What will it take for Vietnam to grow not only faster, but better?

THE HANOI TIMES — To explore what Vietnam needs to do to maintain momentum and ensure long-term, high-quality growth, The Hanoi Times spoke with Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy and former Deputy Director of the Central Institute for Economic Management (CIEM).

One of the key goals for 2025 is an economic growth of 8% and higher. How realistic is this target, and what does it mean in context?

Because 2025 is the last year of Vietnam's 2021-2025 development plan, it carries strategic weight. The past three years have seen uneven growth at 2.58% in 2021, 8.02% in 2022, and 5.05% in 2023, largely due to the pandemic. This makes 2025 a year of acceleration and breakthrough.

But in terms of GDP per capita and overall economic size, we're still starting from a modest base. To become a high-income economy, Vietnam needs not only faster but also more resilient and sustainable growth over the next 5 to 10 years.

That said, the target of double-digit growth is very ambitious. Global economic and political conditions remain volatile and unpredictable, adding to the challenge.

What external risks do you think will weigh on Vietnam’s growth next year?

Several. First, global demand is likely to slow. The US Federal Reserve is focused on taming inflation and maintaining employment, but Donald Trump's campaign agenda of tariff hikes and immigration restrictions could add to inflationary pressures and affect global financial conditions.

If major trading partners grow more slowly, Vietnam's exports will be affected. Domestically, the quality of bank assets is deteriorating, making access to credit more difficult. We're also facing high repayment pressure on corporate bonds, and the real estate market is recovering very slowly.

In addition, non-performing loans are on the rise, input costs for manufacturers remain high, and monetary policy has limited room for maneuver. These are all interrelated risks.

What about the institutional and structural challenges?

These remain serious bottlenecks. Overlapping regulations and slow implementation are hampering business. Many key legal documents still haven’t been issued, and administrative procedures are cumbersome. Meanwhile, digital transformation is uneven across ministries and provinces, leading to inefficiencies.

What are the top policy priorities to support sustainable growth?

Stimulating private investment is critical. In a tight fiscal environment, we need policies that help stabilize prices, promote Vietnamese-made goods that meet global standards, and reduce production costs for businesses.

On the consumption side, we need to unlock the full potential of the domestic market. Vietnam's services sector already accounts for over 50% of the GDP and can drive growth if effectively supported, especially with its strong link to tourism and the domestic population of over 100 million.

High-quality FDI, productivity gains, and innovation will be key to improving the quality of growth.

The prime minister has called for both the revitalization of traditional growth drivers and the stimulation of new ones. Do you see real progress?

This time, yes. We’ve long talked about new growth engines, but now we’re seeing more concrete movement. Projects in semiconductors, artificial intelligence, and green energy are being actively developed.

The government is focusing on three pillars: regulatory reform, infrastructure, and human resources. We've seen strong steps with steering committees led by the prime minister, special task forces to unblock stalled projects, and efforts to align actions across sectors.

Strategic infrastructure projects are being fast-tracked. At the same time, we’re investing more in science, technology, and digital transformation.

What is your view of the push for institutional reform across ministries and provinces?

It's crucial. The National Assembly recently passed a large number of laws that could largely improve the investment climate. But this work must continue regularly and consistently with a focus on transparency and long-term stability.

Starting in 2025, all provinces and cities will implement their new socioeconomic master plans. It's an opportunity for real breakthroughs, especially if more decision-making power is delegated to local governments.

Regulatory reform should be a top priority as many projects and businesses are still stuck because of outdated or unclear regulations.

You also mentioned circular economy initiatives. What are your thoughts on that?

I appreciate the government’s urgency. The forthcoming decree on piloting circular economy mechanisms contains good incentives to encourage businesses to invest in recycling, clean production, and other sustainable practices.

Groundbreaking proposals are also being put forward to attract investment in high-tech sectors such as semiconductors, AI, and cloud computing. Business recommendations for regulatory reform are now being taken more seriously.

Most importantly, we need to get out of the old mindset of banning what we can't manage. This mentality is a barrier to innovation.

Thank you for your time!