Vietnam Country Risk Report September 2026

A country’s risk rating is based on four areas: political, economic, commercial and technological risk. Each area is scored from 1 to 10, where 1 is the highest risk and 10 is the lowest.

Political Risk: September Update

Stable at 7

Fulcrum, which is published by the prestigious ISEAS – Yusof Ishak Institute in Singapore, has produced an interesting analysis of the implications of the concentration of power in the hands of President To Lam. It says that the effects for Vietnam’s political and economic prospects will ultimately depend on how he wields this unprecedented authority. 

If used wisely to advance national interests and implement meaningful reforms, it could propel Vietnam toward its development goals and enhance the country’s political and economic resilience. However, if this power is misused to entrench personal or factional interests, it risks undermining Vietnam’s economic dynamism, eroding investor confidence, and threatening the regime’s long-term legitimacy and stability. Vietnam’s future success, therefore, hinges on whether To Lam’s centralised power becomes a tool for bold, effective governance or a source of new vulnerabilities.

Political Risk - Context

Vietnam is a one-party state ruled by the Communist Party of Vietnam (CPV). The CPV provides strategic direction and decides all major policy issues, which the government then implements. The four most important positions in the country are CPV General Secretary (the most powerful position in Vietnam), State President, Prime Minister and National Assembly Chair.

General Party Secretary Nguyen Phu Trong was the most powerful man in the country until he passed away in July 2024. He had been re-elected to the position of general secretary of the Communist Party in January 2021, at the age of 76, for a rare third five-year term. After taking office in 2011, Trong built up a strong power base in the Communist Party.

In October 2024, General Luong Cuong became the country’s new president, making the military general the fourth official to fill the largely ceremonial role in 18 months. Cuong, 67, replaced To Lam, who had remained president even after he was formally appointed as the general secretary of the ruling Communist Party in August.

Worldbox Business Intelligence believes the reforms could have a dramatic impact on the country’s appeal to foreign investors and could thus have the desired effect of significantly raising Vietnam’s long-term growth potential.

In April 2026, the National Assembly unanimously elected To Lam as State President. He was already the General Secretary of the CPV. The move effectively dismantles the “four pillars” system - the model of collective leadership that has governed Vietnam since the end of the Cold War. By consolidating party and state power in To Lam’s hands, Hanoi is heading toward a governance architecture like that of Xi Jinping’s People’s Republic of China, giving To Lam unprecedented power and abandoning a system designed to prevent the emergence of a strongman and dictatorial rule. To Lam’s newly powerful position raises concerns but it should also allow him to drive through the reforms necessary to achieve the ambition of achieving long-term annual growth of 10% and reaching high-income status by 2045.

Economic Risk: September Update

Stable at 8

The economy grew by just over 8% in 2025, the second-fastest pace in 15 years, driven by services and manufacturing, defying the global slowdown caused by President Trump's tariff policies. The trade surplus with the US grew by US$50bn to close to US$200bn. The trade deficit amounted to US$13.8 billion in the first five months of this year, swinging from a surplus of US$5.1 billion over the same period of last year. That largely reflects the surge in the cost of importing energy due to the Middle East conflict. The export-driven economy is also being targeted by the Trump administration for allegedly distorting trade with excess capacity, intellectual property violations and the use of goods made with forced labour.

Vietnam’s target of 10% growth also faces significant challenges following the outbreak of the conflict in the Middle East. The country imports a significant amount of its oil and gas and has already seen a significant impact.  Much of the country’s crude oil imports come from the Middle East, particularly Kuwait, and Vietnam is seeking to diversify supplies by trying to import refined fuel from Japan, South Korea, Algeria and Angola but faces heavy competition from other countries. 

The economy grew by just 1.83% in the first five months of the year, despite total trade turnover increasing by 25% year on year to US$445.1 billion in the January-May period. In June, Vietnam said that it remains committed to achieving its economic growth target of 10% this year despite global challenges. However, Worldbox Business Intelligence believes that achieving this target after such a low rate of growth in the first five months of the year is impossible. Even the World Bank’s forecast of 6.8% growth, made in May, seems unattainable. We believe growth of 4% is more likely but that growth could rebound sharply in 2027 provided the Middle East conflict is ended this year and that a resolution to the trade dispute is reached with the USA.

