Hanoi is fast becoming one of Southeast Asia’s most strategic business destinations. With a rising middle class, robust infrastructure, and proximity to China, the city offers compelling advantages for foreign investors — if they can navigate the complexities of Vietnam’s legal and regulatory environment.
The city’s strategic location within the region facilitates trade and logistics, making it an attractive location for businesses across various sectors.
However, doing business in Hanoi also presents challenges. Navigating the legal and regulatory landscape can be complex, requiring a thorough understanding of local laws and customs.
Additionally, building strong relationships with local partners and government officials may be crucial for business success.
Despite these challenges, Hanoi’s potential as a business hub is undeniable, and companies that can successfully navigate the local market are well-positioned for growth.
That said, to maximise opportunities and mitigate risks, foreign businesses should conduct thorough market research, seek expert advice, and build long-term relationships with local partners.
By understanding the nuances of the Hanoi business environment, companies can increase their chances of success in this dynamic market.
Key Economic Sectors in Hanoi
Hanoi’s economy is diverse and robust, with several key sectors driving its growth.
Services
As the capital city, Hanoi’s service sector is a major contributor to the economy. This includes finance, banking, insurance, real estate, retail, hospitality, and information technology. The city is a hub for business services, supporting domestic and international companies.
Manufacturing
While traditionally associated with agriculture, Hanoi has undergone industrialization in recent years. Manufacturing sectors such as electronics, machinery, and food processing are gaining prominence. The city is home to several industrial parks and attracts foreign investment.
Technology
Hanoi is positioning itself as a technology hub, with a growing IT sector and a focus on software development, digital services, and e-commerce. The city is home to numerous tech startups and attracts IT talent from across the country.
Tourism
Hanoi’s rich history, cultural heritage, and vibrant atmosphere make it a popular tourist destination. The tourism industry contributes significantly to the city’s economy, generating revenue from hotels, restaurants, transportation, and retail.
These sectors collectively contribute to Hanoi’s economic dynamism and its status as a leading city in Vietnam.
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 Hanoi, the PAPI provides insights into the city’s governance effectiveness.
These rankings reflect governance quality and business-friendliness by province, measuring transparency, accountability, public service delivery, and citizen engagement.
Notably, in 2024 Hanoi’s PAPI score dipped slightly to 43.77, with modest declines in participation and administrative procedures, though e-governance saw a small gain.
The overall trend suggests gradual erosion in citizen confidence in local governance mechanisms, especially around transparency, participation, and environmental oversight — areas of increasing relevance for business compliance and investor trust.
PAPI, Hanoi, 2019 to 2024
| 2024 | 2023 | 2022 | 2021 | |
| Participation | 5.39 | 5.43 | 5.83 | 5.01 |
| Transparency | 5.71 | 5.67 | 5.78 | 5.93 |
| Vertical Accountability | 4.36 | 4.28 | 4.37 | 4.33 |
| Control of Corruption | 6.7 | 6.73 | 6.8 | 7.08 |
| Public Administrative Procedures | 7.12 | 7.16 | 7.31 | 7.54 |
| Public Service Delivery | 7.57 | 7.85 | 7.23 | 7.79 |
| Environmental Governance | 2.87 | 2.87 | 2.93 | 3.16 |
| E-Governance | 4.05 | 3.97 | 3.66 | 3.61 |
| Unweighted PAPI Score | 43.77 | 43.96 | 43.9 | 44.45 |
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. Hanoi, as Vietnam’s economic hub, is always a focal point in PCI reports.
These rankings reflect governance quality and business-friendliness by province, as evaluated through surveys with private firms across Vietnam. Hanoi’s performance in the PCI is a strong signal of how easy (or difficult) it is to operate a business in the city.
Notably, in 2024 Hanoi climbed to 24th place, with gains in entry costs, informal charges, and business support policy, pushing its overall score to 68.38.
While Hanoi remains a key business hub, its declining rank between 2021 and 2023 highlights structural concerns around transparency, land access, and administrative consistency — all important factors for potential investors. The slight rebound in 2024 suggests recent efforts to improve the local business climate may be starting to take effect.
