Amid numerous challenges stemming from global instability, rapid technological advancements, and climate change, Vietnam must undergo a deeper and more robust transformation of its growth model, anchored in science and technology, innovation, and the development of a high-quality workforce. Institutional improvements, economic restructuring, enhancements to the business and investment environment, increased investment in research and development (R&D), and the strengthening of science and technology capabilities are key factors that will determine the country’s ability to secure rapid and sustainable growth.

The Party and the State have set a target of achieving a growth rate of 8 per cent or higher this year and then double-digit growth during the 2026-2030 period, with the goal of joining the ranks of upper-middle-income countries by 2030 and high-income countries by 2045. The pursuit of double-digit economic growth is not only a strategic aspiration but also a measure that reflects the country’s vision, determination, and capacity for macro-economic management.

Driving sustainable growth

Vietnam is facing an urgent need to enhance its competitiveness, restructure its economy, and fully leverage opportunities from international economic integration to achieve its sustainable development goals. However, the path to realizing the ambition of double-digit growth poses multiple challenges in terms of institutional frameworks, resources, quality of growth, workplace productivity, science and technology, and the internal capacity of enterprises.

Moreover, the global landscape is undergoing major shifts, such as geopolitical tensions, evolving policies among major powers, digital transformation, supply chain realignment, and the demand for green and sustainable development, which all require that Vietnam adopt flexible, effective, and breakthrough development strategies.

While Vietnam has made efforts to shift towards a growth model based on science, technology, and innovation, limitations in human resources and restricted investment resources continue to hinder breakthroughs in this regard.

Experts warn that without bold policy breakthroughs, Vietnam’s economic growth may continue to rely heavily on exports and FDI, resulting in only moderate growth rates and limited prospects for breaking out of the middle-income trap. Transforming the growth model to strengthen internal capabilities and mitigate external risks has become imperative in the current context.

Dr. Dang Duc Anh, Deputy Director of the Institute for Policy and Strategy Research, has identified five key limitations in the quality of growth and its contribution to economic expansion.

First, workplace productivity growth has been inconsistent and shows signs of slowing.

Second, the contribution of Total Factor Productivity (TFP), which reflects efficiency gains in capital and labor use due to technological upgrades, production rationalization, management improvements, and workforce skills enhancement, remains low, especially in high-potential localities. According to the Asian Productivity Organization (APO), Vietnam’s TFP index has increased 1.17-times over the past 50 years, lower than Malaysia (1.69) and Singapore (1.63) in the ASEAN-4 but higher than Thailand (1.04) and Indonesia (1.05). In comparison, China’s TFP index rose 2.52-times in the 50-year period, Japan’s 1.4-times, South Korea’s 2.09-times, and the US’s 1.4-times. Limited investment in technology and innovation has resulted in weak science and technology capacity, with no significant productivity breakthroughs. Major cities such as Hanoi and Ho Chi Minh City, despite having the conditions to improve growth quality, have seen only modest results. Workplace productivity growth in these cities remains well below targeted levels. The manufacturing and processing sector, deemed a growth driver, has shown limited and unstable productivity gains, with a declining trend in recent years.

Third, the efficiency of investment capital use remains low, limiting improvements in growth quality. Though Vietnam’s Incremental Capital-Output Ratio (ICOR) has improved, it is still relatively high against many countries and territories in the region and the world. Compared to countries and territories transitioning towards high-income status or investing heavily in infrastructure, such as China, South Korea, Thailand, and Malaysia, Vietnam’s ICOR is significantly higher. Even within the same development stage, Vietnam’s ICOR surpasses that of many ASEAN nations. Additionally, while it has deeply integrated into the global economy and attracted large volumes of FDI, the role of FDI in improving productivity and growth quality remains limited. The impact of international trade on strengthening the science, technology, and innovation capacity of domestic enterprises has also been modest.

Fourth, the quality of Vietnam’s workforce has improved slowly, with a shortage of highly-skilled workers. Though the proportion of trained workers with certificates or degrees has increased, it remains low relative to the total workforce. There is a lack of skilled, technically-trained workers, and the economy is facing a shortage of highly-qualified professionals to meet the demands of digital transformation. The trend of major corporations establishing their own universities and vocational colleges highlights the inadequacies in the training quality of existing higher education and vocational institutions.

