Professor Hoang Van Cuong, Member of the National Assembly’s Finance and Budget Committee and Vice President of the Vietnam Economic Association

The impact of and trends in the global economy present both opportunities and challenges for Vietnam’s growth drivers, particularly the three traditional drivers of investment, exports, and consumption.

Vietnam’s economic growth has always been closely tied to the expansion of export turnover. Leaders have recently engaged in diplomatic and economic activities with countries with which Vietnam previously had no trade relations, aiming to create new opportunities. However, policies under US President Donald Trump’s incoming administration, such as heightened trade protectionism, could directly impact Vietnam’s export products and exacerbate the trade war between the US and China.

Vietnam’s trade balance with the two countries is deeply interconnected. It posts a significant trade deficit with China while enjoying a substantial trade surplus with the US. This raises concerns about the origin of Vietnamese export goods, particularly in relation to the US market and international markets at large. Nonetheless, with experience from the first Trump administration, Vietnam must better control its position and avoid unnecessary challenges.

In terms of domestic consumption and production, in e-commerce, Vietnam has implemented stricter tax policies on products from cross-border e-commerce platforms while promoting domestic e-commerce platforms. Furthermore, the government continues to maintain a 2 per cent VAT reduction to encourage consumption. Along with this, adjustments to personal income tax rates are necessary to give people more disposable income for spending.

Another pressing issue is the quality of tourism services. While tourism activity indices are increasing, spending on tourism remains low. This suggests that current tourism services may not meet the expectations of many travelers.

Regarding institutional issues, Vietnam has made significant efforts in addressing existing bottlenecks. One notable example is the issuance of specific laws, such as those supporting the North-South high-speed railway project, which includes tailored policies and mechanisms. Additionally, the government is reforming State administrative structures by consolidating agencies, which shortens the time needed for completing administrative procedures.

To enhance effectiveness, it is crucial to empower local authorities with greater autonomy to capitalize on their capabilities. Current laws are often general, with implementation details assigned to government decrees, potentially limiting flexibility and creativity at the local level. Addressing this requires clearly delegating authority to localities, enabling them to act independently within a transparent and accountable framework. Centralizing power at the national level risks undermining efficiency and adaptability at the local level.

In regard to public investment innovation, various methods are essential to attract private investment and stimulate economic growth. Most public investment is currently planned and executed by the government. However, the government could consider transferring parts of this responsibility to the private sector, particularly for large-scale projects such as the North-South high-speed railway.

Instead of the State handling the entire process, private corporations could be contracted to carry out specific components, from manufacturing rails and train carriages to building infrastructure. The government would act as a coordinator, providing funding and direction, thereby fostering strong economic conglomerates to serve as pillars of the economy.

This approach not only promotes the development of large enterprises but also encourages the involvement of small businesses, creating value chains and enhancing sustainability. It is also a strategic direction to optimize resources, improve public investment efficiency, and advance the growth of the domestic private sector.

 

Dr. Tran Quoc Khanh, Former Deputy Minister of Industry and Trade

Vietnam’s significant trade deficit with China and substantial surplus with the US reflects the country’s deeper integration into the supply chain for the US market. Major imports from China followed by significant exports to the US are natural outcomes, considering Vietnam’s goal of participating in regional and global value chains. This was an anticipated result of its economic integration objectives.

Regarding concerns over Chinese goods entering the US market disguised as Vietnamese goods, the US has been paying close attention to this issue for years. With high tariffs on Chinese goods, the US remains wary of the possibility that Chinese products could transit through Vietnam or other countries to avoid these tariffs. However, despite this heightened scrutiny, over the past 10-15 years, no cases of origin fraud involving Vietnamese goods have been discovered. This demonstrates that Vietnamese businesses have generally complied well with US origin regulations. To date, no major incidents have occurred, but vigilance must remain a priority.

Diversifying markets has always been a consistent policy of the government and the Ministry of Industry and Trade. However, while the US and Chinese markets each account for approximately 30 per cent of Vietnam’s exports, diversifying away from such major markets is easier said than done. For sectors like agriculture, where export capacity is relatively limited at $60 billion annually, market diversification is more feasible. But for large-scale products like phones and electronic components, finding markets with consumption capacities comparable to the US or China is challenging.

With Donald Trump returning as US President, Vietnam may face export restrictions due to its significant trade surplus with the US. Before any restrictive measures are implemented, Vietnam could initially benefit if the US imposes high tariffs on Chinese goods. This would likely prompt a shift in orders from China to other regional countries, including Vietnam. While this shift could benefit Vietnam, it may also exacerbate its trade surplus with the US, increasing the likelihood that President Trump could consider specific measures to limit Vietnamese exports.

