"The ecosystem is mostly thriving due to the substantial market size of the Vietnamese economy, making the creation of successful local startups profitable even if they do not expand out of Vietnam," according to a report released this week by StartupBlink, a global comprehensive startup ecosystem map and research center.

The report ranked 100 countries and territories around the world based on three basic aspects – quantity, quality and business environment.

In terms of quantity, the number of startups, co-working spaces and startup accelerator events in a country are counted; the quality score measures the impact of an ecosystem’s start-ups based on several factors, including customer base, authority, website visits and valuations; the business environment assesses how easy it is to do business in a given location, based on technological infrastructure, bureaucracy and red tape.

However, to become a true regional and global hub, Vietnam will have to generate innovations with global impact, the report added.

Vietnam plans to have at least 10 unicorns by 2030, according to its Ministry of Planning and Investment. Unicorn is defined as a privately-owned startup company worth at least $1 billion. 

Total investment in Vietnamese tech startups last year reached $741 million, second in Southeast Asia after Singapore, according to Singapore-based venture capital firm Cento Ventures.

The Vietnamese government in recent years has encouraged entrepreneurship and said it wants the private sector to drive economic growth.

Despite Vietnam’s improved performance, it remained behind several Southeast Asian peers like Singapore (16), Malaysia (48), Thailand (50), the Philippines (53) and Indonesia (54).

The U.S. topped the list as the country with the best startup ecosystem, followed by the U.K. and Israel.

StartupBlink also ranked 1,000 cities around the world in terms of the strength of startups ecosystem. In Vietnam, the two largest cities, Hanoi and HCMC, figured in the ranking.

Hanoi jumped 33 places from last year to 196th position while HCMC made its debut at 225.