Vietnam’s economic growth for 2025 goal has been officially changed, with the legislature and government expecting higher growth driven by all possible resources, especially facilitating private sector development.

The new economic growth goal would mean all possible resources gathered for implementation, photo Le Toan

Last week, the National Assembly (NA) passed a resolution on a supplemental initiative on socioeconomic development in 2025, with a prime goal being to reach an economic growth rate of 8 per cent upward (see box).

GDP in 2025 has to hit 8 per cent upward, contributing to creating a solid foundation for reaching double-digit growth as from 2026, according to the resolution.

This rate is higher than the Party Central Committee and NA’s target of 6.5-7 per cent, with efforts to be made to hit 7-7.5 per cent.

In the condition of Vietnam, one per cent of growth, based on last year’s GDP of $476.3 billion, will add about $38 billion to GDP this year (about $514.3 billion) and about 400,000 new jobs. This will also generate another 3.2 million new jobs this year if the economy grows 8 per cent.

The government has underlined some conditions for implementing 8 per cent GDP growth.

“There must be new thinking, new ways of doing things, and breakthroughs in institutions and solutions, along with thorough decentralisation and delegation of power. It is a must to complete the work of streamlining the apparatus organisation, making it more effective and efficient, without affecting the people and production and business activities of enterprises in the short term,” stated a governmental proposal to the NA.

According to the proposal, it is also strongly needed to promote the role of growth of dynamic regions, economic corridors, and growth poles. In particular, the regional GDP growth of localities in 2025 must be at least 8-10 per cent. Especially, Hanoi, Ho Chi Minh City, potential localities, and large cities that are the key drivers of growth poles must strive for a growth rate higher than the national average. There must be appropriate incentive mechanisms for localities with high growth.

“It is necessary to renew traditional growth drivers being investment, consumption, and export, while strongly developing science and technology, innovation, digital transformation, and high-quality human resources to become an increasingly important impetus for boosting economic growth,” said the proposal. “If necessary, the NA allows the adjustment of the state budget deficit to about 4-4.5 per cent of GDP to mobilise resources for development investment. Public debt, government debt, and foreign debt may reach or exceed the warning threshold of about 5 per cent of GDP.”

Solutions advanced

The government has underlined various solutions to reach the new economic growth including institutional reforms, expansion of public investment, boosting consumption and services, and exports, among others.

Notably, the government has also laid a big focus on private investment and processing and manufacturing industries as a prime solution.

“We will focus on reforming administrative procedures, improving the investment and business environment, and creating all conditions to quickly resolve investment procedures and issues in investment and business activities, while encouraging investment from all economic sectors, especially large corporations, state-owned corporations, the private sector, large enterprises, with great impact and contribution to the economy,” stated a governmental report submitted to the NA last week.

According to a survey by the Japan External Trade Organization in 2024, Japanese enterprises assessed Vietnam’s administrative procedures as complicated, especially when it comes to fire prevention, environmental protection, and changing investment certificates.

Furthermore, this organisation said that in Vietnam, the legal system is “incomplete and enforcement lacks transparency, such as product import procedures, and business licenses and taxes”.

Under the European Chamber of Commerce in Vietnam’s Q4/2024 Business Confidence Index report released in January and reflects feedback from EuroCham Vietnam’s extensive network of 1,400 members across a diverse range of sectors, operational challenges continue to be a significant concern for European businesses in Vietnam.

As in previous surveys, the top three operational obstacles identified were administrative burdens, unclear regulations, and difficulties in obtaining licences and permits. The complexities of visa requirements for foreign workers and experts topped the list of administrative challenges, with 42 per cent of responses highlighting this as a primary concern. Tax-related issues, including VAT refunds, were also cited by 30 per cent of respondents, with further challenges related to import/export and investment registration procedures.

The government has announced that it will amend the Law on Investment according to the public-private partnership model, while “developing a mechanism to prioritise the formation and development of new productive forces, build mechanisms to strongly develop large-scale, national enterprises”.

Especially, the government will cut the ask-give mechanism and disconnected public investment, with the medium-term public investment plan from the central budget for the period 2026-2030 being for more than 3,000 projects.

Fuelling enterprise development

The government has set a target to develop a business community of 1.5 million enterprises in 2025 and two million by 2030. At present, about more than 900,000 enterprises are operating in Vietnam.

In 2024, there were more than 157,200 enterprises newly established, registered at $64.45 billion, with over one million employees registered for employment; and nearly 76,200 businesses resumed operations, raising the total number of enterprises of these two types to over 233,400 – up 7.1 per cent on-year.

However, the number of enterprises with halted performance in fixed time sat at nearly 100,100, up 12.4 per cent on-year. There were also nearly 76,200 businesses temporarily stopping operation and waiting for completing dissolution procedures, up 16.3 per cent on-year. In addition, more than 21,600 enterprises completed such procedures, up 20 per cent on-year. On average, each month saw nearly 16,500 enterprises withdrew from the market.

According to the World Bank, Vietnam’s manufacturing-led growth was enabled by the rapid expansion of infrastructure, especially connectivity and power supply. The rapid expansion of infrastructure and the growth of the manufacturing sector in Vietnam have been closely intertwined, contributing to the country’s economic development over the last 30 years. The expansion of transport, including roads, railways, and waterways, and power infrastructure has played a crucial role in facilitating the manufacturing and export-led growth.

However, energy and transport infrastructure needs could become a constraint to growth going forward. Vietnam’s trade and manufacturing-led growth has been both energy- and transport-intensive in energy.

The bank pointed out that recent power blackouts and growing road congestion are concrete manifestations of the emerging challenges.

“If not addressed, they risk becoming a constraint to future growth. Meeting the steep increase in energy demand will require doubling the existing installed capacity (78GW in 2021) every 10 years and expanding the associated transmission infrastructure,” the World Bank stressed.

It is estimated that investment requirements in power generation and grid infrastructure in this decade alone stand at $135 billion ($15 billion per year) including private (80 per cent) and public (20 per cent) investments.

To fuel domestic industrial production, the Ministry of Industry and Trade has set a target that in 2025, total domestically produced and import electricity volume this year must reach 347.5 billion kWh, up by 12.2 per cent as compared to the same period last year In which, the total power capacity, excluding rooftop solar power, will increase by about 6.2 per cent as compared to last year.