Note: This article looks broadly at the business environment in Hai Phong. For specific details on setting up a company in Vietnam see: How to Start a Business in Vietnam.
Hai Phong, a dynamic coastal city in northern Vietnam, has emerged as a thriving economic hub. Its strategic geographic location, coupled with robust infrastructure development, has positioned it as a prime destination for foreign investors. As Vietnam’s second-largest seaport, Hai Phong offers seamless access to both domestic and international markets, making it an ideal base for manufacturing, logistics, and trade operations.
The city has cultivated a business-friendly environment with attractive investment incentives, a skilled workforce, and competitive labour costs. Government initiatives to improve infrastructure, such as the expansion of the port and airport, have further enhanced Hai Phong’s appeal. Key industries flourishing in the city include manufacturing, shipping and logistics, automotive, and information technology.
With its growing economy and strategic advantages, Hai Phong presents compelling opportunities for businesses seeking to expand their operations in Vietnam. However, like any new market, understanding the local business culture, regulations, and challenges is essential for success.
Key Economic Sectors in Hai Phong
Hai Phong’s economy is characterised by a dynamic mix of sectors, with a strong emphasis on industrialization and trade.
Manufacturing and Processing
As a cornerstone of Hai Phong’s economy, manufacturing and processing account for a significant portion of its GDP. The city has successfully attracted investments in various industries, including electronics, automobiles, machinery, and textiles and garments. Its strategic location near major transportation hubs and a skilled workforce make it an attractive destination for manufacturing operations.
Logistics and Shipping
Leveraging its prime coastal location, Hai Phong has developed a robust logistics and shipping sector. The city’s deep-water port facilities, coupled with efficient transportation networks, have positioned it as a key gateway for international trade. This sector plays a vital role in supporting the growth of other industries and facilitating the movement of goods.
Services
The service sector in Hai Phong is experiencing rapid growth, driven by the city’s expanding economy and increasing urbanisation. Areas such as retail, tourism, hospitality, and information technology are witnessing significant development. The city’s growing middle class is fueling demand for a wide range of services.
Supporting Industries
To complement its core economic sectors, Hai Phong is also focusing on developing supporting industries such as auxiliary services, finance, and real estate. These sectors play a crucial role in creating a conducive business environment and supporting the overall economic growth of the city.
These key economic sectors have contributed significantly to Hai Phong’s transformation into a thriving economic hub and continue to drive its development trajectory.
Box 1: A South Korean bioplastics plant in Vietnam
SKC Limited, a part of South Korea’s SK Group, broke ground on a bioplastics plant in northern Vietnam’s Hai Phong province back in May in line with increasing plastics production among foreign firms in Vietnam. The plant will produce an estimated 70,000 tons of biodegradable plastics a year starting from the second half of 2025. Read more…
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 Hai Phong, the PAPI provides insights into the city’s governance effectiveness.
PAPI, Hai Phong, 2019 to 2023
| 2023 | 2022 | 2021 | 2020 | 2019 | |
| Participation | 4.98 | 5.39 | 4.90 | 5.27 | 4.80 |
| Transparency of Local Decision-making | 5.11 | 5.74 | 5.42 | 5.46 | 5.02 |
| Vertical Accountability | 4.15 | 4.50 | 4.41 | 4.57 | 4.42 |
| Control of Corruption in the Public Sector | 6.33 | 6.89 | 7.42 | 6.26 | 5.54 |
| Public Administrative Procedures | 6.94 | 7.11 | 7.46 | 7.32 | 7.13 |
| Public Service Delivery | 7.99 | 7.56 | 7.91 | 7.01 | 7.24 |
| Environmental Governance | 3.24 | 3.37 | 3.68 | 3.10 | 2.90 |
| E-Governance | 3.39 | 3.03 | 2.79 | 3.30 | 4.48 |
| Unweighted PAPI Score | 42.11 | 43.60 | 44.00 | 42.29 | 41.54 |
Source: The Vietnam 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. Hai Phong, as Vietnam’s economic hub, is always a focal point in PCI reports.
