Hanoi, Vietnam’s capital, offers a dynamic business environment for companies seeking to tap into the Southeast Asian market. As the country’s political, economic, and cultural hub, Hanoi provides access to a relatively skilled workforce and a growing consumer market. 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.
PAPI, Hanoi, 2019 to 2023
| 2023 | 2022 | 2021 | 2020 | 2019 | |
| Participation | 5.43 | 5.83 | 5.01 | 5.06 | 5.04 |
| Transparency of Local Decision-making | 5.67 | 5.78 | 5.93 | 5.24 | 4.99 |
| Vertical Accountability | 4.28 | 4.37 | 4.33 | 4.81 | 4.57 |
| Control of Corruption in the Public Sector | 6.73 | 6.80 | 7.08 | 6.60 | 6.13 |
| Public Administrative Procedures | 7.16 | 7.31 | 7.54 | 7.17 | 7.13 |
| Public Service Delivery | 7.85 | 7.23 | 7.79 | 6.87 | 7.10 |
| Environmental Governance | 2.87 | 2.93 | 3.16 | 2.96 | 2.72 |
| E-Governance | 3.97 | 3.66 | 3.61 | 2.92 | 3.86 |
| Unweighted PAPI Score | 43.96 | 43.90 | 44.45 | 41.63 | 41.53 |
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.
PCI, Hanoi, 2019 to 2023
| 2023 | 2022 | 2021 | 2020 | 2019 | |
| Entry Costs | 6.84 | 6.47 | 6.57 | 6.74 | 7.98 |
| Access to land | 5.89 | 6.21 | 6.6 | 6.07 | 6.63 |
| Transparency | 6.45 | 6.32 | 5.21 | 5.81 | 6.6 |
| Time Costs | 7.48 | 7.82 | 8.45 | 7.93 | 7.18 |
| Informal Charges | 6.93 | 6.75 | 7.15 | 6.72 | 5.94 |
| Policy Bias | 5.86 | 6.49 | 5.38 | 6.06 | 5.39 |
| Proactivity | 6.35 | 6.35 | 6.92 | 6.06 | 5.96 |
| Business Support Policy | 7.38 | 6.24 | 7.74 | 6.68 | 7.06 |
| Labor Policy | 7.43 | 7.51 | 7.64 | 7.85 | 7.91 |
| Law & Order | 6.58 | 7.23 | 6.6 | 6.21 | 6.3 |
| PCI Scores | 67.15 | 66.74 | 68.6 | 66.93 | 68.8 |
| Ranking | 28 | 20 | 10 | 9 | 9 |
Source: Provincial Competitiveness Index 2023
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 the first seven months of 2024, Hanoi recorded 143 new projects with newly registered capital of US$1.38 billion. Whereas this is substantial and puts Hanoi in position three among Vietnam’s 63 provinces in terms of newly registered capital this year, it is still a significant fall compared to last year when it recorded US$2.29 billion over the same period.
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.
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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