ADB Country Director: Vietnam's growth remains positive and its regional position is solid.

ADB Country Director: Vietnam's growth remains positive and its regional position is solid. With forecasts of growth leading the region and significant institutional reforms, Vietnam stands before the requirement to upgrade its growth model, shifting from labor-intensive sectors to higher value-added areas. Growth inflection point and macro foundations According to ADB, in the early-stabilization scenario, Vietnam is projected to achieve one of the highest growth rates in Southeast Asia. The director of ADB Vietnam, Mr. Shantanu Chakraborty, noted that this clearly shows the resilience of Vietnam's economy in the face of global challenges. The current growth momentum is not merely a rebound from shocks but reflects underlying factors strengthened through years of integration. However, ADB also notes that to sustain high and sustainable growth, Vietnam cannot rely solely on traditional drivers, but must shift focus to raising productivity and efficiency of the economy. One of the most notable warnings from ADB related directly to the growth model is that although Vietnam has deeply integrated into the global value chain and built a robust export-oriented manufacturing base, the value added domestically remains low. The director emphasized that the advantage of low labor costs is not a sustainable long-term advantage. This highlights an urgent need to upgrade its position in the global value chain. To upgrade its position, ADB emphasizes four key factors: a transparent business environment, access to long-term capital, high-quality infrastructure, and a skilled workforce. These are the foundational conditions for Vietnam to move from participating in the supply chain to creating greater value within the chain. In the energy sector, Vietnam is seen as one of the countries playing an important role in Southeast Asia, with strong commitments to net-zero emissions by 2050 and participation in initiatives such as JETP. However, according to ADB, the biggest challenge today is not the target but the ability to implement projects. The director stressed that for financiers, the most important factor is the financial viability of the project. While private investor interest is high, capital will only be disbursed when projects have a reasonable risk structure and a stable legal framework. Notably, one strategic recommendation from the Vietnam ADB director is that improving energy efficiency is a cost-saving approach far more than simply expanding new power generation. This shows that the approach should shift from expanding supply to optimizing energy use across the system. Institutional framework and project preparation: The decisive capital-raising factor One structural issue highlighted by ADB is the gap between idea and project execution. The director noted that time to move from project idea to project readiness must be shortened. Vietnam indeed has many projects, but many do not reach the required level of preparation to attract capital, especially private capital. Limitations in financial structuring, risk allocation, and international standards remain major obstacles. In a context of increasing competition for investment, the ability to bring a project to readiness quickly will become a decisive advantage. The director said ADB appreciates recent progress in institutional reform in Vietnam, especially the private sector's central role and the push to simplify procedures. Reducing the administrative apparatus to two levels and empowering local authorities is expected to significantly improve decision-making speed. However, this comes with a requirement to enhance local project-preparation capacity to meet donor standards. In the long run, the key factor remains human resources, particularly in fields such as artificial intelligence, fintech, and science–technology. According to ADB, the challenge is not to achieve high growth but to sustain it on the basis of productivity, value added, and resilience. As traditional advantages gradually shrink, the quality of reforms—from institutions and infrastructure to human capital—will determine Vietnam's ability to reach the goal of high-income status by 2045. Thu Trang Government Portal