Fifth, the level of technological application, innovation, digital transformation, and technological capabilities of Vietnamese enterprises remains very limited. Efforts to drive growth based on science, technology, and innovation are progressing slowly, with limited results. The manufacturing and processing sector still relies on low technology or is mainly involved in assembly stages, generating low added value. The technological and digital capabilities of enterprises remain underdeveloped, and are unable to keep pace with global trends. Vietnam’s readiness for digital transformation and the adoption of key technologies from Industry 4.0 remains low.

In analyzing factors that will impact the quality of economic growth to 2030, experts believe that beyond geopolitical tensions and global power rivalries, the digital technology revolution will be a crucial driver of higher-quality growth. Additionally, the imperative of sustainable development is forcing Vietnam to enhance its growth quality. Most importantly, institutional reform plays a pivotal role in this transition.

Experts have noted that while Vietnam’s economic growth quality has shown positive changes over the past decade, reflected in improved workplace productivity and capital efficiency and the increasing contribution of TFP to growth, progress has not yet met expectations. Workplace productivity growth has stalled, innovation and technological adoption remain limited, and investment capital is still used inefficiently compared to the country’s regional peers.

Given the numerous challenges, from global instability and rapid technological shifts to climate change and a fading demographic dividend, Vietnam must shift to a deeper, more robust growth model based on science, technology, innovation, and high-quality human resources development.

Improving institutional frameworks, restructuring the economy, enhancing the investment climate, investing in R&D, and building up scientific and technological capacity will be key determinants of Vietnam’s ability to sustain rapid and sustainable growth. Enhancing growth quality is not only a necessity but the only viable path for Vietnam to escape the middle-income trap and achieve rapid, sustainable development in the decades to come.

According to Dr. Duc Anh, to achieve an average annual growth rate of 10 per cent or more during the 2026-2030 period, Vietnam’s workplace productivity would need to grow by 8.1-8.6 per cent annually. With TFP contributing an average of 55 per cent to growth, total social investment would need to increase by 8.6-9.3 per cent a year. This would correspond to an investment-to-GDP ratio of 36.4-40.8 per cent.

Building on reform and innovation

Acknowledging the immense challenges from both external and internal environments, experts have emphasized that Vietnam must adopt appropriate macro-economic policies that leverage domestic strengths while mitigating risks from global macro-economic instability and geopolitical tensions.

A consistent approach is needed to achieve high and sustainable economic growth by 2045, one that maintains macro-economic stability, establishes appropriate and flexible growth scenarios with risk control mechanisms, enhances workplace productivity, assesses the environmental and social impacts of growth targets, and identifies growth drivers from both aggregate supply and demand.

At an economic growth roundtable held in early June, Associate Professor Pham The Anh from the National Economics University proposed that Vietnam develop a concrete long-term plan, supported by policies on taxation, credit, and business environment tailored to priority industries with competitive advantages. At the same time, it is essential to strengthen the training of high-quality human resources and increase investment in R&D. Moreover, investment should be selectively channeled into high-impact infrastructure projects, avoiding fragmentation and ensuring alignment with strategic priorities. Mobilizing resources for major public investment projects requires restructuring expenditure and identifying sustainable revenue sources.

In terms of productivity, which is considered the most crucial growth driver, necessary solutions include structural transformation, efficiency enhancements, extensive growth, and innovation.

According to the Institute for Policy and Strategy Research, effectively implementing the “Four Pillars” of Resolutions (Resolutions No. 57, 59, 66, and 68), along with reforming the administrative apparatus and restructuring central and local governments towards greater efficiency, performance, and effectiveness, will create favorable conditions for improving growth quality and achieving breakthroughs in productivity.

Mr. Nguyen Canh Cuong, former Trade Counsellor in France and the UK, Minister Counsellor in Belgium and the EU, and Lecturer at the University of Economics, Vietnam National University, emphasized: “To achieve rapid and sustainable development, it is essential to identify and synchronously implement key factors in a substantive and effective manner.”

