Vietnam is accelerating its growth model reform with the goal of becoming a developed, high-income nation by 2045. Amid a global supply chain reshuffle, Vietnam has emerged as a key beneficiary of foreign direct investment (FDI) in Southeast Asia, shifting from a low-wage, quantity-focused strategy to a new development direction centered on productivity, science and technology, innovation, and skilled talent.
According to the Vietnam Youth Newspaper on July 27, a resolution regarding the innovation of the development model was passed during the third meeting of the 14th Central Committee of the Communist Party of Vietnam held on July 24. This resolution is seen as a strategic shift aimed at elevating Vietnam to developed and high-income status by 2045. The core of the new growth model is to transition from a quantitative growth approach to a productivity-focused growth strategy. Vietnam aims to harness science and technology, creative innovation, digital transformation, and high-quality human resources as new driving forces while also improving infrastructure in transportation, energy, healthcare, and education.
Tran Van Khai, deputy chairman of the National Assembly's Committee on Science, Technology, and Environment, described the innovation of the development model as a survival task for Vietnam. He noted that while past growth drivers remain relevant, they can no longer serve as the mainstay. In particular, he pointed out the limitations of relying on increased capital investment, credit expansion, land development, and low-wage labor in the new stage of development.
In this context, Vietnam is also facing distinct opportunities in attracting FDI. The Youth Newspaper reported that international organizations and global institutions have recognized Vietnam as a champion in attracting FDI in Southeast Asia. The Diplomat, a foreign affairs magazine, analyzed that Vietnam is in a leading position among the major beneficiaries in Southeast Asia as the 'China Plus One' strategy spreads.
Vietnam's strengths include its geographical proximity to China, competitive labor costs, and a broad network of free trade agreements. These factors have made Vietnam an attractive choice for global companies looking to diversify their supply chains, opting for it as a strategic production base rather than merely an assembly hub.
Investment flows are also rapidly increasing. In the first half of this year, Vietnam's registered FDI amounted to $34.65 billion, a 61% increase compared to the same period last year. The disbursed amount reached $13.03 billion, marking the highest level in the past five years. Investment is shifting towards high-tech industries such as electronics, semiconductors, artificial intelligence, and data centers.
International organizations are optimistic about Vietnam's trade and investment outlook. A report released by DHL Express and New York University's Stern School of Business forecasts that from 2026 to 2030, Vietnam's merchandise trade growth will rank fourth in the world, following China, India, and the United States. The World Bank and the International Monetary Fund also predict that Vietnam will maintain high growth in the region based on institutional reforms, infrastructure investment, and support for the private sector.
Tran Anh Tung, head of the Department of Business Administration at Ho Chi Minh City University of Economics and Finance, assessed that Vietnam's rise in FDI is not a short-term phenomenon but the result of 20 years of accumulated integration capabilities and institutional reforms. He explained that Vietnam's proximity to southern China allows companies to implement the 'China Plus One' strategy with lower logistics costs, and access to several large markets through 17 free trade agreements.
Bo Chi Thanh, director of the Brand and Competitive Strategy Research Institute, believes that Vietnam's appeal is no longer solely based on low wages or tax incentives. He analyzed that political stability, macroeconomic stability, international integration, and efforts in institutional reform are what enhance Vietnam's competitiveness. He stated, "Investors are now prioritizing countries with stable institutions, consistent policies, and high predictability rather than just low costs."
However, there are calls for Vietnam's FDI strategy to shift from quantitative attraction to qualitative selection. Tran Anh Tung emphasized that rather than attracting more capital, Vietnam should focus on increasing localization rates, developing supporting industries, and training talent in semiconductors and AI. He stressed that Vietnam must not remain an assembly factory but become a supply chain hub that creates technology and products.
Bo Chi Thanh stated, "FDI is a tool for upgrading the economy through technology transfer, the development of supporting industries, and the formation of production clusters." He added, "Vietnam needs to shift from counting the dollar amounts attracted to valuing the quality of capital flows, as the quality of FDI will determine future economic competitiveness, strategic self-reliance, and sustainable growth."
The Central Committee's resolution on development model innovation aligns with this direction. Additionally, Nguyen Phu Trong, General Secretary of the Communist Party and President of Vietnam, noted during the third meeting of the Central Committee that "the biggest bottleneck remains in the execution phase," stating that the main causes must be addressed simultaneously from the root. The Central Committee also proposed that the measure of policies should be based on actual results, quality of life for citizens, job opportunities, happiness, and trust.
Land and urban policies will also be adjusted as part of the new growth model. The Central Committee believes that land should be viewed as a development space connected to underground areas, upper spaces, economic corridors, and marine economic zones. Expanding the Transit-Oriented Development (TOD) model linking urban development and public transportation, strengthening local authority, and clarifying responsibilities were also highlighted as key tasks.
Vietnam's challenge lies in connecting the influx of FDI to economic advancement. Simply benefiting from the reshuffling of supply chains is not enough; there is a growing demand for simultaneous promotion of advanced technology, skilled labor, institutional reforms, and infrastructure improvements.
Meanwhile, Vietnam's new growth strategy focuses on leveraging the FDI boom as an opportunity to elevate its industrial structure rather than merely viewing it as capital inflow. The Central Committee's push for development model innovation and experts' calls for a qualitative shift in FDI indicate that Vietnam must transition from being a host for factories to becoming a hub for technology and innovation.
* This article has been translated by AI.
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