Inflationary concerns are also rising with consumer prices up 4.9% on a year-on-year basis in August. The figure is higher than the government’s full-year target of 4.5%.

Trump’s tariff policies have had little impact on FDI into the country with disbursement in Vietnam in the first eight months of 2026 estimated at $17.25 billion, the highest since 2008 and up 12% from a year earlier.

A lack of skilled workers is one of the major challenges facing the operators of the new factories being built on the back of these huge FDI inflows. VN Express reported in March 2026 that such is the competition for workers, foreign-invested manufacturers are offering sign-on bonuses that have nearly doubled in a year. The publication explained that:

“Last year, a VND7 million (US$266) sign-on bonus paid over three months was the top of the market. This year it has become the baseline, with many companies raising their offers to VND10-12 million. One electronics firm operating at least four factories in Van Trung and Quang Chau industrial parks was advertising combined referral and new-hire bonuses of up to VND18 million through March.”

Economic Risk - Context

Since the early 1980s when the economy was on the verge of collapse, Vietnam has been transformed into a middle-income country with one of the most dynamic economies in the world. Bold economic reforms, political stability, and a hard-working, well-educated and disciplined workforce has attracted vast amounts of FDI that have helped the country become an export powerhouse.

More recently, Vietnam has successfully positioned itself as a low-cost alternative manufacturing base to China. The pandemic, which exposed the Western economies reliance on China, helped drive FDI away from China and into Vietnam

Under the leadership of To Lam, Vietnam aims to build an upper-income, knowledge-and-tech-based economy by the year 2045, with growth driven by the private sector. In May 2025, in a landmark move, Resolution 68, passed at a meeting of the politburo, the highest decision-making body between party congresses. It stated that the private sector will be "the most important driving force of the national economy", rather than the government's previous stance that it was "one important driving force". As the BBC reported, “in officially socialist Vietnam it marked a sea change, for the first time putting privately-owned businesses on the same level as state-run companies, which in the past had always been extolled as the bedrock of the economy.”

The OECD has called on Vietnam to advance structural reforms that will further strengthen market forces, improve social protection for an ageing population and make growth more sustainable. Macroeconomic policies could be enhanced by strengthening the operational independence of the central bank, price-based monetary policy and additional revenue mobilisation to address growing spending needs, says the OECD. It adds that social benefits, including old-age pensions, could be strengthened and widespread labour informality reduced. Making growth more inclusive requires well-coordinated reforms to expand non-contributory social assistance benefits while maintaining strong incentives for formal job creation, adds the OECD.

The East Asia Forum publication believes that the Middle East conflict has exposed Vietnam’s vulnerability to oil shocks. It explains that declining domestic crude oil production, diminished oil supplies and thin foreign exchange reserves have compounded the consequences of soaring global oil prices. It adds that while stabilisation measures have so far kept fuel prices contained, “they sit atop an overstretched, credit-fuelled growth model that leave the government little fiscal room to respond”. To shore up energy security, says the publication, Vietnam needs both a Strategic Petroleum Reserve and a recalibrated growth model.

East Asia Forum says that recalibrating the growth model requires a shift toward productivity-led growth that raises output per unit of capital, labour and energy. It adds that: “this entails improving capital allocation, strengthening state-owned enterprise governance, deepening domestic capital markets, prioritising higher technology and higher value sectors and investing in human capital as well as digital and green transformation. These reforms depend on a dynamic private sector - still underdeveloped in Vietnam’s public sector dominated economy - as the central driver of efforts to recalibrate the growth model.” However, Worldbox Business Intelligence believes that while East Asia Forum may be correct in saying the country’s economic model needs recalibrating, rapidly increasing the role of the private sector could challenge the political dominance of the CPV and therefore any recalibration is likely to proceed at a cautious pace.

