Industrialisation in Vietnam: The Path Since Doi Moi

Industrialisation is a pivotal journey for any nation aspiring to elevate itself into a modern economic powerhouse. In Vietnam, industrialisation hasn’t emerged overnight—it’s a continuous process shaped significantly since the introduction of the doi moi (renovation) reforms in 1986. These reforms have set the stage for Vietnam’s transformation into an industrialised nation, aiming to meet its high-income ambitions.

The Beginning of a Journey

Vietnam’s industrialisation journey predates the doi moi reforms, yet it was after 1986 that the pace significantly accelerated. Initially, the focus was on developing heavy industries. However, as Vietnam opened up to the global market, particularly from 2001 onward, it embraced a more diversified industrial approach. The country sought not only to enhance its industrial capacity but also to adopt a modern industrial structure.

Despite these efforts, Vietnam’s aspiration to fully industrialise by 2020 faced substantial challenges. Disruptions from global financial crises and internal inefficiencies hampered progress. Today, as we look towards future goals, the orientation for further industrialisation has been clearly delineated in Resolution No. 29-NQ/TW, set out in November 2022. This resolution lays a strategic framework for the economy’s transformation through 2030, aiming for a comprehensive modernisation by 2045.

The Role of Foreign Direct Investment (FDI)

A critical engine behind Vietnam’s industrialisation has undoubtedly been foreign direct investment (FDI). The Politburo’s Resolution No. 50-NQ/TW, issued in 2019, serves as a strategic compass for refining policies that enhance the quality of FDI. This emphasis acknowledges the dynamic nature of foreign investments, which have introduced numerous multinational corporations into Vietnam.

FDI’s impact has been profound. It has not only stimulated job creation but also enabled the infusion of advanced technologies and management practices into the Vietnamese market. Over the years, the FDI landscape has evolved, witnessing a significant transition from labour-intensive sectors to high-tech industries. Statistics from 2010 to 2024 illustrate this shift dramatically; for instance, the electronics sector’s FDI share rose from 4.1% to a remarkable 17.8%.

In 2024 alone, the manufacturing and processing sector attracted around $24.68 billion in foreign capital, representing more than 73% of total FDI. As we delve into the figures from the early months of 2025, we see continued strength in this sector, illustrating FDI’s crucial role in achieving Vietnam’s ambitious industrial goals set for 2030.

Evolving Dynamics of the Business Landscape

While FDI continues to play a crucial role, the domestic private sector is rapidly expanding and becoming a significant force in Vietnam’s economy. Resolution No. 68-NQ/TW highlights the importance of the private sector, recognizing it as a key driver for growth, innovation, and employment. The move towards a more market-oriented economy necessitates a balance between attracting FDI and fostering domestic enterprise.

The global economic landscape is changing too. US tariff policies have prompted shifts in FDI flows, creating unique opportunities for Vietnam. Many investors are looking to diversify their supply chains and are exploring Vietnam as a strategic alternative to traditional locations. This trend highlights the nation’s growing appeal as a regional manufacturing hub within ASEAN.

Despite the pressures from global capital flow declines, Vietnam’s FDI inflows remained resilient, achieving remarkable milestones. In 2023, even as global FDI dropped by about 10%, Vietnam attained a record $36 billion in registered capital. This showcases the country’s stability and attractiveness in the investment arena.

High-Quality FDI and Supporting Industries

The focus on improving the quality of FDI in Vietnam is underscored by ongoing efforts to attract high-quality investors. Supporting industries are crucial in this context, as they create necessary links for enhancing competitiveness within the manufacturing sector. With the government’s commitment to refining its policies, the structure of FDI is expected to become even more sophisticated, aligning itself with modern operational standards and sustainability practices.

Various sectors are stepping up to meet these demands, as the Vietnamese government emphasizes the quality aspect of investments. This strategic shift is believed to not only enhance the country’s industrial capacities but also promote sustainable development that is vital for long-term success.

In summary, Vietnam’s pathway to industrialisation, paved with strategic reforms and active engagement in global economic dynamics, illustrates a robust blueprint for future development. As the interplay between FDI, domestic enterprises, and supportive governmental policies continues to evolve, this vibrant economy stands at a critical juncture in its quest for modernization and growth, revealing exciting prospects for both local and international stakeholders.