Shantanu Chakraborty, Country Director of the Asian Development Bank (ADB) in Việt Nam.

After 80 years of nation-building and reform, Việt Nam has achieved remarkable progress, transforming itself into one of Asia’s most dynamic economies. Shantanu Chakraborty, Country Director of the Asian Development Bank (ADB) in Việt Nam, spoke to Vietnam News Agency about the country’s recent growth drivers, reform priorities, and development outlook.

From ADB's perspective, what have been the key macroeconomic drivers behind Việt Nam's impressive growth, particularly in recent years?

In the past few years, despite significant global challenges, Việt Nam has achieved remarkable economic progress. In 2024 the economy accelerated to an impressive growth rate of 7.1 per cent, among the highest in Southeast Asia. This was driven by a combination of robust trade performance and record foreign direct investment (FDI) in an environment of effective policy measures. These resulted in improving industrial production, while agriculture and services remained resilient.

In the first half of 2025, Việt Nam's economy has continued to maintain positive growth momentum, reflecting the strong recovery and economic reform efforts of the Government. The economy accelerated to an impressive growth rate of 7.5 per cent year-on-year from 6.4 per cent a year ago, marking the strongest first half performance since 2010.

We can see the following recent key economic growth drivers for Việt Nam:

-Sound economic management for resilience through the challenges of COVID and global geopolitical uncertainty.

The Government was decisive and agile in handling the pandemic with flexible and effective measures, and implemented suitable and timely monetary and fiscal policies to mitigate supply chain shocks and increased uncertainty in global and regional economic relations. The Government has been proactive in managing macroeconomic impacts of international inflation and exchange rates over the past few years.

-Robust trade performance accompanied by strong industrial production.

The economy has been better integrating into global and regional production networks, as demonstrated by robust trade performance, which was significantly driven by improving export-oriented industrial manufacturing. In the first seven months of 2025, exports reached US$262.4 billion (an increase of 14.8 per cent year-on-year) and imports $252.3 billion (an increase of 17.9 per cent year-on-year), resulting in a trade surplus of $10.2 billion (lower than $14.6 billion for the same period in 2024). The industrial production index rose by 8.6 per cent year-on-year.

-Record levels of FDI to boost Việt Nam's economic growth.

The country remains an attractive destination for foreign investors due to its stable political environment and improving labour force. For the first seven months of 2025, disbursements rose 8.4 per cent year-on-year to $13.6 billion. Total FDI pledges reached $24.1 billion, up 27.3 per cent from a year ago.

-Effective execution of public investment to sustain growth.

This investment stimulates demand, creates employment and boosts private sector investment. Việt Nam has ample fiscal space with a public debt to GDP ratio below 36 per cent, allowing for significant investment in quality infrastructure projects. Public disbursement in the first seven months reached 43.9 per cent of the annual plan. While this has been accelerating recently, it remained well below the Government's ambitious target of a 100 per cent disbursement rate for 2025.

-Relatively stable domestic consumption through recent difficult periods, which helped maintain growth resilience.

This was achieved by fiscal stimulus measures including the 2 per cent value-added tax (VAT) reduction, and other tax incentives and spending programmes. Final consumption increased by 8.0 per cent in the first half of 2025, up from 6.4 per cent in the same period in 2024, demonstrating resilient domestic demand.

-The Government’s recent efforts to push for comprehensive institutional reforms aimed at improving the business investment environment, promoting healthy competition and developing the capital market.

These are vital for long-term economic growth, which helps to create a more efficient and competitive economy.

-The Government's open policy towards international trade and investment, while actively seeking to mitigate risks.

Recently, efforts to be among the earliest countries to negotiate reciprocal tariff with the US showed their efforts in managing the uncertainties, which are expected to continue affecting global and regional trade and investment.

These drivers collectively contribute to Việt Nam's impressive economic growth and its ability to navigate global challenges while maintaining positive growth momentum.

Việt Nam is strongly advancing institutional reform as a key priority. In ADB's view, how will this reform potentially impact Việt Nam's economic competitiveness in the medium and long term?

Việt Nam’s leadership has recently launched bold reforms to enhance public sector efficiency with clear and ambitious objectives of achieving high-income status in 2045. This is in the context that earlier reforms over four decades from Đổi mới (Renewal) have transformed the country from a low-income economy in transition into a middle-income nation.

