Worldbox Country Risk Climate – November 2025
Vietnam
Summary
| Overall Risk Score 29/40 (Stable)
Political risk: Stable 7/10 Economic risk: Stable 8/10 Commercial risk: Stable 7/10 Technology risk: Stable 7/10 The risk assessment of a country is made up of four components, being Political, Economic, Commercial and Technological. Each component is scored out of 10 with 1 being the highest risk and 10 the lowest. |
ESG Risk: 6/10 (Stable)*
*Environmental, social and governance (ESG) issues are becoming increasingly important to companies, investors and consumers in Southeast Asia. That is why we are now preparing a separate ESG score and section with our quarterly country risk reports. We explain how each country rates, looking at the E, S and G individually, and outline recent developments. |
Political Risk – Stable at 7
Vietnam is a one-party state ruled by the Communist Party of Vietnam (CPV). The CPV provides strategic direction and decides all major policy issues, which the government then implements. The four most important positions in the country are CPV General Secretary (the most powerful position in Vietnam), State President, Prime Minister and National Assembly Chair.
General Party Secretary Nguyen Phu Trong was the most powerful man in the country until he passed away in July 2024. He had been re-elected to the position of general secretary of the Communist Party in January 2021, at the age of 76, for a rare third five-year term. After taking office in 2011, Trong built up a strong power base in the Communist Party.
In October 2024, General Luong Cuong became the country’s new president, making the military general the fourth official to fill the largely ceremonial role in 18 months. Cuong, 67, replaced To Lam, who had remained president even after he was formally appointed as the general secretary of the ruling Communist Party in August.
In December, To Lam announced a sweeping set of proposals to streamline the government, legislature and ruling-party apparatus. At the government level, five of 21 ministries will be eliminated through mergers and closures. The reforms aim to improve national government efficiency by eliminating layers of cumbersome bureaucracy, helping drive the country onto a higher economic plane.
These are the most sweeping and ambitious programme of political and governance reforms since the CPV launched the ‘renovation’ (doi moi) economic reforms nearly 40 years ago, which began the transition from a centrally planned economy to a ‘socialist-oriented market economy’. The ambition is to complete the reforms before the 14th National Party Congress, scheduled for the first quarter of 2026.
Worldbox Business Intelligence believes the reforms could have a dramatic impact on the country’s appeal to foreign investors and could thus have the desired effect of significantly raising Vietnam’s long-term growth potential.
Economic Risk – Stable at 8
Since the early 1980s when the economy was on the verge of collapse, Vietnam has been transformed into a middle-income country with one of the most dynamic economies in the world. Bold economic reforms, political stability, and a hard-working, well-educated and disciplined workforce has attracted vast amounts of FDI that have helped the country become an export powerhouse.
More recently, Vietnam has successfully positioned itself as a low-cost alternative manufacturing base to China. The pandemic, which exposed the Western economies reliance on China, helped drive FDI away from China and into Vietnam.
Under the leadership of To Lam, Vietnam aims to build an upper-income, knowledge-and-tech-based economy by the year 2045. It has been aiming for annual growth rates in excess of 8%. Exporting more to the US, already its biggest market, was central to that plan.
New information has emerged about the likely impact of the substantial reforms aimed at strengthening the independent rule of law and institutions, and cutting bureaucracy. In February, the government approved a reduction in the number of ministries from 18 to 14, and cuts to one in five public sector jobs over the next five years.
The administration also plans to merge its 63 cities and provinces into 34. This huge restructuring could streamline governance, and “businesses will need to reorient their relationships with newly formed or expanded local authorities”, according to Tra Huong Dang, Senior Associate, Asia Group Advisors.
She adds that while overall the reforms aim to accelerate decision-making, they may also reduce transparency. That will require businesses to navigate a more centralised and unpredictable regulatory environment.
However, Tra Huong Dang adds that:
“Now more than ever, the government is aligning its policies with its ambition to position Vietnam as a centre for advanced manufacturing – particularly in AI and semiconductors – while introducing new incentives to attract both domestic and foreign investment, and cultivating a skilled workforce to support high-tech advancements.”