Commercial Risk: September Update

Stable at 7

Moody’s has upgraded the ratings of six Vietnamese banks and changed their outlook to positive from stable. The banks are Asia Commercial Joint Stock Bank, JSC Bank for Foreign Trade of Vietnam (Vietcombank), JSC Bank for Investment and Development of Vietnam (BIDV), Vietnam Bank for Agriculture & Rural Development (Agribank), Vietnam JSC Bank for Industry and Trade (Vietinbank) and Vietnam Prosperity Jt. Stk. Commercial Bank (VPBank). The rating actions follow the affirmation of Vietnam's Ba2 rating and the change in outlook to positive from stable.

Commercial Risk - Context

Businesses operating in Vietnam face some significant challenges, according to the US State Department’s 2025 Investment Climate report. These include inconsistent regulatory interpretation, irregular enforcement, and an unclear legal framework. The report says that US companies have consistently voiced concerns that Vietnam lacks a fair legal system for investment, which affects US companies’ ability to do business in Vietnam.

Vietnam does not have a strong record on protecting and enforcing intellectual property rights. Fractured authority and a lack of coordination among ministries and agencies responsible for enforcement are the primary obstacles, and capacity constraints related to enforcement persist, in part, due to a lack of resources and IP expertise.

Corruption is a significant challenge. However, progress does seem to be being made. Vietnam ranked in 81st place out of 180 countries in Transparency International’s 2025 Corruption Perceptions Index, up from 88th place in 2024.

The country ranks as the 66th freest in the 2025 Index of Economic Freedom from the Heritage Foundation, falling from 61st place in the previous year. The country’s economic freedom score is higher than the world and regional averages.

The lack of adequate infrastructure provides significant challenges to operating in Vietnam. The country is making a huge investment in infrastructure: approximately 6% of GDP, compared with an ASEAN average of 2.3%, highlighting its commitment to growth. A number of new projects will come onstream in the coming years. These include 3,000km of expressways, including the North-South Expressway, completed in 2025, and connections to the eastern and western regions.  A new international airport serving Ho Chi Minh City (HCMC) opened in December 2025. International flights are transfering from Tan Son Nhat International Airport to the new Long Thanh International Airport in 2026. Attention is now focusing on a US$67bn North-South high-speed rail project linking Hanoi and Ho Chi Minh City with investment raising plans likely to get underway in 2026. In April 2026, construction is also due to begin on the country’s second high speed railway, linking Hanoi and Halong Bay.

Technology Risk: September Update

Stable at 7

The government has launched a strategic technology framework focusing on 10 major technology groups, which it says covers key sectors critical to the country’s long-term development and competitiveness. The groups include digital technologies such as artificial intelligence, big data, digital twins, cloud computing, edge computing, the Internet of Things and blockchain; next-generation mobile network technologies; robotics and automation; advanced biotechnology and biomedicine; advanced energy and materials technologies; semiconductor chip technologies; cybersecurity and quantum technologies; marine, ocean and underground technologies; aerospace technologies; and high-speed and urban railway technologies.

Technology  Risk - Context

The Global Innovation Index (GII), from the World Intellectual Property Organisation, is an important index used by countries and multinational companies to assess innovation ecosystems and aid in policymaking and investment decisions.

Vietnam ranked 44th out of 139 countries in the 2025 GII – moving up from 62nd place in 2020. It ranked 3rd in ASEAN and 2nd among the 37 Lower middle-income group economies. 

Government policies

The government has implemented a “National Strategy for the Development of Digital Economy and Digital Society by 2025”, which aims to accelerate the adoption of digital technologies across various sectors. Vietnam is also committed to a “green” transition, with the government seeking to transform the economy by applying circular economic principles and exploiting digital technologies to reduce environmental impacts. Many businesses in the country have begun the process of data digitisation and standardisation of their operations. However, many small and medium-sized enterprises lack the funds to invest in clean technologies and digital infrastructure.

The government is keen to attract foreign investors in semiconductor manufacturing, artificial intelligence (AI) and green energy, as it seeks to take the next step in economic development away from low-added-value manufacturing.