One of the critical pillars, he believes, is the development of high-tech industries and innovation. Vietnam must accelerate the transition from a labor-intensive industrial model to a knowledge-based, clean technology-driven economy. Strategic sectors such as semiconductors, robotics, electric vehicles, new materials, and digital technologies should be prioritized, with clear investment strategies in R&D and stronger links between enterprises, research institutes, and universities.

In parallel, developing green industries and a circular economy is vital to realizing Vietnam’s net-zero emissions commitment by 2050. This requires the synchronized development of renewable energy, electrified transportation, sustainable consumption, and infrastructure to support the circular economy model.

Mobilizing financial resources from society and promoting green finance are among the critical levers for ensuring sustainability in development. Solutions include developing the capital market, expanding public-private partnerships (PPPs), and enhancing the application of environmental, social, and governance (ESG) criteria in credit appraisal and public investment allocation.

He also stressed that comprehensive digital transformation plays a pivotal role in improving productivity and the overall efficiency of the economy. The goal is for the digital economy to contribute around 30 per cent of GDP by 2030. To reach this, core technologies such as AI, big data, and the Internet of Things (IoT) must be deeply integrated into production, business, and public services, supported by the development of national digital infrastructure and improved digital skills in the workforce.

In addition to high-quality human resources, Mr. Cuong also emphasized that institutional reform and improved governance efficiency are foundational conditions for ensuring the success of all development efforts.

To realize rapid and sustainable development, Vietnam needs a comprehensive strategy that integrates multiple pillars: innovative industrialization, modern agriculture, cultural and tourism services, a resilient domestic market, and effective institutions. According to Mr. Cuong, the success of this strategy will not only depend on sound policymaking but also on execution capacity and close coordination between the government, businesses, and society at large.

Strategic breakthroughs and new growth drivers

During discussions on rapid and sustainable growth at the ninth session of the 15th National Assembly (NA), Deputy Tran Hoang Ngan from Ho Chi Minh City analyzed that over nearly 40 years of “Doi Moi” (Economic Renewal), Vietnam’s economy has maintained continuous growth, with its highest annual rate recorded in 1995, of over 9.5 per cent. However, during that period, the country was affected by several external shocks, such as the Southeast Asian financial crisis in 1997 and the global financial crisis and economic recession in 2008.

To ensure rapid and sustainable growth in this new development phase, economist Tran Hoang Ngan has emphasized the need for fundamental, long-term strategic solutions to reduce the impact of external shocks.

First, Vietnam must persist with its three strategic breakthroughs: institutional reform, infrastructure development, and human capital. Regarding institutions, the Party General Secretary has identified institutional bottlenecks as the root of all other constraints. The Government and National Assembly have been actively working to improve the institutional framework, particularly the socialist-oriented market economy. The ninth session of the NA passed dozens of laws and resolutions of great significance, institutionalizing the Party’s orientations and policies through the “four strategic pillars” and Resolution No. 60-NQ/TW from the 13th Party Central Committee.

Second, restructuring the three traditional growth drivers, including exports, investment, and consumption, must proceed. With regard to consumption, more attention should be paid to the domestic market, especially the consumer base of 100 million people.

Third, unlocking three new growth drivers: science and technology, innovation and digital transformation, and new development spaces supported by the NA resolution on reorganizing 34 provincial-level administrative units. With a compatible institutional framework and synchronized infrastructure investment, these three new drivers will help accelerate growth in the time to come.

To reduce vulnerability to external shocks, Vietnam must maximize its inherent potential and advantages, particularly in agriculture, the marine economy, tourism, and service sectors such as banking and finance.

Sharing this view, Deputy Le Huu Tri from south-central Khanh Hoa province emphasized that to achieve the country’s growth goals it is essential to prioritize economic expansion, maintain macro-economic stability, and control inflation. He stressed the need to stay focused and persistent in implementing the three strategic breakthroughs, especially by continuing to build and improve institutions aimed at more transparent policies, seamless infrastructure, and smart governance. This will help reduce compliance and logistics costs, enhance workplace productivity, and improve competitiveness.

