

Bac Giang borders the capital and sits along key transport corridors, including National Highway 1A and the Hanoi–Lang Son expressway. This provides direct access to major logistics hubs, airports, and northern seaports, enabling efficient domestic distribution and export operations.

Competitive labour and infrastructure

With a large, young workforce and lower labour costs than neighbouring provinces like Bac Ninh and Hai Phong, Bac Giang is an ideal location for labour-intensive industries. The province has invested heavily in industrial park development, power supply, and transport infrastructure, creating a business-ready environment.

Government-backed investment support

Bac Giang’s authorities actively promote investment through administrative reforms, tax incentives, and infrastructure funding. The province consistently ranks high in the Provincial Competitiveness Index (PCI), reflecting its transparency, low entry costs, and responsive governance.

Sectoral strengths and supply chain integration

Bac Giang has built strong foundations in electronics manufacturing, agri-processing, and supporting industries. It is home to major suppliers in the global tech supply chain, including firms linked to Apple and Samsung. At the same time, its agricultural output, especially lychee production, supports a growing food processing sector.

Room for growth

Unlike more saturated industrial zones, Bac Giang still offers room for expansion, with ample land reserves and lower setup costs. This gives investors long-term flexibility and cost efficiency as they scale operations.

Key sectors driving Bac Giang’s economy

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.

Business environment and governance

Bac Giang has built a reputation for being one of Vietnam’s more proactive and investor-friendly provinces, thanks to consistent improvements in governance, administrative efficiency, and transparency. This has contributed to its rising status as a competitive destination for both domestic and foreign investment.

Investor-focused reforms

The local government has actively introduced measures to cut red tape and streamline investment approvals. These include single-window procedures for business registration, faster land clearance processes, and improved coordination among provincial departments. Investors consistently cite responsive local leadership and a willingness to resolve obstacles quickly as key advantages when doing business in Bac Giang.

Transparent and accountable governance

Bac Giang’s authorities have also made strides in combatting informal charges and improving public accountability. Ongoing administrative digitalisation and public service reforms aim to further reduce time and compliance costs for enterprises.

Strong performance in national rankings

The province has made significant gains in two key national governance benchmarks: the Provincial Competitiveness Index (PCI) and the Public Administration Performance Index (PAPI). These rankings evaluate local governments on factors such as ease of business entry, regulatory transparency, corruption control, public service delivery, and e-governance.

In the latest PCI, Bac Giang ranked among the top five provinces nationwide, reflecting notable improvements in entry costs, time efficiency, and support services for businesses. Meanwhile, its PAPI scores indicate steady progress in public administrative procedures and transparency, although challenges remain in areas like environmental governance and digital transformation.

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 province’s governance effectiveness.

PAPI:Bac Giang

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.

PCI:Bac Giang

Source: Provincial Competitiveness Index

Foreign direct investment trends

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

Setting up a business in Bac Giang

Establishing a business in Bac Giang follows the same legal framework as other provinces in Vietnam but offers unique advantages for foreign investors seeking proximity to Hanoi with lower operating costs.

The province hosts a number of well-developed industrial parks and has streamlined many of its administrative procedures to attract both manufacturing and service-sector investment.

Foreign investors can choose from various legal structures, including representative offices, wholly foreign-owned enterprises (WFOEs), joint ventures, or branch offices.

Local authorities have been proactive in supporting new entrants, with incentives such as corporate income tax reductions, land lease discounts, and investment support services.

To learn more about the registration process, licensing requirements, and business structure options, see our full guide:
How to Start a Business in Vietnam: Step-by-Step Guide →

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.

FAQ

1. What types of businesses does Bac Giang have?

Manufacturing (especially electronics), agri-processing, logistics, and supporting industries are the most successful sectors in the province.

2. How does Bac Giang compare to Bac Ninh or Hai Phong?

Bac Giang offers lower labour and land costs, with proximity to Hanoi, while still benefiting from strong infrastructure and a rising industrial base.

3. Are there incentives for foreign investors?

Yes — Bac Giang offers tax holidays, reduced land lease rates, and fast-track procedures for priority sectors and high-tech projects.

4. Is it easy to hire skilled workers in Bac Giang?

The province has a large, trainable workforce and is investing in vocational training centres to support industrial growth.

5. Can I set up a foreign-owned business in Bac Giang?

Yes — foreign investors can establish wholly foreign-owned enterprises (WFOEs) or joint ventures, with support from provincial authorities.

What’s next for investors?

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.

To keep up to date with the latest business developments in Bac Giang, foreign firms and business persons should make sure to subscribe to the-shiv.

First published August 19, 2024. Last updated May 24, 2025.