Vietnam's 'China+1' Surge: Using Singapore as a Financial HQ for Manufacturing

Global manufacturing supply chains aren't just shifting; they are being rebuilt from the ground up. We've seen Vietnam emerge as the primary destination for the 'China+1' strategy, but the way companies enter the market has changed. Instead of direct capital injection, we are seeing a triangulated approach where Singapore serves as the legal and financial holding jurisdiction for Vietnamese operations.

Geopolitical de-risking is the main driver here. Chinese manufacturers in high-tariff sectors, specifically solar players like Jinko Solar and Trina Solar, have set up massive operations in Vietnam to keep their access to Western markets open. It isn't just about moving a factory; it's about meeting 'Rules of Origin' under the CPTPP and EVFTA. These trade deals require actual value-adding production, not just simple assembly, to get those preferential tariffs. The economics still make sense—by 2025, average monthly wages for manufacturing in Vietnam were around $350 to $400, which is a significant saving compared to China's coastal cities.

Singapore is the natural funnel for this capital. MPI data shows Singapore remained Vietnam's top foreign investor in 2025, with registered capital hitting $12.1 billion—nearly 30% of all FDI. This isn't an accident. The expanded Singapore-Vietnam Connectivity Framework Agreement has tightened the corridor for energy, sustainability, and digital economy projects, making it the default path for regional expansion.

Setting up a Special Purpose Vehicle (SPV) in Singapore is now the standard for any serious play in Vietnam. As John Wong from KPMG points out, Singapore acts as a risk-mitigation layer, offering a stable legal environment to hold Vietnamese assets.

Speed is a factor. You can get an ACRA incorporation done in 1 to 3 days. In contrast, getting your Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC) in Vietnam can take anywhere from 30 to 90 days. By setting up the Singapore holding company first, you can pool capital and secure your IP while the Vietnamese licensing moves through the bureaucracy. For institutional players, the Variable Capital Company (VCC) framework provides a flexible way to handle capital reduction and dividends.

The tax angle is equally compelling. Under the Singapore-Vietnam Double Taxation Agreement (DTA), withholding tax on dividends drops to 5% or 10%. On top of that, Section 13(8) of the Singapore Income Tax Act means foreign-sourced dividends sent back to Singapore are usually exempt from our 17% corporate tax. Since Vietnam’s standard CIT of 20% is higher than the 15% threshold required for the exemption, the math works out in the investor's favor.

The Singapore-Vietnam SPV Structure

The Vietnam-Singapore Industrial Park (VSIP) network is the backbone of this trade corridor. There are now 18 VSIP projects running or approved across the country, housing over 800 companies. Decree 35/2022/ND-CP has been a game-changer for these parks, offering 'one-stop-shop' administrative services that actually work for environmental and construction permits.

Vietnam’s Law on Investment 2020 allows 100% foreign ownership in most manufacturing, but you still need to check the 'negative list' in Decree 31/2021/ND-CP for any restricted sectors. We’ve seen a massive push toward green manufacturing, driven by the Power Development Plan 8 (PDP8). Singaporean banks like UOB, DBS, and OCBC have stepped up their advisory game to match this; UOB alone has helped over 450 companies move into Vietnam as of 2025.

Vietnam’s '4-9-15' tax incentive—4 years of exemption, 9 years of 50% reduction, and a 10% rate for 15 years—is still a great deal for SMEs. But for the big multinationals, the rules changed on January 1, 2024. The 15% Global Minimum Tax (GMT) now applies to any MNE with revenues over €750 million.

To keep the country attractive, the Vietnamese government launched an 'Investment Support Fund' in 2025. This fund offers direct cash support for R&D and green infrastructure to balance out the GMT’s impact. CFOs need to stop banking on old-school tax holidays and start modeling ROI based on a 15% effective tax rate, with a focus on negotiating direct grants from the new fund.