In addition, in an article published by Access Partnership, the analyst believes that “while these aspirations are not unique to Southeast Asian nations, such a radical change of policies signals a readiness for modernity that is at least notable for business leaders. For those prepared to act, this could represent a huge opportunity – while those caught on the back foot may find themselves facing significant challenges.”
Commercial Risk – Stable at 7
Businesses operating in Vietnam face some significant challenges, according to the US State Department’s 2024 Investment Climate report. These include widespread corruption, the entrenched position of state-owned enterprises (SOEs) in certain sectors, regulatory uncertainty in key sectors, a weak and opaque legal regime, poor enforcement of intellectual property rights, a shortage of skilled labour, restrictive labour practices, and slow government decision-making processes.
The report adds that due to a high reliance on inputs from China, Vietnamese manufacturing is vulnerable to forced-labour risks in supply chains, though the government and industry are actively working to address these concerns.
Corruption is a significant challenge. However, progress does seem to be being made. Vietnam ranked in 88th place out of 180 countries in Transparency International’s 2024 Corruption Perceptions Index, up from joint 83rd in 2023.
The country ranks as the 61st freest in the 2025 Index of Economic Freedom from the Heritage Foundation. Its rating has fallen by two places from last year. The country’s economic freedom score is higher than the world and regional averages.
The lack of adequate infrastructure provides significant challenges to operating in Vietnam. The country is making a huge investment in infrastructure: approximately 6% of GDP, compared with an ASEAN average of 2.3%, highlighting its commitment to growth. A number of new projects will come onstream in the coming years. These include 3,000km of expressways by the end of 2025, including the North-South Expressway and connections to the eastern and western regions. A new international airport serving Ho Chi Minh City is also due to open at the end of 2025.
Technology Risk – Stable at 7
The Global Innovation Index (GII), from the World Intellectual Property Organization, is an important index used by countries and multinational companies to assess innovation ecosystems and aid in policymaking and investment decisions.
Vietnam ranked 44th out of 133 countries in the 2024 GII – moving up from 62nd place in 2020. It ranked 10th among the 17 economies in South East Asia, East Asia, and Oceania.
Government policies
The government has implemented a “National Strategy for the Development of Digital Economy and Digital Society by 2025”, which aims to accelerate the adoption of digital technologies across various sectors. Vietnam is also committed to a “green” transition, with the government seeking to transform the economy by applying circular economic principles and exploiting digital technologies to reduce environmental impacts. Many businesses in the country have begun the process of data digitization and standardization of their operations. However, many small and medium-sized enterprises lack the funds to invest in clean technologies and digital infrastructure.
The government is keen to attract foreign investors in semiconductor manufacturing, artificial intelligence (AI) and green energy, as it seeks to take the next step in economic development away from low-added-value manufacturing. A shortage of skilled labour and concerns about stable power supply have stymied the authorities’ attempts to attract high-tech investment. Hanoi is reportedly considering offering special deals on land leases, corporate taxes, and import and export duties to attract high-tech investments from the likes of Apple. The government is also reportedly considering partnering with universities and multinationals to upgrade its labour force and facilitate licensing and registration.
Infrastructure
Vietnam’s 4G mobile network currently covers 99% of the population. The government aims to ensure that every city, province, industrial facility and household nationwide can access fibre-optic internet by 2030, with a goal for all internet users to benefit from speeds of at least 1 Gbps. At least two new international submarine cable routes are due to be launched, and the authorities want to achieve 99% coverage of the 5G broadband network by the end of 2025. Each citizen will have access to one Internet of Things connection and will have a digital identity, with over 70% of adults expected to possess a digital or electronic signature by 2030. Vietnam is investing heavily in data centres that meet international standards and is focusing on attracting domestic and international investments in digital infrastructure.
The government is also investing heavily in transport infrastructure. The Long Thanh International Airport, serving Ho Chi Minh City is a prime example. The project, costing US$13bn, should be largely finished by the end of 2025 with commercial operations targeted for 2026. It will eventually be big enough to handle 100 million passengers a year.