PCI, Hanoi, 2019 to 2024
| 2024 | 2023 | 2022 | 2021 | |
| Entry Costs | 7.37 | 6.84 | 6.47 | 6.57 |
| Access to land | 6.72 | 5.89 | 6.21 | 6.6 |
| Transparency | 6.4 | 6.45 | 6.32 | 5.21 |
| Time Costs | 6.7 | 7.48 | 7.82 | 8.45 |
| Informal Charges | 6.71 | 6.93 | 6.75 | 7.15 |
| Policy Bias | 5.35 | 5.86 | 6.49 | 5.38 |
| Proactivity | 6.02 | 6.35 | 6.35 | 6.92 |
| Business Support Policy | 8.03 | 7.38 | 6.24 | 7.74 |
| Labor Policy | 7.54 | 7.43 | 7.51 | 7.64 |
| Law & Order | 7.39 | 6.58 | 7.23 | 6.6 |
| PCI Scores | 68.38 | 67.15 | 66.74 | 68.6 |
| Ranking | 24 | 28 | 20 | 10 |
Source: Provincial Competitiveness Index
Foreign direct investment in Hanoi
Hanoi has emerged as a significant hub for foreign direct investment in Vietnam. The city’s strategic location and relatively skilled workforce have attracted numerous multinational corporations.
In 2024, Hanoi recorded 293 new projects with newly registered capital of US$2.16 billion. This is substantial and puts Hanoi in position six among Vietnam’s 63 provinces in terms of newly registered capital. It is also a significant jump compared to last year when it recorded US$1.38 billion over the same period.
Legal procedures and business setup in Hanoi
Setting up a business in Hanoi follows Vietnam’s national framework but often involves coordination with provincial authorities.
Foreign investors typically register their enterprise with the Hanoi Department of Planning and Investment.
This process includes obtaining an investment registration certificate (IRC) and an enterprise registration certificate (ERC).
Additional sector-specific licences may be required, especially in regulated industries like education, logistics, or F&B.
While the Ministry of Planning and Investment oversees legal policy, implementation is managed at the city level, making local engagement critical.
For a step-by-step guide, see: How to start a business in Vietnam.
Hanoi business districts
Hanoi’s business activity is concentrated in several key districts, each offering distinct advantages depending on the industry and business model.
Ba Dinh District: The political heart of Vietnam, home to key government ministries, embassies, and headquarters of state-owned enterprises. Suitable for businesses requiring close contact with policymakers or operating in regulated sectors.
Hoan Kiem District: The city’s traditional commercial core, known for banking, finance, legal services, and high-end retail. Hoan Kiem also attracts international firms seeking prestigious office space in central Hanoi.
Cau Giay District: A fast-growing business and technology hub, favoured by IT companies, startups, and educational institutions. The district offers a good mix of modern office buildings, residential options, and universities.
Nam Tu Liem and Bac Tu Liem Districts: Emerging areas west of the city centre with growing infrastructure, mid-range office space, and proximity to industrial zones and national highways. Popular for logistics, industrial services, and back-office operations.
Each district offers varying levels of accessibility, rental costs, and proximity to transport links, making district selection a key strategic decision for foreign investors entering the Hanoi market.
Hanoi office rents
Office rents in Hanoi remain competitive compared to Ho Chi Minh City, particularly in the Grade A segment.
According to CBRE data as of Q4 2024:
Grade A offices in Hanoi are priced at US$26.9 per square metre per month
Grade B offices are renting for US$14.7 per square metre per month
These rates have remained unchanged since Q3 2024, indicating relative market stability in Hanoi. Grade A spaces are concentrated in central districts like Hoan Kiem and Ba Dinh, while Grade B offices are more common in Cau Giay and Nam Tu Liem.
Compared to Ho Chi Minh City, where Grade A office rents reached US$45.5/m² and Grade B offices US$26.2/m² in Q3 2024, Hanoi offers significantly lower occupancy costs — making it an attractive base for cost-sensitive operations.