In addition, he advocated for accelerating the development of strategic infrastructure, concentrating resources on key projects to drive regional and inter-regional economic development. There must also be a strong focus on training and developing a high-quality workforce capable of meeting the demands of the digital economy and global integration, while also improving the efficiency and effectiveness of law enforcement and social governance.

Several other opinions have also highlighted the importance of tapping into new growth drivers such as the green transformation, the circular economy, and innovation, especially in the context of Vietnam’s commitment to achieving net-zero emissions by 2050. This is not only a responsibility but also a major opportunity for the country to change its growth model. At the same time, the development of the digital economy, digital infrastructure, and open data must be considered foundational platforms for achieving sustainable economic growth in the digital age.

 

The People’s Committee of the northern province of Thanh Hoa has issued a decision approving the investment plan for a new apartment building project in Hac Thanh Ward, with a preliminary total investment of nearly VND5.28 trillion (over $201 million).

The project will be developed on a land area of approximately 22,568 sq.m. According to the design, the complex will feature high-rise blocks integrating residential apartments, commercial and service areas, and office space.

The development will also include a comprehensive infrastructure system, including internal roads, green spaces, outdoor parking lots, and other public facilities.

In total, the project is set to supply 2,197 apartments to the market, accommodating around 6,590 residents.

It is envisioned as a model urban area designed to meet the growing demand for housing in the locality.

The Provincial People’s Committee has clearly stated that the investor will be selected through an auction of land use rights, in accordance with land regulations.

The Thanh Hoa Land Fund Development Center has been tasked with organizing the auction plan, ensuring the process is public, transparent, and closely monitored, and will be held fully accountable to the law and the Provincial People’s Committee.

Vietnam’s tourism and resort real estate market has faced continued headwinds since 2018, driven by both external and internal factors. Despite this, the market has been gradually regaining momentum thanks to resilient development strategies and a growing ability to adapt to shifting conditions.

To seize new revenue opportunities, resort real estate investors and hotel operators have been actively diversifying their approaches, with key trends including tapping into emerging destinations, accelerating digital adoption, enriching loyalty and guest engagement programs, optimizing investment costs, and reassessing management contracts.

Resurgence but challenges remain

According to Avison Young Vietnam, as of the end of 2024, the supply of 4-star and 5-star hotels nationwide was largely concentrated in coastal cities and provinces. Leading the way were central Da Nang city and south-central Khanh Hoa province, with 20,466 and 25,565 rooms, respectively, followed by the Mekong Delta’s Kien Giang province (now part of An Giang province), Quang Nam province (now part of Da Nang), northern Quang Ninh province, and Binh Thuan province (now part of the central highlands’ Lam Dong province).

After a subdued few years, 2024 saw a notable rebound in market activity. The average absorption rate, based on successful transactions, stood at around 57 per cent; double that of 2023. Mr. David Jackson, Principal and CEO of Avison Young in Vietnam and Cambodia, explained that tourism real estate, such as hotels, resorts, and condotels, is benefiting significantly from the resurgence of beach tourism, with Vietnam emerging as a bright spot on the global travel map.

Vietnam actually became the fastest-recovering tourism market in Southeast Asia in last year, outperforming Malaysia, Indonesia, Thailand, Singapore, and the Philippines. Total international arrivals reached around 98 per cent of pre-Covid levels, with the majority of visitors coming from South Korea, China, Taiwan, and Japan in Northeast Asia. There was also solid growth posted in arrivals from India, the US, Europe, and Southeast Asian countries. In the first quarter of 2025 alone, Vietnam welcomed over 6 million international visitors, a 134 per cent increase compared to the same period of 2019 and the country’s highest-ever quarterly figure.

According to The Outbox Company’s Vietnam Travel Landscape report for 2025, beach tourism was the most preferred type of travel among Vietnamese. At the same time, coastal destinations such as Ha Long Bay in Quang Ninh province, Da Nang, Nha Trang in Khanh Hoa province, and Phu Quoc Island in An Giang province also drew growing numbers of international visitors. In just the opening two months of this year, these destinations recorded year-on-year growth of between 14 and 27 per cent.

