Powering growth from within

The development of a strong domestic private sector is essential for building a resilient, independent, and self-reliant economy that is less dependent on state-owned enterprises or foreign investment, writes Tim Evans, CEO of HSBC Vietnam.

Turbulent, uncertain, fragmented, volatile and chaotic, are how we can describe the world at the moment. The global economy is grappling with elevated geopolitical tensions, including ongoing conflicts and increased policy uncertainty, which disrupt supply chains, affect asset prices, and raise inflation.

Global economic growth remains slow and divergent with significant variations across regions, while persistent inflation continues to complicate the path for central banks to ease monetary policy. Global trade is also facing the rise of trade barriers and protectionist policies, contributing to a re-ordering of trade flows and a move away from hyper-globalisation.

Despite these global headwinds, Vietnam still shows remarkable resilience. The country’s economy grew at an annual rate of 8.2% in the third quarter, marking the second-highest growth in over a decade – a testament to Vietnam’s growth momentum.

The country aims to become a high-income, developed nation by 2045. To achieve this vision, it is crucial to drive growth from the economy’s internal strengths alongside foreign investment, notably in a world defined by volatility.

The power from within

Vietnam is focusing on four key pillars to further drive growth: technology and digital innovation, international integration, law building, and greater private sector development. These pillars are designed to shift the country's economic model from one based on low-cost labor and resource extraction to one driven by productivity, quality, and high value-added industries.

First, the country is prioritizing technology and digital transformation to overcome the "middle-income trap" and enhance its global competitiveness. Traditional growth drivers are reaching their limits, and the country sees science and innovation as the new engine that will drive the knowledge-based economy. Digital transformation is seen as a way to unleash creativity and improve productivity across all sectors. The Government has set ambitious goals for the digital economy, aiming for it to account for 30% of GDP by 2030.

Second, Vietnam's extensive international integration remains an important strategic approach to strengthen its economic position and national security. By actively participating in the global economy, the country can attract further foreign investment, expand markets for its goods, and elevate its standing on the world stage.

A robust and transparent legal framework is critical for creating a stable and fair business environment that can attract investment and unlock domestic resources. Vietnam is focused on institutional and legal reforms in order to remove the bottlenecks of complex procedures and project delays, ensuring fair competition for all economic sectors including SOEs, the private sector and FDI firms. Aligning the legal system with international standards will also help strengthen investor confidence, improving the country’s position as a safe and competitive destination in the global market.

Last but not least, there will be increased focus on the private sector – which is widely regarded as the most critical engine for Vietnam’s ongoing economic growth and will play a vital role in achieving the country’s long-term development goals. The Government is actively working to empower private businesses by removing barriers in accessing resources like capital, land, skilled labor, and encouraging innovation through policies supporting the adoption of new technologies, productivity improvement, and R&D investment.

Fueling an independent economy

The development of a strong domestic private sector is essential for building a resilient, independent, and self-reliant economy that is less dependent on state-owned enterprises or foreign investment. Since the Doi moi (reform) era, Vietnam's private sector has evolved step by step, gradually asserting its growing importance in the country's transformation with the support of legal framework improvement and policy reforms.

Currently, the private sector employs 82% of Vietnam’s total workforce, providing a vast array of jobs, reducing unemployment, raising household incomes, and improving the overall standard of living. Private companies also respond in an expeditious way to consumer demand and market signals, driving innovation, efficiency and productivity, thereby fueling economic expansion and competitiveness on a global scale.

Private businesses also mobilize significant capital for investment. Through internal profits, private loans, and shareholder investments, they fund new ventures, expand existing operations, and finance research and development. Furthermore, the private sector is also a key contributor to the country's GDP. The profits generated by these businesses and the wages earned by their employees are subject to taxes, which in turn fund public services and infrastructure projects like roads, schools, and hospitals.

How can the private sector unleash its full potential?

The growth drivers for the private sector include both internal strengths and a favourable external environment that encourages investment, entrepreneurship, and competition. Government can foster growth by implementing clear and consistent legal and regulatory frameworks, protecting property rights, and enforcing contracts – thereby strengthening business confidence in long-term investments.

Technological innovation and R&D play a crucial role in private sector growth. The Government can support this by offering incentives for R&D and creating policies that encourage digital transformation and the adoption of advanced technologies. Resolution 57 serves as an outstanding example of policy that focuses on building strategies to develop new technologies and sciences, including AI, green tech, and digitalization.

Investing in human capital development is also vital, as a skilled workforce is a cornerstone of a growing sector to drive innovation and efficiency. The Government and businesses can collaborate to invest in education, vocational training, and continuous skill-building to ensure a supply of high-quality human resources.

Furthermore, reliable infrastructure, including transportation, energy, and digital networks, is essential for businesses to operate efficiently. Growth is also promoted by open markets that allow businesses to compete freely, both domestically and internationally. This includes policies that support trade and remove barriers to entry for new firms.

Last but not least, to achieve sustainable growth and fulfil its role to the economy, Vietnamese businesses need access to sustainable fund. The current major funding is coming from banks, but soon the need will be huge requiring mobilisation from a diverse source. Access to both domestic and foreign capital is crucial, as is building effective capital markets that enable companies to raise funds.

Open new doors

As capital is the lifeblood of any business, it is vital to ensure Vietnamese business have access to a varied source of capital. International capital markets may offer lower borrowing costs, diversified capital, and accelerated expansion with different channels and financial instruments.

Over 20% of our clients are well-positioned and qualified to tap into these markets. This includes a mix of large corporates and increasingly agile middle market enterprises as well as innovative New Economy names that demonstrate strong financial health, transparent governance, and scalable operations. This figure is rising rapidly as Vietnam's businesses embrace global standards, fueled by the country's export boom and FDI inflows.

To shine on the global stage, businesses should focus on two things. The first priority should be building rock-solid fundamentals - enhancing financial reporting to international standards, strengthening balance sheets, maintaining consistency and transparency, and adopting sustainable practices that appeal to international investors. Second, they can leverage partnerships like HSBC's to gain credibility through due diligence support, credit enhancement, and introductions to our vast network of global lenders and investors.

Domestically, Vietnam has recently been upgraded to secondary emerging market by FTSE Russell, which is set to come into effect next September, subject to an interim review. This milestone could lead to material fund inflows. $1.5-3 billion of foreign capital is expected to flow into the market via passive funds while the flow from active funds is estimated to be between $1.9-7.4 billion. This represents a huge opportunity for local businesses.

Furthermore, Vietnam's Resolution 222/2025/QH15 on International Financial Centres (IFC), effective September 1, 2025, marks not just a policy shift but a key milestone for local businesses. IFC membership brings major new benefits, specifically allowing companies to freely conduct investments with offshore investors. Critically, this change means companies can raise capital internationally without going through the complex offshore holding structures previously required.

Seize the opportunity

There is no doubt that Vietnam’s private sector is standing at a once-in-a-generation inflection point. It is now time for its private enterprises to seize this moment to rise with the same strength and spirit, just as Saint Giong - a powerful symbol of resilience, unity, and patriotism did in Vietnamese folklore.