Amidst a rapidly evolving global landscape, investors are increasingly drawn to Asia’s burgeoning economies. Southeast Asia, with its dynamic growth and strategic trade networks, has emerged as a pivotal region. Within this context, Vietnam shines as a beacon of opportunity, offering growth, stability, and long-term returns.

Vietnam lies at the heart of Southeast Asia, strategically positioned within the Valeriepieris Circle, home to 70% of the world’s GDP growth potential. Its prime location is further bolstered by an long eastern coastline and proximity to the China Southern Economic Corridor—dubbed the “Chinese Silicon Valley”—which contributes a remarkable 20% to the China’s GDP. Despite locating in a favorable location, Vietnam struggled through a turbulent period of war for most of the 20th century until 1975. For the next decade, recovery after war was challenging and Vietnam economy grew at a slow pace.

“Doi Moi” Transformed Vietnam from Low to The Brink of Upper-Middle-Income Status

“Doi Moi,” or “Renovation,” introduced in 1986, marked Vietnam’s transition from a centrally planned economy to a socialist-oriented market economy. By opening its doors to global trade, fostering private enterprise, and attracting foreign investment, the reform propelled Vietnam into one of the fastest-growing economies of the 21st century, with GDP per capita rising twelvefold at an average annual rate of 11.3%. 

Vietnam’s strategic embrace of globalization has been the cornerstone of its economic success. Joining the World Trade Organization (WTO) in 2007 marked a turning point, opening the nation to global trade and investment opportunities. Since then, Vietnam has expanded its international reach through 17 Free Trade Agreements (FTAs), securing preferential access to major economies and embedding itself into the global value chain.

Vietnam’s extensive trade integration, coupled with competitive manufacturing and labor costs, has made it a magnet for multinational giants. Nike, one of the earliest movers, began investing in Vietnam in 1995. Over time, as the country developed a more skilled labor force, it shifted toward higher value-added industries, such as electronics. Samsung followed suit in 2008, marking a pivotal moment in Vietnam’s transformation. Today, Vietnam accounts for 50% of Nike’s global footwear production and 30% of Samsung’s global revenue.

But Nike and Samsung are just the tip of the iceberg. Global FDI flows into Vietnam have consistently outpaced those of other countries. From an average FDI disbursement of 4.4% of GDP during 2010-2015, the figure accelerated to 4.6% during 2016-2023 thanks to the “China Plus One” strategy. By now, Vietnam has become one of the most globalized countries in the world.

The benefits of integration extend beyond trade figures; they are driving robust economic growth, transforming consumer wealth, and fueling a rapidly growing middle class. Consumption has been growing rapidly, illustrated by the rising contribution of services sector in the GDP structure from 38% in 2000 to 43% in 2024 

Đổi Mới 2.0: Vietnam’s Vision for a High-Income Economy by 2045

After three decades of robust economic growth, the COVID-19 pandemic and rising geopolitical tensions have posed significant challenges, not just for Vietnam but for the global economy. To navigate these headwinds and sustain its growth trajectory, Vietnam is embarking on what can be described as Đổi Mới 2.0 – a bold wave of reforms centered on enhancing government efficiency and an unprecedented infrastructure transformation. 

Streamlining Government for Growth: “It cannot be delayed any longer”- General Secretary To Lam

At the core of Vietnam’s transformation is an ambitious “anti-waste” campaign targeting inefficiencies in government spending. Over 70% of the state budget currently goes to recurring expenses such as salaries and operational costs—significantly higher than the 40-50% seen in developed economies. To address this, the government is planning for aggressive cost-cutting measures, including merging five ministries, closing ineffective departments, and encouraging early retirements among senior officials.

Proposed mergers include the Ministry of Planning and Investment with the Ministry of Finance and the Ministry of Transport with the Ministry of Construction. These measures aim to reduce 15-20% of government units, while surplus personnel will either be relocated to new roles within the streamlined entities or supported by provincial authorities during their job transitions. While the restructuring may incur one-off expenses, such as severance and relocation costs, it is expected to ease long-term spending pressures significantly. Final approvals are expected by February 2025, paving the way for a more efficient procedural framework to resolve bottlenecks hindering investment projects.

Infrastructure as an Economic Game-Changer

Vietnam’s bold administrative reforms are laying the groundwork for tackling one of its most critical challenges: high logistics costs, currently at 18% of GDP—well above regional peers like Thailand and Indonesia at 14%. To tackle this, Vietnam is embarking on its most ambitious infrastructure upgrade in decades.

Key projects include the $67 billion North-South High-Speed Railway, approved by the National Assembly, which will reduce travel time by land between Hanoi and Ho Chi Minh City from 37 to just 5 hours and contribute 1% annually to GDP during its construction. The $16 billion Long Thanh International Airport, poised to be Southeast Asia’s premier aviation hub, is being fast-tracked for early 2026, with supporting infrastructure upgrades underway.

Urban transit is also a priority. Ho Chi Minh City’s first metro line opened in December 2024, with further plans for a 355-kilometer metro network by 2030, while Hanoi targets 418 kilometers. Combined investments for these networks exceed $77 billion, underscoring Vietnam’s transformative push toward modernized transportation and economic connectivity.