Vietnam 20250710
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Headlines:
Vietnam's Trade and Growth Shakes Up Asia
Record 1H Economic Growth
Infrastructure Investment Up 40%
Foreign Investment Hits $21.5 Billion
Banks Get a Makeover, Index on the Rise
Green Energy Gets $7 Billion
New Financial Centers Launch with Tax Incentives
VN Now Fifth Largest Electronics Exporter
Real Estate Brings $4.8 Billion Foreign Cash
Vietnam Joins BRICS as a Partner Country
Digital Economy Gets New Rules
Vietnam's Trade and Growth Shakes Up Asia
The US and Vietnam have reached a trade agreement that puts a two-tier tariff system in place: 20% on Vietnamese exports and 40% on products that contain Chinese components. US exports are 30% of Vietnam's GDP. The agreement will mandate strict proof of product origin and is definitely going to disrupt supply chains, particularly in low-margin sectors like textiles, but could benefit Vietnam overall if international suppliers relocate from China. The agreement puts Vietnam in a delicate diplomatic position between US and Chinese interests, with economic retaliation from China still somewhat of a concern.
Read more: The Guardian (Impacts), East Asia Forum (Export Resilience), Geopolitical Monitor (Supply Chains), Harris-Sliwoski (Transshipment)
Record 1H Economic Growth
Exceptional 7.52% GDP growth was posted in the first half of the year so far, its strongest first-half performance in a decade and a half. The services sector led with 8.14% growth, industrial production expanded 9.2%, and manufacturing rose 11.1%. Business formation remained positive with 91,200 new enterprises registering with $31.4 billion in capital. FDI inflows hit $21.51 billion, up 32.6%. Trade reached $432 billion, yielding a $7.63 billion surplus. The CPI rose 3.22% year-on-year, and core inflation currently sits at just a hair above 3%. The government is keeping its targets of 8% growth for 2025 and 10% for 2026-2030.
Read more: Vietnam-Briefing (Economic Performance), Vietnam Insiders (GDP Growth), VN Economy (Growth Forum), VN Economy (Inflation)
Infrastructure Investment Up 40%
Infrastructure investment is up 40% year-on-year for 2025. The Prime Minister is pushing officials to finish projects three to six months ahead of schedule. The country is in the process of growing its expressway network to 5,000 km by 2030. Other big projects include the $13 billion Long Thanh International Airport, $13 billion ring roads in Hanoi and Ho Chi Minh City, and the $8.4 billion Lao Cai-Hanoi-Haiphong railway. Vietnam currently runs a government debt of less than 40% of GDP and maintains a budget surplus of more than 5%.
Read more: VIR (Investment Surge), VN Economy (Long Thanh Airport), VN Economy (Railway Projects), VN Express (VinSpeed)
Foreign Investment Hits $21.5 Billion
FDI in the first half of 2025 was $21.5 billion, a 32.6% year-on-year increase. The country brought in nearly 2,000 new projects (+21.7%), with manufacturing/ processing coming in at $12 billion (55.6% of total), followed by real estate at $5.17 billion (24%). Singapore remains the top investor ($4.6 billion), followed by South Korea ($3 billion), China ($2.55 billion), Japan ($2.15 billion), and Malaysia ($1.59 billion). Hanoi was the top destination - it was able to draw $3.66 billion in investment.
Read more: VIR (FDI Growth), VIR (Tax Breaks), VIR (Innovation Focus), Vietnam News (Investor Appeal)
Banks Get a Makeover, Index on the Rise
The banking sector is growing, with the State Bank of Vietnam setting a 16% credit growth target for this year. Total credit outstanding reached $658.3 billion in the first half, a 9.9% increase from end-2024 and the highest growth rate since 2023. The Prime Minister has told SBV to scrap the credit growth cap regulation on commercial banks, an attempt to change from an administrative to a market-based management. The VN-Index has surpassed 1,400 points for the first time in over three years, with analysts projecting it could reach 1,500-1,550 points in H2 2025.