Education and skilled staff
The number of students studying STEM subjects has increased in recent years but remains low compared with some countries in the region and with Europe – particularly in the proportion of female students. For example, in 2021, the latest year for which figures are available, around 28% of university students studied STEM subjects, compared with 46% in Singapore, 50% in Malaysia, 35% in South Korea, 36% in Finland, and 39% in Germany.
November Bulletin
Political Risk – Stable at 7
Vietnam remains one of the most politically-stable countries in the region. The robust economy, which is generating strong real wage growth and low unemployment, is helping to quell dissent. Recent policy amendments suggest the government is highly capable and is laying the foundations for future strong growth.
That said, the administration has intensified its crackdown on dissent, according to an April 2025 released by Human Rights Watch. The organisation said the authorities are punishing people simply for raising concerns or complaints about government policies or local officials.
At the same time, the government is vigorously pursuing an anti-corruption crackdown, aware that anger at the misuse of public funds poses perhaps the most significant threat to its credibility. The 2024 Vietnam Provincial Governance and Public Administration Performance Index revealed that corruption is identified as the most pressing issue requiring urgent Government attention. The index measures and benchmarks citizens’ experiences and perception on the performance and quality of policy implementation and services delivery of all 63 provincial governments.
In September, for example, a former senior parliamentary official was sentenced to over five years in jail in a corruption case linked to a construction company accused of bribing its way into winning deals. The former head of the construction business was sentenced to more than 10 years in jail for violating bidding regulations.
Economic Risk – Stable at 8
The economy grew by 7.1% in 2024, supported by continued strong external demand, resilient foreign direct investment, and accommodative policies. Economic growth exceeded expectations in the second quarter of the year, expanding by 7.96% year on year. Robust exports, foreign direct investment, and public investment fuelled the economy.
The government has set a goal for GDP growth of 6.5% to 7% in 2025, and is determined to achieve a double-digit growth rate in the long term. This could be achievable if the government’s reforms work given that Hanoi has successfully negotiated down President Trump’s tariffs on Vietnamese exports to the US to 20% from an initial 46%.
In 2024, the US was Vietnam’s second-largest trading partner after China and the largest destination for Vietnamese exports. Total bilateral trade between the two countries reached US$149.6 billion, 20.4% up, from 2023. Exports account for about 90% of Vietnam’s gross domestic product, with net shipments to America making up about one-fifth of the economy. Maintaining the growth of exports to the US is therefore vital to Vietnam’s growth plans.
Vietnam appears to be trying to engineer a depreciation of the currency to gain a competitive advantage over other ASEAN countries. Bloomberg reports that the State Bank of Vietnam has been steadily guiding the Dong weaker this year with the Dong hitting record lows against the dollar.
Vietnam’s exports in August rose 14.5% from a year earlier to $43.39 billion. The data seems to confirm that the policy of depreciation to maintain competitiveness is working.
In a September 2025 Article IV consultation, the IMF projected growth of 6.5% in 2025. It warned that a further escalation in global trade tensions or a tightening of global financial conditions could weaken further exports and investment. It added that domestically, financial stress could re-emerge from tighter financial conditions and high corporate indebtedness.
However, the IMF added that “successfully implementing infrastructure projects and structural reforms could significantly boost medium-term growth”, while if global trade tensions subside, the economic outlook would improve.
Inflation rose to 3.24% in August from 3.19% in July. The IMF, in its September 2025 Article IV consultation, argued that the room to ease monetary policy is very limited, and inflation and FX risks should be closely monitored given still buoyant economic and credit growth.
Commercial Risk – Stable at 7
In September 2025, The IMF highlighted the need to bolster the financial sector’s resilience against shocks. The organisation said the priority should be building liquidity and capital buffers and improving the macroprudential toolkit. It also called for further upgrading the insolvency, crisis preparedness and resolution, and AML/CFT frameworks, as well as for advancing the framework for the regulation of crypto assets.
