Vietnam rose from sixth to fifth place in Southeast Asia, displacing the Philippines, and is well-positioned to overtake Thailand (rank 4) next year if this positive momentum continues.

The gap between the two only ranked Vietnamese cities has widened this year. Ho Chi Minh City ranks first and is moving closer to the global top 100, jumping 68 spots to 111, and showing positive momentum from last year. This rapid growth signals that good things are happening in Ho Chi Minh.

"On the flipside, Hanoi has decreased 31 spots to 222, falling out of the global top 200. Having Hanoi and Ho Chi Minh City as innovation hubs is a massive bonus to the Vietnamese ecosystem, but hopefully, more cities will follow suit. With Vietnam’s population of almost 100 Million, two ranked ecosystems are certainly not enough," says the report.

The Vietnamese startup ecosystem has massive potential, mostly due to the substantial market size of the economy, making the creation of successful local startups profitable even if they do not expand internationally.

A large number of expats and digital nomads in Ho Chi Minh city further contributes to the growth of the local ecosystem.

However, to become a true regional and global hub, Vietnam will have to generate innovations that have a regional or global impact.

To attract foreign investors or companies to Vietnam, the government offers tax incentives. In 2016, Vietnam approved the Initiative for the startup ecosystem in Vietnam until 2025, more commonly known as National Programme 844, to further promote the thriving startup ecosystems in the country.

Since the beginning of the programme, there has been strong growth both in the number of new startups and in their revenues. In 2018, the government approved the Law on Supporting Small and Medium-sized Enterprises to support startups through technology transfer, investments, training, and incentives for venture capital funds.

According to StartupBlink, growing industries that attract investors to Vietnamese startups include e-commerce, fintech, foodtech, enterprise solutions, and IT services.

With unicorns such as MoMo and Sky Mavis, Vietnam is revealing itself to be a startup powerhouse in Southeast Asia.