The country is a rising digital powerhouse in south-east Asia, while seeing a rapid expansion of its entrepreneurial and affluent classes.
While growing trade tensions are impacting the markets and economies of both the US and China, other countries are expected to benefit from the stand-offs. One key beneficiary, believe investment experts, is likely to be Vietnam.
“Vietnam has been one of the fastest growing economies in south-east Asia over the past five years,” says Cynthia Tobiano, deputy chief executive officer at Edmond de Rothschild, a Geneva-based private banking group.
Vietnam continues to see strong gains in education, healthcare and GDP per capita and Ms Tobiano expects this momentum to persist.
“Investors are applauding Vietnam’s stability, well-trained labour force, and extensive network of free-trade agreements and zones,” she notes.
She believes the country has been strong strongly inspired by and is trying to adapt the Chinese model from the turn of the millennium.
The manufacturing sector remains a key driver of economic expansion, particularly driven by trends in electronics and energy production. Construction and tourism are also expected to thrive, fuelled by a rapidly growing middle class.
By 2035, the middle class is expected to represent 50 per cent of the country’s population, according to the World Bank. This surge in affluence is also contributing to a sharp increase in Vietnam’s population of entrepreneurs and high net worth individuals (HNWIs).
"Vietnam is witnessing a rapid expansion of its entrepreneurial and affluent classes, and we are observing a surge in the number of millionaires over the past 10 years,” says Ms Tobiano. She expects this trend to persist, “unlocking substantial investment potential for the nation in the years ahead”.
Recognising these opportunities, the Swiss bank has established a strategic partnership with the Bank for Investment and Development of Vietnam (BIDV), creating a Vietnamese asset manager through a joint venture.
Spirits unleashed
Family offices are also eyeing investments in Vietnam, “looking for a more diverse environment, partly for improved returns but also as a risk mitigation play relative to other jurisdictions”, says Tim Houghton, global head of private wealth and family office at TMF Group.
“Some of the family offices are going through a generational change. The younger generation is looking to invest in technology, artificial intelligence (AI), renewables, and up-and-coming technologies,” he adds.
Advancements in cloud computing, AI and data analytics are driving innovation across sectors, positioning Vietnam as a rising digital powerhouse in the region, according to TMF.
But to fully understand this technological boom, it is important to look at the historical context. Following the Vietnam war, which lasted from 1955 to 1975, the country functioned as a centrally planned economy. But in 1986, the government introduced significant policy in the transition to a free market economy.
This “unleashed and entrepreneurial spirit”, believes Thuy Anh Nguyen, director at Dragon Capital, a regional investment firm headquartered in Ho Chi Minh City. “Vietnam’s economy has been driven by exports, initially focusing on low-value goods like fisheries and agriculture but has since moved up the value chain to branded manufacturing and electronics,” she says.
The decisive “renovation reforms” of the late 1980s liberalised private enterprise, opened the country to foreign investment, and restructured inefficient state-owned enterprises. Land reforms boosted agricultural exports, while financial and legal overhauls modernised banking and strengthened business regulations.
These policies transformed Vietnam into one of Asia’s fastest-growing economies, attracting manufacturing and foreign direct investment (FDI) while integrating it into global trade networks, according to Dragon Capital.
Electronics has been a primary FDI beneficiary, with the number of Vietnamese suppliers of US tech giant Apple in Vietnam increasing from five to 30 in the last two years due to the ‘China+1’ strategy.
“Vietnam is logistically attractive for manufacturing, with low labour costs and a government-friendly business environment,” says Ms Nguyen. Samsung produces 60 per cent of its global handsets in Vietnam, and the country is now trying to immerse itself in the semiconductor supply chain, she adds.
Trade shifts
Vietnam is emerging as a key beneficiary of global trade shifts, attracting businesses seeking to diversify supply chains and avoid tariffs on Chinese goods. "Nobody benefits from a long trade war, but in the near term, Vietnam gains by leveraging its young, skilled workforce, strategic location, low costs, and improving infrastructure," says Michael Mainelli, chairman of Z/Yen Group, a London-based financial services sector think tank.
“For HNWIs, Vietnam offers the excitement and energy of a fast-growing economy with a burgeoning tech sector, an emerging international finance sector, and real estate opportunities, particularly in Ho Chi Minh City and Hanoi,” says Mr Mainelli. The government has also introduced investment-friendly regulations, including residency programmes for foreign investors.
The tariff increases imposed by the Trump administration have expedited the US-China “decoupling”, positioning Vietnam to benefit, according to Edmond de Rothschild’s Ms Tobiano.
In 2023, Chinese investment in Vietnam jumped 80 per cent to $4.5bn, while US imports from the country also rose. “This shift highlights Vietnam’s strategic positioning and its diplomatic 'bamboo flexibility',” she says. But there are also some challenges on the horizon.
“For Vietnam, the critical challenge lies in ensuring these external growth drivers translate into sustainable development,” says Ms Tobiano.
“The focus must be on reinvesting the profits generated to support domestic business growth and foster authentically Vietnamese economic progress.”
