Vietnam is launching its biggest economic overhaul in a generation, aiming to become Asia’s next “tiger economy.”
Beneath red banners and a gold bust of revolutionary leader Ho Chi Minh in the central party school, the Communist Party chief declared the arrival of “a new era of development” late last year. The speech was more than symbolic— it signaled the launch of what could be Vietnam’s most ambitious economic overhaul in decades.
Vietnam aims to get rich by 2045 and become Asia’s next “tiger economy” — a term used to describe the earlier ascent of countries like South Korea and Taiwan.
The challenge ahead is steep: Reconciling growth with overdue reforms, an aging population, climate risks and creaking institutions. There’s added pressure from the U.S. President over Vietnam’s trade surplus with the U.S., a reflection of its astounding economic trajectory.
In 1990, the average Vietnamese could afford about $1,200 worth of goods and services a year, adjusted for local prices. Today, that figure has risen by more than 13 times to $16,385.
Vietnam’s transformation into a global manufacturing hub with shiny new highways, high-rise skylines and a booming middle class has lifted millions of its people from poverty, similar to other regional economies. But its low-cost, export-led boom is slowing, while the proposed reforms — expanding private industries, strengthening social protections, and investing in tech, green energy. It faces a growing obstacle in climate change.
“It’s all hands on deck…We can’t waste time anymore, » said an industry consultant.
The export boom can’t carry Vietnam forever
Investment has soared, driven partly by U.S.-China trade tensions, and the U.S. is now Vietnam’s biggest export market. Once-quiet suburbs have been replaced with industrial parks where trucks rumble through sprawling logistics hubs that serve global brands.
Vietnam ran a $123.5 billion trade surplus with the U.S. trade in 2024, angering the former U.S. President, who threatened a 46% U.S. import tax on Vietnamese goods. The two sides appear to have settled on a 20% levy, and twice that for goods suspected of being transshipped, or routed through Vietnam to avoid U.S. trade restrictions.
During negotiations with the previous U.S. administration, Vietnam’s focus was on its tariffs compared to those of its neighbors and competitors, said a former U.S. ambassador to Vietnam. “As long as they’re in the same zone, in the same ballpark, I think Vietnam can live with that outcome, » he said. But he added questions remain over how much Chinese content in those exports might be too much and how such goods will be taxed.
Vietnam was preparing to shift its economic policies even before the tariffs threatened its model of churning out low-cost exports for the world, aware of what economists call the “middle-income trap,” when economies tend to plateau without major reforms.
To move beyond that, South Korea bet on electronics, Taiwan on semiconductors, and Singapore on finance, said a business advisor.
But Vietnam’s economy today is more diverse and complex than those countries were at the time and it can’t rely on just one winning sector to drive long-term growth and stay competitive as wages rise and cheap labor is no longer its main advantage.
It needs to make “multiple big bets,” the advisor said.
Vietnam’s game plan is hedging its bets
Following China’s lead, Vietnam is counting on high-tech sectors like computer chips, artificial intelligence and renewable energy, providing strategic tax breaks and research support in cities like Hanoi, Ho Chi Minh City, and Danang.
It’s also investing heavily in infrastructure, including civilian nuclear plants and a $67 billion North–South high-speed railway, that will cut travel time from Hanoi to Ho Chi Minh City to eight hours.
Vietnam also aspires to become a global financial center. The government plans two special financial centers, in bustling Ho Chi Minh City and in the seaside resort city of Danang, with simplified rules to attract foreign investors, tax breaks, support for financial tech startups, and easier ways to settle business disputes.
Underpinning all of this is institutional reform. Ministries are being merged, low-level bureaucracies have been eliminated and Vietnam’s 63 provinces will be consolidated into 34 to build regional centers with deeper talent pools.
Private business to take the lead
Vietnam is counting on private businesses to lead its new economic push — a seismic shift from the past.
In May, the Communist Party passed a
