Vietnam's FDI Bet:
Strength or Fragility?

With Vietnam's leader headlining the Shangri-La Dialogue, the country is having a moment. But behind the "Vietnam can only go up" narrative sits a more demanding reality — and the operators on the ground already know it.

The headline is real — and so is the friction

Start with the good news, because it's genuinely good. FDI commitments jumped 32.6% in the first half of 2025 to $21.5 billion, the strongest first-half showing since 2009. Disbursed FDI — money actually deployed, not just pledged — reached $11.7 billion, up 8% year-on-year. Vietnam remains one of Asia's fastest-growing economies, with the government targeting 8% GDP growth.

This is the part everyone repeats. The "China+1" story, the manufacturing migration, the young workforce. It's not wrong. But it's only half the picture — and the operators actually doing business in Vietnam live in the other half.

The friction, in numbers

The OECD's 2025 Economic Survey is blunt: Vietnam's restrictions on FDI inflows in 2023 were more than four times higher than the OECD average, and above the ASEAN average. Most of that restrictiveness sits in services sectors — exactly where higher-value growth lives.

Ask the firms directly and the picture sharpens. In the American Chamber of Commerce's 2024 survey, the top concerns weren't labor or logistics — they were governance:

None of these are dealbreakers on their own. Together, they're a tax on every transaction — the kind of friction that doesn't show up in GDP headlines but shows up in every operator's week.

Reform is happening — fast, and disruptively

Here's what the pessimists miss: Vietnam is moving. And not gently. The reforms are real, measurable, and in some cases dramatic.

The clearest win: tax compliance time was cut from 537 hours to 121.5 hours under Resolution 19 — a roughly 77% reduction that lifted Vietnam in global business-climate rankings. Foreign ownership limits have been removed in most industries, with the Securities Law now allowing 100% foreign equity in many businesses.

Then there's the structural overhaul. In 2025, the Communist Party directed its most ambitious administrative reform in decades: merging provincial units and eliminating the district level of government entirely. The stated goal — cut bureaucracy, lower state costs. The anti-corruption campaign continues in parallel.

But reform at this speed cuts both ways. As one regional analysis noted, the scale and pace of the 2025 restructuring also pose operational risks — and foreign investors have flagged that the sweeping anti-corruption drive has, at times, slowed government decision-making and approvals as officials grow cautious. Reform and friction are, paradoxically, the same story.

What the operators are actually doing

Here's the part the macro misses entirely. The businesses on the ground — especially in retail and distribution — aren't waiting for the reforms to finish. They're adapting now:

So: strength or fragility?

Both, and that's the point. Vietnam's FDI-driven model is genuinely powerful — and genuinely concentrated. Recently announced high US tariffs on Vietnamese exports could pressure sustained FDI inflows, the OECD warns, which means the very engine of the boom carries the main risk.

"Vietnam can only go up" is a mid-level take. The operators who win here don't believe the slogan or the doom — they read the structure: where reform is real, where friction still bites, and which specific moves their competitors are making. That's a market-by-market, sector-by-sector question.