Hanoi retail rents
Retail rents in Hanoi continued a gradual upward trend through 2024, reflecting sustained consumer demand and limited availability in premium shopping areas.
According to CBRE data as of Q4 2024 average retail rents were:
Central Business District (CBD): US$173.00 per square metre per month
Non-Central Business District (NCBD): US$37.30 per square metre per month
This represents a modest increase from Q3 2024, when CBD rents were US$172.70, and NCBD rents were US$37.00. The rising trend is driven by stronger foot traffic in key districts such as Hoan Kiem and Dong Da, alongside continued expansion by international and domestic retail chains.
While rents remain more affordable than Ho Chi Minh City — where Q4 2024 CBD rents stood at US$280.00 — Hanoi offers solid long-term retail potential, especially in NCBD zones where demand is rising and rents remain under US$40/m².
Entertainment and Nightlife in Hanoi
Foreign business persons looking to travel to Hanoi for work can expect to enjoy their down time in a broad range of ways. Hanoi offers a diverse range of entertainment and nightlife options, catering to various tastes and preferences.
Old Quarter
The heart of Hanoi’s nightlife, the Old Quarter is famous for its bustling atmosphere and vibrant street life. Visitors can enjoy a wide array of bars, pubs, and restaurants offering local and international cuisine. The area is particularly lively in the evening, with street vendors, live music, and people-watching adding to the charm.
West Lake Area
For a more relaxed atmosphere, the West Lake area offers a different kind of nightlife experience. Here, you can find trendy bars, rooftop lounges, and upscale restaurants with stunning views of the lake. This area is popular among expats and locals alike.
Live Performances:
Hanoi boasts a thriving arts scene with various live performances. From traditional water puppet shows to contemporary theatre and music, there’s something for everyone. The Hanoi Opera House is a landmark venue for classical music and ballet performances.
Other Entertainment
Beyond nightlife, Hanoi offers numerous entertainment options, including historical sites, museums, and parks. Visitors can explore the city’s rich history, enjoy outdoor activities, or simply relax in one of the many cafes and tea houses.
Hanoi’s entertainment and nightlife scene is continually evolving, offering something for everyone. Whether you prefer a lively atmosphere or a more laid-back experience, the city has it all.
FAQ
1. How do you start a business in Hanoi, Vietnam?
To start a business in Hanoi, foreign investors must apply for an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC). Depending on the industry, additional licenses or approvals may be needed. Working with a local expert is advised to navigate regulatory procedures smoothly.
2. Is Hanoi a good place to invest?
Yes, Hanoi remains one of Vietnam’s top investment destinations in 2024. With strong infrastructure, a growing middle class, and an increasingly skilled workforce, it offers opportunities in sectors such as technology, manufacturing, and tourism.
3. What’s better: Hanoi and Ho Chi Minh City for doing business?
Hanoi offers proximity to central government agencies, better public administration, and a slower, more stable investment climate. Ho Chi Minh City is faster-paced, more commercially driven, and often preferred for startups and high-growth sectors.
4. What are Hanoi’s main industries?
Hanoi’s fastest-growing industries include information technology, electronics manufacturing, e-commerce, tourism, education, and logistics. These sectors benefit from government support, infrastructure development, and foreign investor interest.
5. Are there tax incentives for foreign companies in Hanoi?
Yes, foreign-invested companies in Hanoi may qualify for corporate income tax reductions, land rent exemptions, and other benefits, especially in high-tech, education, and export-focused sectors. Incentives vary by zone and project type.
What’s next?
Hanoi, as Vietnam’s capital, offers a dynamic and complex business environment. The city’s strategic location, growing economy, and relatively skilled workforce present significant opportunities for foreign investors. While navigating the regulatory landscape and building strong local partnerships can be challenging, the potential rewards are substantial.
To succeed in Hanoi, businesses must carefully consider factors such as market entry strategies, cultural nuances, and long-term investment plans. By understanding the city’s unique characteristics and leveraging its strengths, companies can position themselves for growth and success in the Vietnamese market.
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