Read more: VIR (Banking Growth), VN Economy (Credit Growth), Vietnam News (Credit Cap Removal), VIR (Market Upgrade)
Green Energy Gets $7 Billion
More than $7 billion in funding commitments have been secured for the nation’s Just Energy Transition Partnership. Three major projects have been confirmed: a 500 kV power transmission line (EUR 67 million), the Bac Ai pumped storage hydropower project (EUR 480 million), and upgrades to the Tri An hydropower plant (EUR 65 million). South Korean conglomerate SK Group is evaluating a $2.1 billion investment in an LNG power plant project in Nghe A Province with a 1,500MW capacity.
Read more: The Investor (JETP Funding), Vietnam News (Energy Transition), VIR (LNG Investment), VN Economy (Green Investment)
New Financial Centers Launch with Tax Incentives
Resolution No. 222/2025/QH15 has been released to set the framework for International Financial Centres in Ho Chi Minh City and Da Nang. The plan offers generous incentives, including 10% corporate tax rates for up to 30 years, personal income tax exemptions for foreign experts through 2030, and 100% foreign ownership rights. The policy framework is particularly supportive of fintech development, green finance, and capital markets integration, with English designated as an official working language.
Read more: Lexology (IFC Resolution), Vietnam News (Swiss Interest), VN Economy (Makara Capital Plans)
VN Now Fifth Largest Electronics Exporter
Vietnam is now the world's fifth-largest electronics exporter and second-largest exporter of mobile phones and parts, with electronics export turnover topping $134.5 billion last year. The first five months of 2025 saw exports of $60.8 billion, a 39% year-on-year increase. Still, 80% of phone components are currently imported, and more than 90% of tier-1 suppliers are foreign-owned. The government wants to further semiconductor industry development and is trying to move up the value chain from assembly to advanced manufacturing.
Read more: VIR (Electronics Sector), EET Asia (Edge AI Adoption), Digital Times (Talent Challenges), VIR (Strategic Transformation)
Real Estate Brings $4.8 Billion Foreign Cash
Real estate brought $4.8 billion in foreign direct investment during the first half of 2025, a 2.4-fold increase year-over-year. Singapore led foreign investment with $2.4 billion, accounting for 26% of newly registered capital. Some of the programs underway to support the industry include a new subsidized loan program targeting homebuyers under 35, and a reduction in interest rates to 5.9% for social housing purchases (that’s 2% below the average rate of four state-owned banks). The preferential rate applies for an initial five-year period.
Read more: VN Express (FDI Growth), Vietnam News (Market Transformation), VN Express (Subsidized Loans), Vietnam Insiders (Tariff Impact)
Vietnam Joins BRICS as a Partner Country
Vietnam has joined BRICS as a partner country, bringing the total BRICS+ membership to 20 nations: 10 full members (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran, UAE) and 10 partner countries. BRICS+ now represents 43.93% of the global economy based on GDP at purchasing power parity and 55.61% of the world's population. Vietnam and Cambodia are strengthening their economic ties as both nations navigate US-China geopolitical tensions. The partnership achieved $10 billion in bilateral trade in 2024, with Vietnamese investments in Cambodia reaching $550 million that year. Vietnam is also finalizing a strategic rice trade agreement with Indonesia following a 97% drop in Vietnamese rice exports to Indonesia during 2025's first half.
Read more: East Asia Forum (Cambodia Partnership), Geopolitical Economy (BRICS Membership), VN Economy (BRICS Summit), Vietnam Insiders (Indonesia Rice Deal)
Digital Economy Gets New Rules
Vietnam is putting regulatory reforms in place for the digital economy, including e-ID for foreign residents. This system offers two levels of identification: Level 1 with basic information and Level 2 with biometric data allowing access to advanced digital services. New tax regulations for e-commerce sellers took effect July 1st, requiring platforms to handle tax withholding, with 1% VAT and 0.5% personal income tax for goods, and services face 5% VAT and 2% personal income tax. The big platforms, including Shopee and TikTok Shop, are providing support to help sellers navigate these new requirements.
Read more: Vietnam-Briefing (E-ID Implementation), Vietnam News (E-Commerce Taxes), VN Economy (Online Standards)
That’s it for this week!
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