Mr. Mauro Gasparotti, Director of Savills Hotels Asia Pacific and in charge of Southeast Asia, highlighted a marked improvement in Vietnam’s tourism service quality. Once considered a destination for brief visits, Vietnam has successfully transformed into a place where travelers return for longer, more meaningful stays. Tourists are increasingly drawn back to destinations with distinctive local identities, enhanced by improved infrastructure, amenities, and direct flight connections. “This demonstrates Vietnam’s growing competitiveness on the global tourism stage,” he commented.

Looking ahead, he sees tremendous potential for coastal tourism real estate, especially as the Vietnamese Government has a target of welcoming 50 million international visitors by 2030 while continuing to diversify source markets.

Notably, the government has officially prioritized beach tourism development in the Strategy for the Sustainable Development of Vietnam’s Marine Economy by 2030 with a Vision to 2045. This strategy focuses on three main pillars: investing in tourism infrastructure; encouraging participation from various economic sectors in developing high-quality coastal resorts; and building out and diversifying beach tourism offerings.

However, challenges remain. “Even with a coastal spatial plan and legal framework in place, complexities around land use rights, lease durations, investment licensing, and environmental protection continue to be bottlenecks,” Mr. Gasparotti noted. He also pointed out that underdeveloped transport infrastructure and public amenities are still limiting both accessibility and the overall tourist experience, particularly during peak seasons or adverse weather conditions.

Global brands, local moves

According to Mr. Jackson, the number of international hotel brands operating in Vietnam has doubled over the past three decades, especially since 2000. Major players such as Hilton, the Radisson Hotel Group (RHG), Accor, and IHG continue to expand their footprint around the country by diversifying their service segments and elevating quality standards.

For domestic investors, partnering with international hotel operators has become a key strategy to upgrade service quality to global benchmarks and enhance their appeal among high-income travelers and international guests. This synergy has led to a noticeable increase in strategic collaborations between developers and operators in recent years.

As competition grows and the tourism sector experiences rapid transformation in the post-pandemic era, hospitality real estate investors and hotel operators are shifting their approach to capture new revenue streams and improve operational efficiency.

One significant trend is the growing focus on emerging destinations. Provinces such as Ninh Binh, Gia Lai, Quang Ngai, and Dak Lak saw impressive growth in visitor numbers from 2022 to 2024. They also boast long-term tourism potential thanks to their abundant land reserves, relatively undeveloped commercial tourism landscape, unique ecosystems, including national parks and biosphere reserves, and rich local cultures. Early entry into these markets would provide investors with a strategic advantage and long-term brand positioning.

However, sustainable development is crucial. Developers must carefully assess the environmental, economic, and social impacts of their projects, ensure alignment with master plans that balance development and conservation, and conduct thorough market research with a long-term view of supply-demand dynamics and target customer segments.

At the same time, both developers and hotel operators are ramping up efforts in digital transformation and guest engagement. They are upgrading facilities, expanding service offerings, building destination ecosystems, and personalizing experiences through digital tools. Loyalty programs are also being prioritized to retain guests and build brand affinity, especially among Millennials and Gen Z travelers, who are experience-driven and adventurous but highly cost-conscious.

Given the high capital and maintenance costs of coastal hospitality projects, often due to environmental compliance and exposure to severe weather, investors and operators are increasingly focused on cost optimization. This includes smart design choices, the use of sustainable materials, and efficient operational systems. Hotel management contracts are also being renegotiated to ensure a fairer balance of benefits and responsibilities between property owners and hotel operators.

Despite these improvements, Mr. Jackson emphasized that even the most attractive investment opportunities will not reach their full potential without strong destination marketing efforts. He stressed the need to promote cultural heritage, strengthen tourism campaigns in key source markets, and develop public-private partnerships to diversify tourism offerings.

Mr. Gasparotti, meanwhile, highlighted that Vietnam has enormous natural advantages, from its long and beautiful coastline to its highlands and mountainous regions. While the potential to attract tourists is clear, infrastructure and product quality remain decisive factors. Without improvements in these areas, even well-located projects may fall short in terms of revenue performance and competitiveness.

He also noted that now is a favorable time to explore opportunities in hospitality real estate, as the regulatory framework has become more transparent. However, success will depend on choosing the right partners, selecting well-positioned projects, and developing concrete business models that can support sustainable, long-term growth.