The extent of this risk depends largely on President Trump’s geopolitical strategy. Even if measures are taken, they would require time for preparation, investigation, and consultation, meaning they may not take effect until 2026. In a worst-case scenario, Vietnam’s exports could face challenges for 2-3 years, but not all products would be affected. The US is particularly sensitive to items like automobiles, steel, and solar panels, whereas mass-market products like footwear and textiles are less likely to be targeted.

These considerations highlight that Vietnam still has time to prepare and implement measures to mitigate the potential negative impacts of tariffs on its exports to the US under a Trump administration.

 

Mr. Dau Anh Tuan, Deputy Secretary General of the Vietnam Chamber of Commerce and Industry (VCCI)

Institutional solutions are critical for Vietnam achieving its high growth targets in 2025, with the focus on three key areas: the quality of legal documents, administrative procedures, and the effectiveness of implementation at the local level.

Regarding the quality of legal documents, many projects have been delayed recently due to legal mechanisms and policies. Large projects, whether from FDI or public investment, often involve numerous laws, such as the Land Law, the Law on Planning, the Law on Fire Prevention, Fighting, and Rescue, and the Law on Construction. If the legal system is not favorable, bottlenecks and challenges are created. The root cause, in my view, lies in the lack of effective coordination between ministries and sectors, leading to inconsistencies from the perspective of investors.

VCCI recently worked with one province to survey 30 completed projects, mapping out their actual implementation journeys rather than merely following the documented processes. The findings revealed a stark difference between practical and prescribed procedures. Projects often required considerable time, involving up to 30 points of contact, where a single bottleneck could stall the entire process.

The drafting committee for the Law on the Promulgation of Legal Documents is currently working to address these issues. One proposed solution is to create more stable and comprehensive laws that transcend individual sectors. For example, the upcoming law on high-speed railways aims to encompass land, capital, and special mechanisms within a single legal framework. This approach is being prioritized by the National Assembly and the government.

In terms of administrative procedures, two priority areas for breakthroughs are needed. The first involves streamlining procedures related to land, investment, and planning to expedite the flow of capital into the economy. Instead of forming numerous task forces to resolve bottlenecks, the focus should be on simplifying and accelerating policies and processes, reducing project timelines from 2-3 years to months or even weeks.

One positive development is the 15th National Assembly passing a law on amendments and supplements to four laws - the Law on Planning, the Law on Investment, the Law on Public-Private Partnership Investment, and the Law on Bidding - during its ongoing eighth session. These include provisions for expedited procedures, particularly for high-tech investments, which can now be implemented in a much shorter time. I hope these streamlined procedures will extend beyond high-tech projects to other sectors, significantly reducing societal costs.

Nearly 90,000 businesses handle import-export procedures daily. Faster customs clearance and reduced warehouse times would accelerate capital flow, speed up the movement of Vietnamese goods, and enhance competitiveness. While improvements have been made, they still fall short of expectations. Critical areas like customs and taxation require more robust reforms to benefit a large number of businesses.

At the local level, some cites and provinces, such as Hai Phong and Bac Giang in the north and Tra Vinh in the Mekong Delta, have consistently achieved double-digit growth. Their common characteristics include a favorable business environment, streamlined administrative procedures, and strong support for business operations.

Studying these high-growth models offers valuable lessons for national-level development. I believe Vietnam’s transformation will originate from the grassroots level. Empowering dynamic and creative localities could expand the number of cities and provinces posting double-digit growth from the current 7-8 to 30-40, significantly boosting the country’s overall growth.

 

Mr. Le Tien Truong, Chairman of the Vietnam National Textile and Garment Group (VINATEX)

The textile and garment industry is a major export sector for Vietnam and one of the few industries in which Vietnam ranked second globally in 2024, accounting for 7 per cent of the total global textile and garment trade. It has consistently remained among the top 3 globally for the past six years.

The first bottleneck is mindset. Can industries like textiles and garments innovate? Can they achieve a high degree of automation? In the upcoming period, as Vietnam aims for a green, clean, and high value added industrial economy, will there still be a place for the textile and garment sector? How should we plan for the development of such industries? Vietnam’s light industries currently employ around 10 million workers, of which the textile and garment sector employs 2.6 million. So, where do industries like textiles and footwear fit into Vietnam’s era of growth and accelerated development?

Textile and garment products are essential consumer goods with a perpetual global demand. There will always be a market for them. In recent years, the global trend has focused on green and circular production. However, while this is a long-term direction, in practical production, the output of green products has not significantly increased. In fact, in 2024, the consumption of green garments made from recycled materials was even lower than in 2023.

