Vietnam vs Thailand: Where Should You Start A Business?

When you think of two of the most dynamic economies in Southeast Asia, Vietnam and Thailand will come to mind. Boasting idyllic islands where thousands of tourists every year, these countries are equally attracting more entrepreneurs who are being drawn in by their growing startup environments.

Vietnam’s capital, Ho Chi Minh City is home to plenty of historic landmarks and innovative startups, earning the nickname as the economic powerhouse of Vietnam.

Similarly, Thailand has seen a surge in startups that are revolutionising technology, finance and agriculture.

Both are exciting locations to consider when starting a business but, of course, there are many other factors that need to be given thought to before making a final decision.

 

Which Country Is More Welcoming To Startups?

 

Vietnam: Here, the manufacturing sector is developing rapidly which is contributing to its growing economy. Vietnam is also adopting more digital practices, making it the ideal location for tech or e-commerce startups. Corruption does remain a prevalent issue which can be a challenge for foreign business owners.

Thailand: The startup ecosystem here is a bit further developed with government incentives such as the Board of Investment who offer certain privileges to specific sectors. However, there are some industry restrictions when it comes to foreign ownership, which would need to be assessed beforehand.

Overall, Thailand is slightly more business-friendly but Vietnam does have fewer restrictions on foreign ownership which can be advantageous.

 

Which Industries Thrive In These Countries?

 

Vietnam: The country has seen explosive growth in the manufacturing, e-commerce and tech as well as the hospitality industries. More specifically, the development of electronics and clothing have seen significant success.

Thailand: Thailand has one of the strongest tourism industries in the world, attracting millions of tourists each year from all over the world. Health and wellness is also growing, and plenty of foreigners visit the country for retreats. With a growing expat market, real estate and property development is also an industry to consider branching into.

 

The Extent Of Language Barriers In Vietnam And Thailand

 

Vietnam: The official language is Vietnamese and although English is widely spoken in the larger cities, it is less common in rural areas. If you move out of the main business hubs like Ho Chi Minh City and Hanoi, it may be challenging to find staff who are bilingual.

Thailand: Thai is the official language but you may find that English is spoken in some business settings. The proficiency will vary though, and most of the official documentation will be in Thai which can be difficult to navigate for foreigners who don’t speak the language.

A language barrier does exist to some degree in both countries, but Vietnam does have a slightly larger English-speaking workforce compared to Thailand.

 

 

A Comparison Of Taxes In Vietnam And Thailand

 

Vietnam: The country has a standard corporate tax rate of 20% and between 5%-35% for personal income tax. Value Added Tax (VAT) is currently set at 10%. There are some tax incentives reserved for certain industries like tech, manufacturing and renewable energy.

Thailand: Here, the corporate tax rate and personal income tax range is the same as Vietnam’s but the VAT is slightly lower at 7%. Similarly, there are tax holidays and incentives for specific sectors that are foreign-owned.

While Thailand does have a lower VAT, Vietnam offers better incentives which can benefit startups in the tech and manufacturing industries.

 

What Is The Cost Of Living Like In These Countries?

 

Vietnam: Rent can range from $400-$800 per month and you can find office spaces between $100-$250 per month. It is more affordable here, particularly in cities like Hanoi and Da Nang.

Thailand: It is more expensive to live in Thailand, especially in Bangkok and in the tourist areas. Rent can range from $500-$1,200 per month while co-working spaces range from $150-$300 per month.

For the entrepreneurs who are on a tight budget, Vietnam would be the more cost-effective location.

 

Visa And Work Permit Requirements For Foreign Entrepreneurs

 

Vietnam: You can apply for a business visa which is valid for 3-12 months and work permits are required, although there are exemptions for those who are investors. If you are, you may be eligible for an investor visa which is easier to obtain if you register a company there.

Thailand: A business visa is required to start a business while a SMART visa is available for startups and professionals in the tech industry. Remote workers can also apply for a digital nomad visa.

Overall, Thailand’s visa system is more structured while Vietnam’s offers more flexibility.

 

How To Set Up A Business In Vietnam Or Thailand

 

Vietnam: The first step is to choose your business structure. Typically, a limited liability company is the most common choice for foreigners. You can then register your business with the Department of Planning and Investment. After this, you can apply for your Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC) respectively. The last step is to register for tax and open a business bank account.

Thailand: Likewise, you can decide on your business structure. A private limited company is the common choice here for foreigners. Then, you can register with the Department of Business Development and open a business bank account. After this, you can apply for VAT and a tax ID with the Revenue Department and apply for Board of Investment incentives if it applies to your industry.

 

The Final Verdict: Where Should You Start A Business?

 

Both countries offer unique advantages and challenges, so your decision will ultimately depend on which industry you plan to operate in and your own financial situation.

For entrepreneurs in manufacturing, e-commerce or technology that want to enjoy a lower cost of living with more control over their business, Vietnam may be the one to consider.

On the other hand, those in tourism, hospitality or healthcare may be better-suited to Thailand where processes are more structured and business-friendly.