Under government targets, Vietnam is aiming to reach a GDP figure of $800 billion by 2030, translating to roughly $8,000 per capita. To do so, the country will need to sustain double-digit GDP growth throughout the 2026-2030 period. Against that backdrop, capital market restructuring is emerging as a critical lever for achieving such growth.
Experts have noted that the banking system is under mounting strain as credit continues to shoulder most of the economy’s financing needs. Constraints ranging from a limited supply of investment products to gaps in information transparency and the national credit rating are preventing the market from maturing as it should.
Financial imbalances
Analysts note that if the share of private sector investment remains steady at around 40 per cent of GDP, total private investment would need to be in the range of $250 billion to $300 billion per year; far beyond what the commercial banking system can supply. In this context, developing the domestic capital market and attracting foreign portfolio investment, particularly through the debt market and corporate bonds, has become critical.
Data from FiinRatings show that the ratio of short-term debt to total outstanding debt among listed companies rose sharply during 2023-2024, surpassing 60 per cent. Among the 50 largest listed firms by assets, the ratio reached roughly 45 per cent in 2024 - significantly higher than in regional markets such as Thailand (12 per cent), Malaysia (13.5 per cent), the Philippines (17 per cent), and Indonesia (26.5 per cent).
Growing dependence on short-term borrowing has heightened refinancing risks across the financial market, especially amid unpredictable interest rate movements.
To support economic growth, the State Bank of Vietnam has been cutting policy rates since 2022 and maintaining a low interest rate environment to improve access to credit for households and businesses. However, low rates have also made savings less attractive, causing deposit growth to lag credit growth for more than three years.
However, the downside of credit expanding faster than deposits is heightened liquidity risk and greater maturity mismatches in the banking system. “When lending growth exceeds deposit growth, pressures on capital adequacy and liquidity buffers inevitably increase,” said Mr. Sacha Dray, Economist at the World Bank in Vietnam.
Mr. Dray also warned of accumulating credit risks if capital flows are not allocated efficiently or if the economy’s capacity to absorb capital remains uneven. “These factors make it essential to strengthen risk management capacity within the banking system, while adding complementary tools to sustain financial stability and support long-term economic growth,” he emphasized.
Financial statements from listed banks show that as of the third quarter of 2025, the loan-to-deposit ratio had climbed to its highest level in five years, underscoring the mounting liquidity pressure across the system.
Significant barriers
Beyond the challenges within the banking system, the capital market is also confronting significant barriers in attracting international investment. Historically, foreign inflows into Vietnam’s stock market have come mainly from South Korea and Taiwan (China), but whether Vietnam can draw capital from regions with lower risk appetite, such as the US, Europe, and the UK, remains in question.
A shortage of investable products, in both quantity and quality, is seen as a chronic issue not only for the equity market but for the debt market more broadly. The investable universe includes not only equities and corporate bonds but also government bonds and money market instruments.
Bond funds typically manage assets far larger than equity funds. Yet a major obstacle preventing their participation in Vietnam is the lack of suitable investment products. Each year, the market records only about 300-400 corporate bond issuances, most of them private placements executed on a deal-by-deal basis. This approach works only for small funds or investors allocating a very limited share to Vietnamese debt.
In terms of quality, despite notable progress in information transparency, the market still has significant gaps to fill. Credit ratings remain far from widespread, and intermediary products such as bond guarantees are largely absent - tools essential for attracting large institutional investors.
In reality, many global debt funds managing hundreds of billions or even trillions of dollars operate with only a few dozen staff. They run portfolios using standardized methods and rely heavily on credit ratings for capital allocation decisions. These funds do not have the capacity to manually evaluate individual projects, yet Vietnam’s bond market still operates on a bespoke, deal-specific structure that requires exactly that.
Another major barrier is Vietnam’s sovereign credit rating, which remains at speculative grade, making the country less appealing to major financial institutions. The situation mirrors Vietnam’s equity market, which has not yet been upgraded to emerging market status. Without such upgrades, many foreign mutual funds and sovereign funds are unable to allocate capital to Vietnamese debt, regardless of its long-term growth prospects.
According to analysts, achieving a higher sovereign rating will require Vietnam not only to strengthen macro-economic fundamentals and manage foreign-currency public debt, but also to ensure banking system stability, improve the balance of payments, particularly foreign exchange reserves, and enhance transparency towards global markets.
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