Vietnam appears to have heeded the IMF’s advice in terms of crypto assets. In September, Hanoi launched a five-year pilot programme for regulated digital asset exchanges, aiming to end the legal grey area and attract foreign capital. The government wants to position the country as a regulated hub for digital assets in Asia. Vietnam already ranks fifth globally in crypto adoption with an estimated $100 billion in holdings.
In September, S&P Global Ratings raised the long-term credit ratings of three major banks, “reflecting the stronger resilience of the country’s financial system and continued above-average economic growth”. The agency added that strong inflows of foreign direct investment (FDI), a competitive and increasingly skilled workforce, and continued strength in the manufacturing sector is supporting economic growth.
Technology Risk – Stable at 7
The government has announced that it is planning to update its National Artificial Intelligence Strategy and Law on AI later this year. Minister of Science and Technology Nguyen Manh Hung will issue a national AI ethics code that is in line with international standards but suitable for Vietnamese practice, and at the same time develop an AI Law and an AI strategy with core principles.
Environmental, Social and Governance (ESG) – Stable at 6
The United Nations’ Sustainable Development Goals (SDGs) are recognised as a beneficial framework for responsible investment. The Sustainable Development Report from Cambridge University Press assesses the progress of all UN Member States on the SDGs. It provides a useful means of ranking Southeast Asian countries on their ESG progress.
Vietnam is ranked 61 out of 167 in the 2025 report, with a score of 73.35.
Environment – According to the Intergovernmental Panel on Climate change, Vietnam is one of several countries most vulnerable to climate change. With 3260 km of coastline, 2860 rivers and 4000 islands, Vietnam is dangerously exposed to flooding, typhoons, tsunamis and tropical storms. In September 2024, a super typhoon known as Yagi killed more than 250 people and caused damage estimated at over US$3 billion.
Attempting to combat climate change, the Vietnamese Government has released plans to reach a net-zero emissions target by 2050. It has pledged to stop two coal-fired power plants by 2030 and then all inefficient ones that cannot be improved by 2040. By 2030, Vietnam also plans to research, promote, and pilot co-firing biomass and ammonia as feedstock at coal-fired power plants to reduce carbon emissions. It aims to boost the use of renewable energy so that it accounts for 29.2-37.7% of the country’s electricity generation by 2030. It also plans to complete its first nuclear power plant by 2030.
Social – Vietnam passed the amended Law on Employment in July 2025, introducing updated regulations on job creation, labour registration, vocational training, and unemployment insurance. Unemployment insurance will cover job counselling, skills training, and financial support. The government has also proposed a 7.2% average increase in Vietnam’s regional minimum wage for 2026 to help counter inflation and maintain living standards.
Governance – The government passed an amended Law on Enterprises in June 2025 with the ambition of raising corporate governance standards in the country. The most notable amendments, which came into effect from 1 July 2025 include:
- the introduction of the concept of an Ultimate Beneficial Owner (“UBO”); and
- enhanced disclosure and valuation requirements for share capital and capital contributions.
The introduction of the UBO concept marks a significant step toward aligning Vietnam’s corporate governance framework with international standards, particularly those set by the Financial Action Task Force, which has placed Vietnam on its grey list and may consider escalation if progress stalls, according to lexology.com.
The website adds that the amendment on share capital and distributions is designed to address longstanding issues around the inflation of non-cash capital contributions – such as assets, land use rights, or intellectual property – where inflated or unverifiable valuations have historically been used to obscure true ownership ratios or inflate charter capital on paper. Such practices have not only undermined financial transparency but have also created risks for shareholders and business partners, especially in disputes.
November Bulletin
Environmental, Social and Governance (ESG) – Stable at 6
Sustainability has emerged as one of the top 10 defining trends shaping the real estate market according to a September 2025 report released by Indochina Capita. The report added that more than 85% of Vietnam’s 500 fastest-growing companies have either implemented or are planning ESG commitments. It said the trend not only signals a transformation among local businesses but also creates compelling opportunities for both domestic and foreign investors.
Latest economic data
f – forecasts
Source: International Monetary Fund
Source: Worldbox
Useful Links
https://www.transparency.org/en
https://www.imf.org/en/Countries/VNM
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