In March 2026 one of the world’s first comprehensive AI regulatory frameworks, outlining risk-based classifications, compliance requirements, innovation incentives, and strategic opportunities for businesses investing in AI technologies came into effect. According to Vietnam Briefing, the law explicitly bans AI applications that pose systemic threats. These include real-time biometric surveillance in public spaces (without special approval), large-scale facial recognition databases built through unauthorised data scraping, and AI systems designed to manipulate public opinion or behaviour in deceptive ways.

Infrastructure

Vietnam’s 4G mobile network currently covers 99% of the population. The government aims to ensure that every city, province, industrial facility and household nationwide can access fibre-optic internet by 2030, with a goal for all internet users to benefit from speeds of at least 1 Gbps. At least two new international submarine cable routes are due to be launched, and the authorities want to achieve 99% coverage of the 5G broadband network by the end of 2025. Each citizen will have access to one Internet of Things connection and will have a digital identity, with over 70% of adults expected to possess a digital or electronic signature by 2030. Vietnam is investing heavily in data centres that meet international standards and is focusing on attracting domestic and international investments in digital infrastructure.

Education and skilled staff

Vietnam’s state-run education system is renowned for high literacy rates of over 95% and strong performance in international assessments like PISA. The system emphasises standardised testing. Students must pass exams at the end of Grade 9 to proceed to upper secondary, and again in Grade 12 to qualify for university entrance. The government is increasingly prioritising STEM education, recognising its critical role in developing workforce skills.

Environmental, Social and Governance (ESG): September Update

Stable at 6

The government has launched an ESG accelerator - the Sustainability Twin transition And Reporting (S.T.A.R.) Accelerator Programme - to help businesses move from zero to structured ESG implementation within a six-month period. Between 30 and 50 enterprises in Vietnam will be selected for the programme, based on leadership commitment and the availability of dedicated internal resources. 

ESG Risk - Context

The United Nations' Sustainable Development Goals (SDGs) are recognised as a beneficial framework for responsible investment. The Sustainable Development Report from Cambridge University Press assesses the progress of all UN Member States on the SDGs. It provides a useful means of ranking Southeast Asian countries on their ESG progress.

Vietnam is ranked 61 out of 167 in the 2025 report, with a score of 73.35.

Environment

Vietnam is one of the countries most at risk from climate change. It faces high natural disaster risk levels, fourth highest in the ASEAN+3 region and far above the world average, According to the ASEAN+3 Finance Ministers, the ASEAN+3 Macroeconomic Research Office (AMRO), Vietnam’s geographical features, especially the concentration of economic activities along its long and densely populated coastline and numerous transboundary river basins, which are exposed to typhoons, sea-level rise and floods, make the country highly vulnerable to extreme weather induced by climate change. Vietnam has also seen a marked increase in greenhouse gas emissions as well as energy consumption due its rapid economic growth, reports AMRO. The government is adopting measures such as industrial and urban development strategies, early warning systems to monitor and predict hazards, and hard infrastructure such as dikes and sea walls to reduce severe coastal and riverine erosion and help mitigate the impact of climate change.

Social

Vietnam’s labour laws, primarily governed by the 2019 Labour Code, establish a 48-hour workweek, mandatory contracts, and benefits like maternity leave and social insurance. The International Labour Organization and the Vietnam Chamber of Commerce and Industry have intensified collaboration to help enterprises embed responsible business conduct into everyday operations. Implementing labour rights in practice as well as in theory has become an imperative given that international buyers are increasingly prioritising suppliers that can demonstrate transparency, accountability, and adherence to labour standards. 

Governance

Vietnam has launched a new corporate governance code aligned with G20/OECD principles to raise transparency, board accountability and ESG standards across listed and public companies. The new framework aims to lift standards among listed and public companies and align the market more closely with international practice as investor expectations continue to rise. Prior to the launch of the new code, the ASEAN Corporate Governance Scorecard (ACGS) found that governance practices in Vietnam required improvement, particularly in board independence and diversity, the protection of minority shareholders and the effectiveness of board committees.

Latest Economic Data

f  forecasts
Source: International Monetary Fund