Vietnam: investment potential more attractive than ever

Vietnam is expected to show the strongest growth of all Southeast Asian economies in the year to come. The World Bank and the International Monetary Fund estimate an economic growth of 6.5%, driven by manufacturing exports, tourism and investment. This, amongst other things, makes Vietnam an attractive investment destination.

Vietnamese asset manager Dragon Capital highlights the country’s strength in a recently published white paper, dubbing Vietnam the “last dragon of East Asia”.

“Vietnam is currently at the mid-point along the road to becoming an advanced economy after achieving lower middle-income status in 2011. Getting this far was by no means a certainty given the ruined state of its economy at the end of the war in 1975,” the white paper states.

As Dragon Capital explains, five factors speak for Vietnam as an investment destination.

Human Capital: Vietnam’s youthful demographic is a cornerstone of its economic potential. The government’s emphasis on education and skill development aims to enhance labour productivity, aligning with the successful East Asian development models.

Social Capital: A harmonious civil society and effective governance are pivotal. The Vietnamese Communist Party’s legitimacy is closely tied to its ability to deliver shared economic growth, fostering a stable environment conducive to investment.

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Physical Capital: Foreign Direct Investment (FDI) has been a significant driver of Vietnam’s industrial revolution. The country’s strategic location and integration into global supply chains have boosted exports. Ongoing infrastructure development further supports economic expansion, while rising domestic consumption reflects increasing living standards.

Foreign Capital: Vietnam’s adept “Bamboo Diplomacy” balances relationships with major powers, including China and the United States. This diplomatic strategy attracts diverse foreign investments and technology transfers, reinforcing economic resilience.

Financial Capital: Vietnam is on the cusp of achieving Emerging Market status from FTSE Russell by the end of 2025, which is expected to trigger a new wave of stock market inflows. The government’s commitment to financial stability, learning from past banking crises, underpins this progress.