Globally, there are eight main criteria in evaluating a textile-exporting country: speed to market, production flexibility, quality, unit price, labor risks and social responsibility, vertical integration along the supply chain, environmental risks, and geopolitical risks.

Vietnam and China scored equally high, at 25 out of 40 on these eight criteria, placing them among the world’s top performers and ahead of regional countries like Bangladesh and Cambodia. However, Vietnam does not excel in any single criterion, only reaching a “good” level across the board. While its performance is consistent, it lacks standout strengths.

Of the eight criteria mentioned, some fall under the responsibility of enterprises, such as speed to market, production flexibility, quality, unit price, and social responsibility, while others are beyond the capacity of individual businesses and require national-level mechanisms and policies to improve.

Thus, if we identify textiles and other light industries as key contributors to growth in the future, specialized planning and sufficiently-large production zones are essential. In China, for instance, a production zone in one district, comparable in size to an entire Vietnamese province, generates the same export value as Vietnam as a whole, of around $35 billion.

“Eagles” are not exclusive to high-tech industries like semiconductors and electronics; there are also “eagles” in textiles. To attract these “eagles” in the fashion industry, a shift in mindset and proper preparation is necessary.

The second bottleneck is capital. Transitioning to green production requires green financing. Currently, textile enterprises face significant challenges as the cost of green transformation is prohibitively high and risky. Domestic businesses also lack sufficient incentives to pursue this path.

The third bottleneck is logistics costs. Vietnam has the highest logistics cost-to-product value ratio among the top 7 textile-exporting countries in the world.

 

Mr. Nguyen Bich Lan, Former Director General of the General Statistics Office (GSO)

According to data published by the General Statistics Office, Vietnam’s GDP grew by 7.09 per cent in 2024. Using the expenditure approach, final consumption increased by 6.57 per cent, while total retail sales of goods and services rose by 5.9 per cent (in constant prices). Final consumption, encompassing spending by individuals, households, and the government, accounts for over 63 per cent of GDP. With government spending making up only a small portion of this total, final consumption emerges as a key driver of economic growth.

The economic picture in 2024 reflected slow progress in final consumption. Prior to the Covid-19 pandemic in 2020, the total retail sales of goods and services at current prices consistently grew at double-digit rates, with constant prices recording growth near 10 per cent. In recent years, however, growth in constant prices has only been around 6 per cent. Given that final consumption constitutes two-thirds of the economy’s GDP, it is imperative to implement measures to stimulate this driver in the years to come.

To encourage spending, people’s incomes must first improve to ensure they have disposable income. Once individuals have sufficient income, they need access to affordable, high-quality goods and services to facilitate spending. High prices can deter purchases, and attention should be given not only to goods but also to services, which have often been overlooked.

Additionally, trade activities in Vietnam remain heavily reliant on traditional markets, which account for approximately 75 per cent of trade. Expanding the role of e-commerce could significantly contribute to boosting consumption and stimulating demand.

For final consumption to grow sustainably, Vietnamese consumers must prioritize using domestically-produced goods and services. Excessive reliance on imported goods and services undermines GDP growth.

A case in point is the tourism sector, which was a hot topic in 2024. Vietnam welcomed 17.6 million international tourists during the year, nearing its target of 18 million, with international arrivals increasing by over 33 per cent. Revenue from the export of tourism services reached $12.17 billion. However, 5.3 million Vietnamese tourists traveled abroad during the same period, resulting in $12.57 billion in imported tourism services. This created a trade deficit of $380 million in tourism alone, as spending by Vietnamese tourists abroad exceeded that of international visitors to Vietnam.

The high number of Vietnamese traveling overseas can be attributed in part to expensive domestic airfares, which account for about 30 per cent of travel costs. Additionally, Vietnam’s tourism offerings remain limited and lack diversity, particularly in the high-end leisure and entertainment segments. This leaves many international tourists in Vietnam without meaningful opportunities to spend.

Comprehensive solutions are needed to address these challenges. Stimulating consumption through targeted policies will be essential for achieving ambitious economic growth targets in the years to come.

 

Mr. Nguyen Ba Hung, Principal Country Economist in Vietnam, Asian Development Bank (ADB)

In the current environment, several key factors impacting both short-term and long-term economic growth, such as public investment, private investment, trade activities, and foreign investment attraction, have been extensively discussed. However, I would like to share some personal observations.

Recently, a lot of focus has been placed on public investment policies and strategies. We have approved and allocated public investment budgets at relatively favorable levels. For countries with a development level similar to Vietnam, it is generally agreed that public investment needs to account for at least 6-7 per cent of GDP annually to ensure the sustainability of infrastructure development for long-term growth.

