NEW DEVELOPMENT SPACE FOR VIETNAM - OTIS LAWYERS

Vietnam is entering a promising phase of development, marked by groundbreaking shifts in leadership thinking, institutional reforms, and a strong economic transformation. From a lower-middle-income country, Vietnam has risen to become one of the most dynamic economies in the world, emerging as a new bright spot in Southeast Asia.

Expanding Economic Reach Regionally and Globally

In 2024, Vietnam's GDP is estimated to reach $476.3 billion, despite the negative impacts of the Covid-19 pandemic and global economic downturn. According to a report by the Asian Development Bank (ADB), Vietnam continues to be one of the fastest-growing economies in the Asia-Pacific region. This not only demonstrates strong resilience but also affirms Vietnam's position on the regional and global economic map.

In 2024, exports—a key pillar of Vietnam’s economy—amounted to $405.53 billion, reflecting a 70% increase over the past five years. High-value products such as electronic components, machinery, and processed agricultural goods have helped establish Vietnam as a global manufacturing hub. Additionally, foreign direct investment (FDI) inflows in 2024 reached over $38.23 billion, highlighting Vietnam’s attractiveness to international investors.

Young Population, Large Domestic Market

With a population exceeding 100 million, Vietnam ranks as the 16th most populous country in the world. Nearly 70% of the population is of working age, creating a dynamic and abundant labor force. The middle class, the main driver of consumption, is rapidly expanding. According to PwC, the middle class in Vietnam is projected to make up over 55% of the population by 2030, creating a massive domestic consumer market, particularly in retail, real estate, and services.

Moreover, Vietnam’s global economic integration has made significant strides thanks to new-generation Free Trade Agreements (FTAs). The country has signed 17 FTAs with over 60 countries and regions, including major economies like the EU, Japan, and China. These agreements not only allow Vietnamese goods to penetrate large markets but also enhance production standards and competitiveness for local businesses.

Skilled Workforce as a Competitive Advantage

One of Vietnam’s greatest strengths is the quality of its human resources. The Global Innovation Index (GII) 2024 ranks Vietnam 44th out of 133 countries, an improvement of nearly 30 places since 2013. This achievement is the result of strong investments in education, vocational training, scientific research, and technology.

High-value industries such as information technology, renewable energy, and artificial intelligence are attracting an increasing number of skilled professionals. Statistics indicate that about 56% of IT workers in Vietnam are well-trained to meet international standards. The startup ecosystem is also thriving, with over 4,500 startups operating and attracting billions of dollars in investment. Companies in the tech sector, such as MoMo, VinFast, and Sky Mavis (Axie Infinity), are not only establishing Vietnam’s position in the global market but also creating hundreds of thousands of high-quality jobs.

Institutional Reforms as a Driving Force for Growth

Vietnam has made significant progress in institutional reforms and improving its business environment. Surveys on business sentiment in Vietnam’s Provincial Competitiveness Index (PCI) reports by VCCI show that the business environment in Vietnam has become increasingly transparent and favorable. The government is also accelerating digital transformation and e-government, with a high and rapidly increasing percentage of ministries, sectors, and localities implementing online public services.

Vietnam has prioritized cutting and simplifying business conditions and streamlining administrative procedures in 2023-2024, demonstrating strong reform efforts. These changes not only reduce costs and time for businesses but also improve government efficiency and strengthen investor confidence.

Notably, the Vietnamese Party and State are currently undertaking an administrative revolution, restructuring government institutions to enhance efficiency, effectiveness, and transparency. This is part of a broader vision to build a modern, high-performing political system that supports Vietnam’s rapid and sustainable development in the new era.

Science and Technology as a Key Growth Pillar

Vietnam has identified science and technology as key drivers for economic growth in the coming years. Fields such as artificial intelligence (AI), blockchain, and renewable energy are receiving significant investments.

Recently, the Politburo issued Resolution 57-NQ/TW, emphasizing breakthroughs in science, technology, innovation, and digital transformation. By 2030, Vietnam aims to achieve advanced scientific and technological capabilities in multiple key sectors, positioning itself among the leading upper-middle-income countries.

Vietnam aims to rank among the top three Southeast Asian nations and top 50 globally in digital competitiveness and e-government development. Additionally, it seeks to become a regional leader in AI research and digital technology industries. The country also aims to develop at least five world-class digital technology companies. By 2030, R&D expenditure is targeted to reach 2% of GDP, with at least 3% of the annual state budget allocated to science, technology, and innovation.

Significant Progress in International Trade

Vietnam’s international trade relations continue to advance significantly. In 2024, Vietnam's total import-export turnover reached $786.29 billion. Notably, trade between Vietnam and the U.S. is projected to reach $140 billion, a 50% increase compared to 2019. Exports to the EU, bolstered by the EU-Vietnam Free Trade Agreement (EVFTA), reached $60 billion, marking a 70% growth over the past five years.

Additionally, Vietnam actively participates in regional and international economic forums such as APEC, ASEAN, and the G20, reinforcing its role as a critical link in global supply chains. These developments expand growth opportunities for domestic enterprises while enhancing Vietnam’s international reputation and influence.

[This article was written by Mr. Dau Anh Tuan, Deputy Secretary General of the Vietnam Chamber of Commerce and Industry (VCCI)]

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