PCI, Hai Phong, 2019 to 2023
| 2023 | 2022 | 2021 | 2020 | 2019 | |
| Entry Costs | 7.14 | 6.45 | 6.52 | 7.34 | 7.14 |
| Access to land | 6.6 | 7.22 | 6.77 | 6.18 | 6.9 |
| Transparency | 6.12 | 6.22 | 6.82 | 6.02 | 6.5 |
| Time Costs | 8.32 | 7.91 | 7.64 | 7.51 | 5.71 |
| Informal Charges | 7.01 | 7.22 | 6.7 | 6.63 | 6.11 |
| Policy Bias | 6.59 | 7.16 | 6.02 | 6.82 | 6.44 |
| Proactivity | 6.8 | 7.49 | 7.73 | 6.91 | 6.07 |
| Business Support Policy | 7.4 | 6.39 | 7.49 | 6.68 | 6.85 |
| Labor Policy | 7.39 | 6.57 | 7.17 | 8.11 | 8.24 |
| Law & Order | 7.14 | 7.87 | 7.21 | 7.28 | 6.66 |
| PCI Scores | 70.34 | 70.76 | 70.61 | 69.27 | 68.73 |
| Ranking | 3 | 3 | 2 | 7 | 10 |
Source: Provincial Competitiveness Index 2023
Foreign direct investment in Hai Phong
Hai Phong has emerged as a magnet for foreign direct investment in Vietnam. Its strategic location, robust infrastructure, and favourable investment climate have made it a prime destination for global investors. The city has successfully attracted significant capital from a diverse range of countries, including South Korea, Japan, Singapore, and Taiwan.
In 2024, by the end of July, Hai Phong had counted 66 new foreign investment projects and newly registered capital of US$1.27 billion. This was a fall from the same period in 2023 of about 36.3 percent, but still has Hai Phong sitting in sixth place in drawing foreign direct investment in Vietnam this year.
Box 2: The Port of Hai Phong
The Port of Hai Phong is the biggest port in northern Vietnam with 36,600 square metres of warehouse space. It has 21 berths with its deepest draft at 9.4 metres and can accommodate vessels with a dead-eight-tonnage of up to 50,000. Of note, it is currently listed on Vietnam’s Unlisted Public Companies Exchange.
Entertainment and Nightlife in Hai Phong
Foreign business persons looking to travel to the city for work can expect to enjoy their down time in a broad range of ways. Hai Phong offers a vibrant and diverse nightlife scene, catering to a wide range of tastes and preferences.
A Taste of Nightlife
Hai Phong’s nightlife revolves around a mix of traditional and modern entertainment. Visitors can enjoy a leisurely evening at one of the city’s numerous cafes or bars, sipping on local coffee or craft beer while soaking in the city’s atmosphere. For those seeking a more lively experience, there are a growing number of nightclubs and pubs offering live music, DJ performances, and dancing.
Local Flavour
To truly experience Hai Phong’s culture, exploring its local entertainment options is essential. Traditional Vietnamese music performances, water puppet shows, and cultural events are often held in theatres and community centres. Additionally, street food markets and night markets offer a unique opportunity to immerse oneself in the local lifestyle, enjoying delicious food and shopping for souvenirs.
While Hai Phong’s nightlife may not be as expansive as that of Ho Chi Minh City or Hanoi, it has its own charm and appeal. With a growing number of entertainment options, the city is steadily becoming a more attractive destination for both business and leisure travellers.
What’s next?
Hai Phong has emerged as a dynamic and attractive city for businesses seeking to tap into the Vietnamese market. Its strategic location, coupled with robust infrastructure and a supportive government, has fostered a thriving business environment. The city’s focus on industrialization, particularly in manufacturing and logistics, has attracted significant foreign direct investment, creating job opportunities and driving economic growth.
While challenges such as infrastructure development and skilled labour shortages persist, Hai Phong’s potential is undeniable. As the city continues to invest in its development, it is poised to become an even more important economic hub in Vietnam. For businesses looking to expand their operations in the region, Hai Phong offers a compelling opportunity to capitalise on its growth trajectory.
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