However, the economy is facing structural challenges to reach a high income level, or what is often referred to as the 'middle income trap', shown in diminishing returns on investment, low productivity growth and limited value added in international value chains.

A new round of bold and effective reforms to enhance the economy's structure and competitiveness is much needed. Ongoing reforms including institutional enhancement and upgrades of key laws and policies — including those on private sector development, public investment, procurement and public debt management — are important to strengthen governance, improve efficiency, and boost long-term economic competitiveness. It is thus crucial to ensure effective implementation of these reforms to produce a stronger impact on social and economic development.

In the medium and long terms, if the fundamental reforms to enhance public sector efficiency and promote private sector development are effectively implemented, we could expect to see substantial benefits for the economy.

For example, streamlining administrative procedures reduces delays in licensing, land use, and investment approvals, improving the business climate, and facilitating public investment. Lower costs and clearer rules also support production and boost investment efficiency, enhancing businesses’ competitiveness in both domestic and global markets.

Ideally, the business climate should also be compatible with international market norms to better attract and retain international investors while preparing domestic firms for international competition. A more agile public administration can respond more quickly to economic changes, help resolve bottlenecks in industrial zones and support regional economic integration efforts like the CPTPP and RCEP.

Better efficiency will help cut unnecessary expenses and simplify compliance requirements for both public and private sectors, allowing the Government’s resources to be efficiently allocated to productive infrastructure and social services like healthcare and education, key sectors for long-term development. The private sector will also be able to enhance their investment returns, or direct capital to the most productive activities.

A stronger public sector will also be more effective regulators to ensure healthy competition and environmental and social protection to address market limitations, inequality and broader attainment of sustainable development goals.

However, to realise these reform benefits, effective implementation will need to address transitional challenges.

These reforms are complex and could cause temporary disruptions in services and governance. It is important to identify and quickly resolve emerging problems and share them widely, for replication of good practices and to rectify mistakes early.

Public service staff needs capacity support to enhance their performance of new duties, and digital technology should be applied to enable workers to complete their duties. Wider digital technology usage must be safeguarded by strong cybersecurity arrangements.

Significant changes like these reforms are causing disruptions to many groups and communities. It is important to create measures to ensure that the benefits of reforms are broadly shared by all stakeholders, and that support is provided to those who need to transition into new circumstances.

In short, Việt Nam’s structural reforms — particularly in streamlining administration and consolidating agencies — are important steps toward a more efficient and competitive economy. While these reforms hold strong potential, careful implementation and continued attention to emerging challenges will be essential to ensure a lasting impact.

Implementing such a large-scale reform undoubtedly presents challenges. Based on ADB's international experience in supporting institutional reforms, what are the key factors for Việt Nam to ensure a smooth transition and maximise the long-term socio-economic benefits?

Implementing large-scale institutional reforms is inherently complex, especially in a dynamic and rapidly developing economy like Việt Nam. With extensive international experience in supporting institutional and structural reforms across Asia and the Pacific, ADB stands ready to support the Government in this crucial long-term endeavour. In addition to the implementation challenges mentioned earlier, I would like to share some key factors that can help Việt Nam sustain these reforms and unlock long-term socio-economic benefits:

-Strong commitment and strategic continuity

Successful reforms require clear and consistent commitment from top leadership for an extended period of time. Việt Nam already has extensive experience in the four decades of reforms from Đổi mới. It is important that the leadership maintains a unified reform vision, anchored in national development strategies (e.g., SEDS, SEDP) and helps align efforts across ministries, sectors, provinces and people. It is also important to balance near-term gains with long-term endurance.

-Technocratic talent

Effective implementation of the reform agenda requires strong technical expertise and the capacity of the public sector to make and sustain development. As I mentioned previously, the Government should focus on strengthening its technical capacity in all areas.

-Monitoring, evaluation and adaptability

As reform efforts go through cycles of formulating reform measures, implementing them for social and economic impact and reviewing and refining further reform measures, a system must be put in place to monitor progress and measure impacts to generate feedback for further reforms.

Embedding robust monitoring and evaluation mechanisms into reform programmes allows policymakers to assess progress, learn from experience and adjust policies in a timely manner. This adaptive form of governance is key in navigating complex reforms.

