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PESTEL analysis of Vietnam

PESTEL analysis of Vietnam

This detailed PESTEL analysis of Vietnam aims to address some of the political, economic, social, technological, environmental, and legal factors that affect Vietnam today. Vietnam is officially known as the Socialist Republic of Vietnam. It is one of the most populous countries in the world and aims to become a developed nation very soon.


Political factors affecting Vietnam

In Vietnam, the president is the elected head of state and the commander-in-chief of the military, while the prime minister is the head of government. It is a country where the role of the Communist Party of Vietnam (CPV) is asserted virtually in all spheres of life. However, many analysts argue that though Vietnam is socialism-oriented from the standpoint of political philosophy, many of its economic policies have adopted capitalist principles.


Vietnam pursues a policy of building and maintaining good relations with any countries in the world regardless of their political outlook on global affairs. It is a member of the United Nations (UN), World Trade Organization (WTO), Association of Southeast Asian Nations (ASEAN), Non-Aligned Movement (NAM), and some other prestigious institutions. Though it had a bitter history with the United States, the relations between the two improved quite a lot in the last 20 years.


However, according to the Human Right Watch (2023), Vietnam has a very poor record in human rights. Freedom of expression, association, and peaceful public assembly are strictly restricted, while dissidents being imprisoned are very normal.


As the Communist Party of Vietnam controls the country’s media, journalists and media platforms often risk sanctions for presenting sensitive topics and for criticising the government. Likewise, corruption is a problem though the country has made a lot of efforts to eradicate it in the last several years.


Economic factors affecting Vietnam

Economic discussion is a major part of this PESTEL analysis of Vietnam. Vietnam is a growing economy. Its nominal GDP in 2021 was worth 366.14 billion US dollars (Trading Economics, 2023). It has made a lot of progress in poverty eradication and has lifted millions of people out of it in the last decade.


Vietnam’s economic outlook for the next few years is positive and robust. It is interesting to note that it has come out as one of the largest beneficiaries of the trade dispute between China and the USA. However, it should also be noted that it has been struggling with high price increases for years. 


According to the World Bank (2023) Vietnam aims to become a high-income country by the year 2045. However, to achieve this, its economy would have to grow at an annual average rate of 5.5% per capita for the next 25 years.


Broadcasting equipment, telephones, integrated circuits, textile footwear and leather footwear are some of Vietnam’s top exports that end up in countries such as the USA, China, Japan, South Korea, and Germany (OEC, 2023).


On the other hand, computers, electrical goods, telephones, mobile phones and parts, instruments and accessories, and textile fabrics are some of its top imports that mostly come from countries such as China, Japan, South Korea, Honk Kong, and Singapore.


The standard corporate income tax (CIT) rate in Vietnam is 20%. However, the tax rate varies from 32% to 50% for organisations that operate in the oil and gas industry. On the other hand, the personal income tax (PIT) rate varies from 5% to 35% (PwC, 2023).


Social factors affecting Vietnam

The next element to discuss in the PESTEL analysis of Vietnam is the social environment. The total population of Vietnam is around 99.6 million (Worldometer, 2023). Buddhism is the major religion, and Vietnamese is the major language in the country. The life expectancy for men is 71 years, while 79 years for women (BBC, 2023).


Vietnamese culture is deeply rooted in Confucianism, which places a strong emphasis on respect for authority and family values. It is also influenced by Buddhism, and Taoism. Visitors should be aware of the cultural customs and etiquette. For example, it is important to remove shoes before entering someone’s home, and to dress modestly when visiting temples or other religious sites.


Another important aspect of Vietnamese culture is the importance of family. The extended family is often involved in decision-making processes, and family gatherings are an important part of Vietnamese life.


An emerging middle class is growing rapidly in the country and is expected to reach 26% by 2026 (The World Bank Group, 2023). Vietnamese people are generally friendly. Many tourists have shared online their interesting and memorable encounters with the locals. However, many tourists have also complained about being hassled, overcharged, and treated badly by the locals.


Though Vietnam has made massive economic progress over the years, there is a growing concern about wealth distribution. The gap between the rich and the poor is very wide and growing further. Another social challenge facing the country is ageing population.


Technological factors affecting Vietnam

Flourishing start-up culture, international investments, low costs, government initiatives, and an educated workforce have been driving an IT revolution in Vietnam for a long time. The country has a number of tech parks such as Da Nang Hi-Tech Park and Saigon Hi-Tech Park that accommodate offices and factories for more than 700 companies, including 220 foreign companies that specialise in IT and software engineering, hardware manufacturing, and infrastructure development.


Vietnam is now the eighth largest provider of IT services in the world. Five IT industries that are currently trending are fintech, artificial intelligence, E-commerce, software outsourcing, and education technology. However, as many companies are shifting manufacturing operations to the country, a fierce battle for skilled labour is well underway, exacerbating an existing shortage of skilled labour.


Another issue facing Vietnam is the digital divide. While many urban areas have access to high-speed internet and other technological amenities, rural areas often lack access to these resources. This can be a barrier to education and economic development.


Environmental factors affecting Vietnam

Vietnam is one of the most beautiful countries in Asia. It houses 8 UNESCO heritage sites and receive millions of international tourists in every year. In fact, tourism has been an important actor to transform its agrarian economy to a service one.


Rapid economic development has led to unsustainable exploitation of natural assets that may impact on future potential for growth. Vietnam is badly affected by air pollution. Similarly, water pollution is a big problem and has significant impact on human health. Vietnam is highly exposed to natural disasters such as volcanic eruptions, floods, droughts, earthquakes, floods, and typhoons.


According to the World Bank (2023) Vietnam is aiming to grow in a greener in the future. It is committed to reducing methane emissions by 30 percent. It is also committed to halting deforestation by 2030 and achieving net zero carbon emissions by 2050.


Legal factors affecting Vietnam

The last element to address in the PESTEL analysis of Vietnam is the legal landscape of the country. However, the article offers a limited discussion on this element.


Foreign companies are permitted to operate in Vietnam and is often encouraged by the government to invest through direct or indirect investment. In fact, the company law has become quite easier noticeably in recent years. International investors can now swiftly create limited liability companies.


Employees are entitled to several benefits such as annual paid leave, sick leave, and maternity benefits under the Employment Act. The minimum age to get into an employment contract is 15. 8 hours per day and 48 hours per week are the standard working hours.


Summary of PESTEL analysis of Vietnam

To conclude, Vietnam is a country full of charm and beauty, with a rich history and culture. However, it faces technological challenges, particularly in terms of internet censorship and the digital divide. It also needs to work more on eradicating poverty.


Despite these challenges, Vietnam remains a unique and fascinating destination for travellers seeking adventure and cultural enrichment. It also offers massive opportunities for businesses as well.


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Last update: 08 March 2023


BBC (2023) Vietnam country profile, available at: (accessed 08 March 2023)

Human Right Watch (2023) Vietnam, available at,  (accessed 08 March 2023)

OEC (2023) Vietnam, available at: (accessed 08 March 2023)

PwC (2023) Vietnam Individual – taxes on personal income, available at: (accessed 08 March 2023)

The World Bank Group (2023) The World Bank In Vietnam, available at: (accessed 07 March 2023)

Trading Economics (2023) Vietnam GDP, available at: (accessed 08 March 2023)

Worldometer (2023) Vietnam population, available at: (accessed 07 March 2023)

Author: M Rahman

M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.

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