Vietnam’s budget allocation falls within the 6-7 per cent range. In practice, however, actual implementation has been less effective. For example, in a recent year with positive performance, we achieved 85 per cent of the allocated budget. In previous years, the allocation rate fluctuated, with some years falling below 80 per cent and others slightly above 80 per cent. As a result, actual public investment has only accounted for just over 5 per cent of GDP, which is still below the necessary 6 per cent. While policy and budget allocation levels are in place, implementation remains suboptimal.

Over time, a lack of investment in essential infrastructure will create barriers to both foreign and domestic investment. Challenges will arise in areas like infrastructure, energy, transportation, operational costs, logistics services, and even in developing markets such as the automotive industry and urban expansion. Without proactive infrastructure investment to prepare for long-term growth, the economy will face continuous growth constraints.

I believe we have good opportunities from the government’s recent reforms, but to speed up progress it must adopt more decisive measures. Public investment procedures are still time-consuming.

Additionally, we should look at increasing private sector participation in infrastructure investment. Though public-private partnership (PPP) models are being utilized to attract private investment, most projects are still carried out through public investment. Even projects initially planned as PPPs often shift to public investment. Moreover, foreign investment in infrastructure remains limited, primarily in electricity and certain renewable energy sectors.

Investing in infrastructure for industrial parks in various localities is also essential. This would help encourage private enterprises to become more actively involved in investment and production. By upgrading industrial infrastructure, business costs will fall, investment efficiency will improve, and private enterprises will be more likely to expand.

More importantly, public investment can generate a ripple effect, stimulating private investment. When industrial parks are developed comprehensively, domestic businesses can transition from smaller operations in urban areas to concentrated zones with optimized infrastructure. This not only improves operational efficiency but also contributes to broader local economic development.

 

Ambassador Pham Quang Vinh, Former Deputy Minister of Foreign Affairs

Despite internal and external fluctuations, Vietnam’s economy ended the year surpassing its targets. Data from the General Statistics Office shows that GDP growth reached 7.09 per cent, inflation was effectively controlled, and trade set a record, with exports and imports totaling $786 billion.

Looking at 2025, the government has set a growth target of over 8 per cent and even aims for double-digit growth. This is a major challenge, as both the global and Vietnamese economies are expected to face numerous uncertainties, difficulties, and challenges, which may outweigh the favorable factors. One such issue is the potential impact of President Trump’s tariff policy, which could affect Vietnam’s trade.

As the world enters 2025, in addition to continuing the major trends of 2024 and previous years, two key points are particularly noteworthy.

First, the second term of the Trump administration brings a very different approach to economic and geopolitical priorities.

Second, many countries will undergo internal changes, with 70 countries holding elections in 2024. These elections are likely to result in more conservative shifts, with major partners such as Germany, France, Japan, South Korea, China, and Russia also facing difficulties.

Regarding Trump 2.0, his approach will likely be more pragmatic, with competition, especially with China, remaining a top priority. As for allied partners, the focus will be on mobilizing forces to separate from China, but President Trump will also adopt a more pragmatic approach in managing these relations. His practical tool for this is tariffs. Besides tariffs, there are also commitments from the US and its market.

President Trump is often associated with terms like trade, tariffs, and pragmatism. He imposes tariffs with the aim of securing advantageous deals for the US, and his approach is distinctive and difficult to predict.

So, what are President Trump’s main priorities and targets? Our priority is to address our trade surplus, though the primary focus seems to be on China and the US’s European allies.

The plan to impose a 60 per cent tariff on Chinese goods, as reported, will be implemented gradually, with other countries subjected to tariffs on a case-by-case basis. Avoiding the risk of tariffs under President Trump’s approach is crucial.

Vietnam should shift its focus from reducing its trade surplus with the US, even though this is an important issue, to a broader framework of trade that includes fairness, transparency, and particularly clear rules of origin for both imports and exports.

Secondly, it is essential to make the business environment in Vietnam more favorable for US investors, especially since there have been concerns from several investors in recent times.

Thirdly, Vietnam will have to purchase more goods from the US. During President Trump’s first term, the government purchased aircraft, liquefied natural gas, and agricultural products. Ultimately, political and geopolitical relations must be used to address Vietnam’s concerns with the US.

Overall, Vietnam stands to benefit, as while President Trump imposes tariffs on China and strengthens tariffs on other regions, Vietnam only faces tariffs on a few items, and its competitiveness in the US market remains strong. The opportunity to shift supply chains and investment flows, including FDI, as well as the separation of US-China technology, presents a great opportunity for Vietnam. Ultimately, there are risks, but there is still potential to mitigate them and reduce the impact of President Trump’s tariffs on Vietnam.