In summary, Việt Nam is well positioned to benefit from institutional reforms, provided they are approached with strategic foresight, strong coordination and sustained investment in implementation capacity. ADB stands ready to continue supporting Việt Nam in this critical journey, if there is a need from the Government.

Amid ongoing global economic headwinds, and with Việt Nam creating a new impetus from its institutional reform, what is ADB's outlook for the country's economic growth in the short to medium term? What are the key downside risks that Việt Nam should pay attention to?

There is no doubt that bold reform will contribute significantly to Việt Nam’s long-term and comprehensive development.

In the short to medium term, rising tariff tensions and global uncertainties are expected to weigh on growth. While Việt Nam’s economy remains resilient, it is projected to moderate under these pressures.

According to the July 2025 Asian Development Outlook, GDP is forecast at 6.3 per cent in 2025 and 6 per cent in 2026, revised down from 6.6 and 6.5 per cent in April. Escalating tariffs, retaliatory measures, the prolonged Russia–Ukraine conflict and continued instability in the Middle East are adding to global headwinds, affecting Việt Nam’s growth outlook.

In the first half of 2025, investment, exports and domestic consumption remain Việt Nam’s key growth drivers. However, external drivers like FDI and exports are facing stronger headwinds, and their strong performance is unlikely to sustain itself. Việt Nam therefore has an opportunity to focus on domestic growth drivers, especially public investment. With public debt at 36–37 per cent of GDP, Việt Nam still has ample fiscal space to invest in critical infrastructure projects.

Amid rising external uncertainties in 2025 and beyond, emerging downside risks call for proactive and long-term policy responses.

As a highly open economy, Việt Nam is particularly vulnerable to shifts in global trade and investment flows driven by geopolitical tensions and rising protectionism. Navigating these external uncertainties will be critical to sustaining economic growth.

In the medium to long term, Việt Nam needs to enhance competitiveness through improved infrastructure quality, particularly in transport and energy, to lower logistics costs and enhance economic efficiency in a green, sustainable manner. Despite recent progress, Việt Nam’s essential infrastructure remains underdeveloped compared to regional peers.

Comprehensive institutional reform, an improved business environment, capital market development, a skilled workforce and the growth of high-value services and innovation are all essential to building a dynamic business ecosystem for long-term development.

An improved business environment will translate to domestic firms upgrading their technologies and managerial expertise to create higher added value in global supply chains. One important area is to strengthen the links between domestic companies and FDI supply chains, or expand them to foreign markets.

Last but not least, climate change poses a serious challenge for Việt Nam, threatening infrastructure, livelihoods and property. It not only disrupts agricultural production but also slows growth and undermines overall economic efficiency. Adapting to climate change to mitigate damage and open up new opportunities for green growth should continue to be a major focus of Việt Nam’s development strategy.

Looking ahead, what priority areas of cooperation does ADB plan to focus on to most effectively support Việt Nam in achieving its socio-economic development goals?

ADB has been a trusted partner of Việt Nam for over 30 years, and remains committed to supporting the country’s development goals.

Moving forward, ADB will support Việt Nam’s green transition, promote social equity and mobilise the private sector. In alignment with ongoing institutional reforms, our focus will include public investment and policy advisory in key areas.

ADB can support the Government’s public spending in projects and reform programmes to effectively implement the necessary measures. With ADB’s strength, we can assist with the following:

-Infrastructure development, especially the priority mega-projects: ADB will continue to prioritise investments in quality infrastructure, including transport, urban development and energy projects. These investments are essential to reducing logistics costs and enhancing economic efficiency in a green and sustainable manner. ADB can support project development, project financing and act as an advisor for public-private partnerships.

-Programmes for reform implementation (budget support): Việt Nam is undertaking comprehensive institutional reforms to improve the business climate, enhance competition, and promote investment efficiency. Effective public spending for reform implementation remains a key priority. ADB will continue to support the Government’s efforts with technical advisories in relevant reform areas to build a robust and sustainable business ecosystem. ADB stands ready to provide budget support to assist the Government in advancing its development agenda.

-Private sector development: ADB will continue to support reform areas that support private sector development, and provide capital directly or through domestic financial institutions to private sector development projects with significant impact, including support for small- and medium-sized enterprises or other disadvantaged communities, such as women-led businesses. VNA/VNS