by Duc Le, Tractus Vietnam Country Manager
Vietnam is no longer just catching up. After decades of steady reforms, infrastructure development and economic liberalization, the country is now pushing to join the ranks of Asia’s most dynamic economies. Its story echoes that of the original Asian Tigers — Singapore, Hong Kong, South Korea, and Taiwan — whose rapid growth transformed them into global trade and investment hubs.
From Reforms to Results
Vietnam’s transformation began in 1986 with the Doi Moi economic reforms, a turning point that shifted the country from a centrally planned economy to a more open, market-oriented system. These reforms allowed private enterprise, reduced trade barriers and opened the door to foreign investment.
The impact was swift. In the late 1980s, GDP per capita hovered just above US$100. By 2024, it had surpassed US$4,500 (PPP). Poverty rates fell, exports surged and Vietnam began to emerge as a credible manufacturing destination. With the signing of major trade agreements, Vietnam’s access to global markets deepened.
Vietnam continues to post strong economic growth, often between 6% and 7% annually, excluding pandemic years. The country’s manufacturing sector remains a key driver, with electronics, apparel and footwear as top exports. Major global brands such as Samsung, LG, Intel, Nike and Adidas have established production facilities in Vietnam, drawn by competitive labor costs and improving infrastructure.
Vietnam’s trade relationships are diverse. The United States is the largest buyer of Vietnamese goods, while China serves both as a supplier and export destination. The EU, Japan and South Korea also play central roles, trading across sectors such as electronics, seafood, coffee and machinery. This geographic spread reduces overreliance on any single partner.
Demographics are another strength. With 70% of its 100 million people at working age and a median age of 32, Vietnam boasts a young, literate and increasingly urbanized population. The country’s growing middle class adds another layer of resilience, fueling domestic consumption and attracting investors seeking stable long-term markets.
Rendering of Long Thanh International Airport
Courtesy of IC İçtaş Construction
Building a Platform for Investment
Infrastructure, once a major constraint, is catching up fast. Vietnam has expanded its expressway network, linking major cities such as Hanoi and Ho Chi Minh City through projects like the North–South Expressway. Airports including Tan Son Nhat and Noi Bai have been upgraded, while new facilities in Van Don and Phu Quoc are boosting both tourism and trade.
Port capacity has also grown. Deepwater terminals such as Cai Mep–Thi Vai and Lach Huyen can now accommodate some of the world’s largest container ships, reducing dependence on foreign transshipment hubs. Urban mobility is advancing too. Hanoi’s first metro line is operational, and Ho Chi Minh City’s Line 1 is set to follow.
Ambitions for the next decade are even higher. The under-construction Long Thanh International Airport is designed to handle up to 100 million passengers annually. A planned high-speed rail line could reduce travel time between Hanoi and Ho Chi Minh City to under six hours. By 2030, the expressway network is expected to quadruple in size.
Alongside physical infrastructure, digital upgrades are underway. Vietnam is investing in 5G networks and smart city technologies, particularly in key urban and industrial zones.
Making Things and Making Things Work Better
Vietnam’s rise in manufacturing has been driven by more than just low wages. Its location near key Asian markets, coupled with an extensive network of free trade agreements, makes it an attractive hub for global supply chains. The U.S.–China trade tensions accelerated this trend, as companies looked to diversify sourcing and reduce geopolitical risk.
Still, challenges remain. High-tech industries face a skills gap. Logistics costs, while falling, are still higher than in some neighboring economies. And while FDI continues to flow, the bulk of exports come from foreign-owned enterprises, highlighting a lag in the development of local firms. Environmental pressures also loom larger as industrial activity expands.
Vietnam’s government has played a central role in shaping the investment environment. The 2020 Law on Investment streamlined processes for foreign businesses and opened more sectors to private and foreign participation. Customs clearance has improved through the National Single Window Portal. High-tech, renewable energy and R&D projects now benefit from targeted tax incentives.
The country’s ambitions for Industry 4.0 are backed by policies promoting automation and semiconductor manufacturing. Education reform is accelerating, with vocational programs expanding in industrial regions and more focus on STEM curricula. International education partnerships — especially with institutions in Japan, Australia and the United States — are helping build a skilled, globally competitive workforce.
Sustainability also features prominently. The National Green Growth Strategy 2021–2030 commits to cutting greenhouse gas emissions by 15% and has already made Vietnam a leader in solar power across Southeast Asia. Wind energy and electric vehicles are also growing priorities.
The government is also working to decentralize growth. Special economic zones in Van Don, Phu Quoc, and Chu Lai are drawing investment beyond the main urban centers, while rural infrastructure projects are improving connectivity for farmers and small producers.
Vietnam is following a familiar path, one paved by the original Asian Tigers, with export-led industrialization, education investment and growing global integration. Its fundamentals are strong: low labor costs, a strategic location, diversified trade ties and political stability.
But it is not alone. Regional rivals such as Indonesia, Thailand and India are also competing aggressively for investment. Vietnam’s response has been to accelerate infrastructure delivery, improve technical education and align industrial policy with innovation and sustainability.
In an era where ESG standards matter more in trade and investment, Vietnam’s early moves into renewables and green industry could prove to be a competitive advantage.
Duc Le is Vietnam Country Manager for Tractus. Tractus has 30 years of experience supporting global companies with market entry, site selection and implementation across Asia. Visit tractus-asia.com for more information.